ADB Annual Report 2006

2006
ANNUAL REPORT
VOLUME 1
1
CONTENTS
The Record 3
Chairman’s Message 4
Board of Directors 6
40th Anniversary 14
Policy Overview 20
Financing Operations 36
Operations Overview 42
Central and West Asia 48
East Asia 58
Pacific 68
South Asia 80
Southeast Asia 90
Internal Initiatives 102
Appendixes 110
Contact Addresses 123
Websites 124
The ADB Annual Report 2006 comprises two separate volumes:

Volume 1 is the main report and Volume 2 contains the financial
statements and statistical annexes.
The Record
(amounts in $ million)
1966–2006 2003 2004 2005 2006
OPERATIONAL ACTIVITIES
LENDING (amount) 123,201 a 6,085 5,039 a 5,761 7,396 a
Number of Projects b 2,002 66 62 63 67 c
Ordinary Capital Resources (OCR) Loans (amount) 90,523 4,706 3,797 a 4,398 6,117
Number of Loans 1,126 37 31 31 35
Disbursements (amount) 60,797 2,688 2,508 3,498 4,420
Asian Development Fund (ADF) Loans (amount) 32,677 a 1,379 1,242 1,362 1,279
Number of Loans 1,150 47 47 40 45
A. Sovereign Loans (amount) 120,456 5,918 4,947 5,248 6,821
Number of Projects b 1,903 62 58 58 59
Disbursements 82,447 3,703 3,454 4,541 5,399
OCR Loans (amount) 87,793 4,539 3,705 3,885 5,542
Number of Loans 1,026 33 27 25 26
ADF Loans (amount) 32,663 1,379 1,242 1,362 1,279
Number of Loans 1,145 47 47 40 45
B. Nonsovereign Loans (amount) 2,744 167 93 513 575
Number of Projects b 100 4 4 6 8
Disbursements (amount) 1,804 113 109 204 358
Public Sector (amount) 150 – – – 150 e
Number of Projects b 2 – – – 2e
Disbursements (amount) 1 – – – 1
OCR Loans (amount) 150 – – – 150 e
Number of Loans 2 – – – 2e
Disbursements (amount) 1 – – – 1
ADF Loan (amount) – – – – –
Number of Loans – – – – –
Disbursements (amount) – – – – –
Private Sector (amount) 2,594 167 93 513 425 f
Number of Projects b 98 4 4 6 6
OCR Loans (amount) 2,580 d 167 93 d 513 d 425 f
Number of Loans 98 d 4 4d 6d 7
ADF Loans (amount) 14 – – – –
Number of Loans 5 – – – –
Disbursements (amount) 14 – – – –
EQUITY INVESTMENT g (amount) 1,311 d 36 164 197 d 261
Number of Investments 157 d 3 11 8d 14
EQUITY UNDERWRITING g (amount) 40 – – – –
Number of Commitments 6 – – – –
GRANTS h (amount) 2,602 d 454 104 1,150 d 538
Number of Projects 187 d 12 27 50 d 43
TECHNICAL ASSISTANCE h (amount) 3,021 d 175 192 d 199 242
Number of Projects 6,153 d 312 317 d 299 260
MULTITRANCHE FINANCING FACILITIES i (amount) 5,330 – – 1,520 3,810
Number of Facilities 10 – – 2 8
COFINANCING j (amount) 13,958 789 295 401 1,483
Number of Projects 1,062 95 110 111 103
Sovereign Operations (amount) 12,179 614 285 351 828
Number of Projects 1,025 93 109 110 96
Nonsovereign Operations (amount) 1,779 175 10 50 655 k
Number of Projects 37 2 1 1 7
Guarantees (amount) 3,220 170 d 10 68 125
Number of Projects 27 2a 1 2 3
Political Risk Guarantee (amount) 708 a 0a 10 50 15
Number of Projects 9a 0a 1 1 1
Partial Credit Guarantee (amount) 2,512 170 0 18 110
Number of Projects 18 2 0 1 2
RESOURCES (as of period end)
Ordinary Capital Resources
Authorized Capital 53,169 51,997 54,162 50,163 53,169
Subscribed Capital 53,169 51,997 54,162 50,163 53,169
Borrowings (gross) (for the period) 65,129 4,141 1,629 4,230 5,576
Outstanding Debt 27,601 26,359 24,212 24,454 27,601
Ordinary Reserve 8,994 8,892 8,865 8,957 8,994
Special Reserve 198 186 190 194 198
Gross Revenue (for the period) 35,849 1,657 1,313 1,432 1,839
Net Income after Appropriation of Guarantee Fees to Special Reserve (for the period) 12,044 436 427 105 566
Special Funds Resources
Asian Development Fund Total Resources 29,247 26,759 29,571 27,605 29,247
Technical Assistance Special Fund Total Resources 1,347 1,006 1,062 1,257 1,347
Japan Special Fund
Regular and Supplementary Contributions 929 853 877 904 929
Asian Currency Crisis Support Facility 241 241 241 241 241
ADB Institute Special Fund Total Resources 121 83 96 110 121
Asian Tsunami Fund Total Resources h 594 – – 565 594
Pakistan Earthquake Fund Total Resources h 114 – – 85 114
– = nil.
