ADB to boost lending by $10 b as crisis hits poor

The Associated Press ,  Nusa Dua   |  Sat, 05/02/2009 9:44 PM  |  Business

The Asian Development Bank announced Saturday it will boost lending to the region's poorest nations by more than US$10 billion over two years and warned that the global economic crisis is jeopardizing the U.N.'s goal to halve poverty by 2020.

The announcement comes just days after the bank's 67 member countries approved a tripling of its capital to $165 billion, expanding its ability to finance infrastructure and other projects aimed at reducing poverty in partnership with the private sector.

On Saturday, the bank's president, Haruhiko Kuroda, told an annual meeting in Bali, Indonesia, that loans for Asia's developing nations will rise to $32 billion over 2009 and 2010 from $22 billion in the previous two years.

The lending will "assist faltering economies and most importantly, protect the poor from the worst impacts of the crisis," he said. It includes a $3 billion fund that the hardest-hit governments can tap to boost their own fiscal stimulus spending as they battle the downturn.

Activist organizations have not welcomed the bank's bigger firepower, saying ADB-funded projects often harm the very people they aim to help.

"If not managed well, this 200 percent general capital increase could easily translate into a more than 200 percent increase in social and environmental harm," said Red Constantino, executive director of NGO Forum on ADB - an umbrella group pushing the bank to become more accountable.

Activists highlighted an ADB-backed dam and hydroelectric power scheme in the West Seti region of Nepal, saying it could displace 20,000 people and lead to conflict in resettlement areas that are already heavily populated.

The ADB estimates about 12,000 people would need to be resettled.

Michael Barrow, a director of the bank's infrastructure finance division, said he "senses" from community consultations a consensus in favor of the project, provided there's "compensation that allows them a good livelihood" and the thorny problems of resettlement can be resolved.

Activists dispute tat most locals support the dam, pointing to the burning of project information centers in September last year.

The venue for the May 2-5 meeting, an international convention center nestled amid plush five-star resorts, provides a stark contrast to one of its main talking points: tackling Asia's endemic povrty. More than 900 million live on $1.25 or less a day.

The global recession sparked by greed on Wall Street threatens to keep nearly 160 million Asians trapped in extreme poverty, a setback for ambitious goals such as liftin hundreds of millions out of abject poverty.

Kuroda told a news conference he remains "hopeful" that extreme poverty in Asia can still be halved by 2020 though the global recession is making that and the United Nations' other Millennium Development Goals harder to achieve.

"I'm afraid that in some ountries poverty could increase," he said.

With economic growth in Asia not including Japan likely to fall by half to 3.4 percent this year from 2008's figures, the regional bank estimates some 61 million people will be prevented from rising above the extreme poverty line. That figure will increase to nealy 160 million if slow growth continues next year, it says.
  

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