Against the backdrop of a global economic crisis whose depth and severity has surprised us all, this year's Meeting of the Board of Governors is one of the most important in the ADB's history. This year's Board of Governors' meeting has become very critical to ensure the ADB has the ability and flexibility to meet the current and future needs of its members.
What must come out of this meeting is the clear resolve that the ADB is ready and capable to take on this serious challenge. We must demonstrate that the global financial crisis has made the ADB more, not less, relevant.
It is important at this turning point of our global economy to acknowledge that we are indeed facing a new world. The economy of the future will be unlike the economy that is failing us. The economy of the future will be full of new challenges. We will need to adapt. We will need to innovate. We will need to be enterprising and to be bold. And I have every confidence that, if we work together, we will succeed.
One of the most significant positive outcomes from this crisis has been the way the international community has rallied together, to deal with the immediate consequences. Thankfully, we are not seeing a retreat to protectionism and isolationism. As we know, they were the main reasons why the Great Depression lasted as long as it did. Going forward, we must ensure that we keep our economies open.
It is also encouraging that governments are proactively taking measures to stimulate their economies and are injecting liquidity into their financial systems. This has relieved the great pressure to all economies to adjust to the weak global demand.
Many countries are also seeking to address the issue of toxic assets in bank balance sheets. It is vital that all affected countries urgently find an approach to deal with toxic assets and follow this with capital injections returning to banks to a healthy balance sheet based on the principles of efficient and effective good governance. This would help to put banks in a position where they can start lending again, and in a responsible and properly regulated fashion.
These are all important steps in the right direction over the short term. But there is still the question of what the world should do to address the root causes of the crisis over the medium to longer term. On this point, I am pleased that there have already been some tentative but necessary steps towards resolving some of the fundamental issues.
In the G20 process, for instance, Indonesia co-chaired with France a working group that focused on the effectiveness of Multilateral Development Banks (MDBs), including the ADB. We also worked closely with Australia and South Africa who co-chaired a working group on IMF, to ensure its reform to correct its failures of the past.
Our working group looked at MDB mandates and governance arrangements, the adequacy of resources and their ability to support counter-cyclical policies.
As part of that process, I put the case at the London Leaders' meeting that G20 members who are also represented on the ADB Board of Governors should provide strong support for a General Capital Increase (GCI) of 200 percent for the ADB, the first such increase since 1994.
The ADB governors have subsequently agreed to such an increase. The new funds are particularly timely in light of the capital outflows from developing to developed economies, and the associated liquidity shortages.
The increase will allow the ADB to play a central role in assisting members to advance counter-cyclical efforts and to support investments in areas that match the bank's driving mandate to reduce poverty. All these efforts will improve the quality of life in the Asia-Pacific region.
In short, it will appropriately position the ADB to assist its members at this crucially important point in its history. It will be our shared responsibility to ensure that these additional funds are used wisely, and that they provide the necessary foundation to benefit future generations.
For the last 42 years, the ADB has made life better for our communities in the Asia Pacific region. My administration strongly commends the ADB's achievements in this noble endeavor. We admire the devotion and professionalism that the ADB has shown over the years.
Over the time the ADB has been in existence our region has become increasingly important to the global economy. The size of our economies as a percentage of the world economy has continued to grow, and we are much more systemically important than at any point in the past. We also have the drive and determination to take the rest of the world with us on a positive growth trajectory at this critically important point in history.
The ADB can justifiably claim to have played a positive part in this success story. What we need the ADB to do now is to repeat this effort by playing a strategic and far-sighted role to help our members confront the current crisis and to be ready to face future crises.
The ADB indeed faces a great challenge in the coming months and years.
Will the ADB be able to help member countries return to positive growth? Can it help stop the bleeding of our economies? Can it promote national, regional and global solutions?
I am confident that the ADB is up to the challenge.
The above article is the excerpt from President Susilo Bambang Yudhoyono's opening address at the Asian Development Bank's 42nd Annual Meeting of the Board of Governors in Bali on Monday.