a Totals may not add up because of rounding.
b Projects with multiple loans are counted once. Cumulative number of projects excludes g Refers to nonsovereign operations only.
supplementary loans. h Includes direct value-added cofinancing.
c Includes loans arising from multitranche financing facilities. i Multitranche financing facilities are facilities that will give rise to loans. Loans arising from
d Adjusted to exclude terminated loans, equity investments, guarantees, technical assistance, the facilities are included under loans when approved by ADB.
and grants. j Starting 2006, cofinancing statistics indicate direct value-added cofinancing. 3
e These are loans to companies in which public sector entities own more than 50% of the k Nonsovereign operations comprise total syndications and guarantees. Total syndications amount
capital or over which they exert management control in other ways. to $530 million (B-loans for private sector projects, $105 million; B-loans for public sector projects,
f Of which $75 million has been reinsured. $350 million; reinsurance [KfW guarantee], $75 million). Guarantees amount to $125 million.
MESSAGE FROM THE PRESIDENT AND
CHAIRMAN OF THE BOARD OF DIRECTORS
ADB celebrated its 40th anniversary in 2006, look-
ing back on 4 decades of cooperation with the
governments and peoples of Asia and the Pacific.
This region has made tremendous progress, helping
300 million people rise out of extreme poverty.
The region continued to show impressive growth
in 2006, with the People’s Republic of China and India
emerging as major players in the global economy. On
the other hand, about 1.9 billion people—nearly half
the population of this region—still live on $2 a day or
less. More than 620 million of them live in extreme
poverty on $1 a day or less. In this region of increas-
ing prosperity, one in five people do not have access
to safe drinking water and almost 50% do without
proper sanitation. An estimated 4 million children died
before reaching their fifth birthday. Poverty in all its
aspects remains the region’s most daunting problem.
ADB therefore remains focused on its vision of an
Asia and Pacific region free of poverty. To help achieve
its goal of substantially reducing poverty in the region,
ADB adopted its second medium-term strategy to guide
its operations from 2006–2008. Responding to emerging
challenges in the region, the strategy is built around General Supachai Panitchpakdi, to advise ADB on key
five priorities: catalyzing investment for development, trends and development challenges in the region. The
strengthening inclusiveness, promoting regional coopera- report of this Eminent Person’s Group is an important
tion and integration, managing the environment, and input to a comprehensive review of ADB’s long-term
improving governance and preventing corruption. strategic framework to be conducted in 2007. The
ADB’s operational model was adjusted to support report will be discussed at the Governor’s Seminar
these priorities. In particular, since ADB cannot do
at ADB’s 40th annual meeting in Kyoto, Japan.
everything everywhere and do it well, it identified core
At the Frankfurt meeting to review the progress
sectors where it will focus its operations. These sectors,
of ADF IX replenishments, ADF donors noted that
in which ADB will build a critical mass of expertise,
ADB had made significant progress in achieving some
include road transport, energy, urban infrastructure,
aspects of its reform agenda. They called for a closer
rural infrastructure, education, and financial services.
alignment of the ADF grant framework with that of the
The sectors have been selected based on their relevance
to ADB’s broad strategic priorities, client country International Development Association, and a joint debt
demands, and ADB’s track record of quality project sustainability assessment with the International Monetary
delivery. In line with this selected focus, 73% of all Fund and the World Bank. A Board paper on proposed
public sector loans and Asian Development Fund (ADF) changes to the ADF grant framework to accommodate
grants approved in 2006 were in these sectors. these recommendations will be prepared in 2007.
To help ADB refine its longer-term goals, I convened In 2006, ADB adopted a regional cooperation
a panel of eminent people, led by UNCTAD Secretary and integration strategy to fight poverty and
4
Anti-Corruption Task Force that established a consistent
and harmonized approach to combat corruption in
ADB President Haruhiko Kuroda visits Phu Chan Lower Secondary the activities and operations of the institutions. This
School in Tu Son District, Bac Ninh Province, Viet Nam. The school is initiative led to standardized definitions of fraudulent
being supported by ADB’s Lower Secondary Education Development and corrupt practices and common principles and
Project, which is assisting the Viet Nam Government improve lower
secondary education guidelines for investigations. ADB also worked with
other multilateral development banks in designing a joint
investment framework for clean energy and develop-
ment. ADB continued to work with its bilateral and
multilateral development partners to harmonize strate-
gies, programs, and procedures. ADB hosted the 2006
Asian Regional Forum on Aid Effectiveness to support
the implementation of the Paris Declaration in Asia.
Internally, ADB made important progress in
implementing its reform agenda to make the institu-
tion more relevant to the region, more responsive
to the needs of its members, and more focused on
achieving results. Among other things, ADB revised its
private sector development framework and developed
its second governance and anticorruption plan.
To better serve client countries at different
stages of development, ADB worked to clearly
define its separate approaches to guide its support to
middle-income and weakly performing countries.
For the second year in a row, ADB increased its
assistance to its developing member countries. ADB
approved loans, technical assistance, and grants
amounting to $8.17 billion in 2006 compared to $7.11
billion approved in 2005, and $5.34 billion approved
promote growth through collective action. In an in 2004. Moving forward, we will continue to fight
increasingly interdependent world, the new strategy poverty and inequity, promote inclusive development,
will enable ADB to move beyond the stand-alone and contribute to building an Asia and Pacific region
subregional programs of the past to a more strategic where all have access to the essentials of life—education,
approach to cooperation and integration. health, safe drinking water, and proper sanitation.
One area where the world’s interdependence is For 40 years, ADB has been a steadfast partner
painfully obvious is that of greenhouse gas emissions and in the region’s development process. Our institution
climate change. As Asian economies continue their rapid is proud to be a part of the amazing economic and
economic growth, their energy needs are rising sharply. social progress that has lifted hundreds of millions of
This is particularly true of the People’s Republic of China people out of poverty. We look forward to working
and India. In 2006, ADB retained a focus on its clean with all our members and shareholders as we take
energy and environment program, promoting investments the next steps on this journey toward greater and
in energy efficiency and further developing a carbon more widely shared peace, security, and prosperity.
market initiative to provide up-front financing and techni-
cal support to clean development mechanism projects.
To disseminate knowledge on these important issues, ADB HARUHIKO KURODA
joined government and nongovernment development
partners in Asia to establish regional knowledge hubs.
ADB worked with other multilateral development President and Chairman
banks to organize an International Financial Institutions Board of Directors
5
DIRECTORS
BOARD OF
BOARD OF
DIRECTORS
The Board of Directors strongly supports President Kuroda’s call for the
Asian Development Bank (ADB) to enhance its relevance, responsiveness,
and results orientation. These are key benchmarks for ADB’s effectiveness
that require increasing both the quality and quantity of assistance. ADB is
gradually shifting from a focus on loan approvals to a focus on outcomes.
Its country strategies are becoming more selective, more responsive to
country priorities, and have better monitoring frameworks. Project design
frameworks have improved but need to continue to do so. The proportion
of projects at risk is declining and project performance has continued its
upward trend. Devoting sufficient attention to implementation and moni-
toring, however, remains an ongoing challenge.
The Board considered a number of new or revised policies and strate-
gies that target ADB’s greater relevance, responsiveness, and results ori-
entation. These included the medium-term strategy, financing partnership
strategy, and regional cooperation and integration strategy. A recurrent
theme in discussions on policies was the need to ensure that they support
development in developing member countries without unduly burdening
them with conditions for ADB involvement. The policies’ resource implica-
tions were repeatedly raised in Board discussions, and Management and
staff were encouraged to strengthen the link between policy and strategic
priorities and ADB’s resource allocation.
STRENGTHENING ADB’S STRATEGIC

FRAMEWORKS
ADB’s second medium-term strategy (2006–2008) reorders ADB’s priorities,
including giving new emphasis to regional cooperation and integration. In
endorsing the regional cooperation and integration strategy, the Board
asked Management to concentrate on cross-border infrastructure and
regional public goods. In considering the approach of greater selectivity
and focus, the Board concluded that ADB needs to have strengths in key ar-
eas but must also be able to meet the most pressing development needs of
7
Board approvals totaled $3.8 billion multitranche financing facilities that will give rise to future
loans for increased development. Optimal governance
in multitranche financing facilities arrangements are still being developed to ensure that
DIRECTORS
BOARD OF
that will give rise to future loans new instruments such as the multitranche financing facil-
for increased development ity, subsovereign lending, and greater use of guarantees
not only provide more money more conveniently but also
a wide variety of developing countries. Weakly performing deliver demonstrably stronger development outcomes.
countries have particular needs for policy advice, knowl-
edge products, and institutional capacity building. Board COUNTRY PARTNERSHIP STRATEGIES
members stressed throughout the year the importance of
technical assistance in delivering knowledge and skills and The Board discusses every country partnership strategy
in strengthening capacity. Board members asked ADB to (formerly the country strategy and program) that ADB
intensify efforts to coordinate the work of the knowledge negotiates with its developing member countries. Board
departments and expressed increasing concern about discussion of a strategy guides its implementation. The
pressure on technical assistance resources, including as a Board paid particular attention to responding to country
result of adopting new policies and priorities. demands, strengthening the strategies’ results orientation,
A review of ADB’s long-term strategic framework and promoting greater focus and selectivity in the country
commenced, with an Eminent Persons Group established programs.
to provide inputs. The Board welcomed the opportunity
to meet with the group and to discuss related issues at RISK MANAGEMENT
the Board’s annual retreat in October. The review of the
framework is a key means of helping ADB become as effec- While considering the middle-income country strategy, the
tive as possible. The Board looks forward to contributing Board debated the trend toward increased use of country
to the strategic choices that will be made as a result. systems. Many members saw it as potentially positive, where
adequate capacity and transparency could be demonstrated,
SCALING UP but also as creating areas of vulnerability and risk that need to
be carefully managed. In discussions on credit enhancement
ADB’s approach to support middle-income countries and in the Audit Committee, Board members welcomed
encompasses measures already taken under the innova- the evolution of ADB’s risk management architecture but
tion and efficiency initiative to scale up operations and pressed for a more comprehensive approach to identifying
better meet the needs of these countries. These meas- and mitigating major risks facing the institution. They also
ures include new mechanisms such as the multitranche called for a strengthening of staff and managerial skills in risk
financing facility. Board approvals totaled $3.8 billion in management.
TRANSACTION COSTS
The Board discussed ADB transaction costs on many
occasions. Board members share the desire to shorten the
project cycle where possible but also want ADB to uphold
high standards of quality, equity, and transparency. Getting
the balance right is a key institutional challenge, brought
into sharper focus in ADB’s safeguard policies. Reviews
of these policies commenced in 2006. The Development
Effectiveness Committee considered two studies by the
Operations Evaluation Department on the environment
and resettlement and asked Management to diligently
Board members visit a solar/wind hybrid electricity system in
work through the issue to deliver better outcomes for all
Afghanistan stakeholders.
8
DIRECTORS
BOARD OF
Board members review a scheme that helps tsunami-hit families in Aceh, Indonesia, start a new life with goat breeding
INSTITUTIONAL MANAGEMENT a number of financial issues, most notably by approving

AND OVERSIGHT the new asset and liability management statement and the
borrowing program for 2007, as well as recommending
The year saw increasing calls for managerial changes that the allocation of net income for various uses.
would allow ADB to respond more quickly and effectively to
its clients. These included greater delegation of authority to IMPROVING BOARD EFFECTIVENESS
managers and staff to make sound professional judgments
and be held responsible for them. The operational role of vice The Board recognizes that the demands for greater relevance,
presidents has become better defined, and accordingly, they responsiveness, and results challenge it to think and rethink
contribute more substantively in steering the institution. the way it operates and supports the overall reform process.
The Board saw some progress in human resources manage- In doing this, the Board fully respects the provisions in the
ment in key areas such as introducing staff assessments that Charter on its role, responsibilities, and functions.
more clearly distinguish between different levels of perform- The Board bears the ultimate responsibility for
ance, strengthening management training, and designing approving the projects and programs funded by ADB. The
a competency framework. However, as the Board observed Board repeatedly emphasized its role in setting the policy-
during budget discussions, progress needs to become more level strategic directions for ADB. It has streamlined some
consistent and approaches less mechanistic to make the best of its procedures to be able to pay more attention to policy
use of ADB’s largely talented and committed staff. and strategic issues.
The Board sought to play a greater role in the design The Board proposed a series of initiatives to improve
and approval of overarching strategies such as the second the quality of efficiency of its working procedures. These
medium-term strategy and to become involved earlier and initiatives relate to matters such as strengthening the
more deeply in the budget process. Board inputs helped
guide the internal administrative expense budgeting and
In March 2006, a group of five Board
work program processes at various stages. The Board’s
discussion in September 2006 on the 3 year work program members went to Afghanistan,
and budget framework for 2007–2009 led to the finaliza- Pakistan, and Sri Lanka, and
tion of the budget framework by Management, and further
in September another group
served as policy guidance in finalizing the 2007 budget for
internal administrative expenses, approved by the Board of five Board members visited
in December. The Board also gave its policy guidance on Indonesia and the Philippines
9
feedback to the Board by Management following Board internal controls. The committee operated under terms of
decisions, and how the Board arranges its formal and reference that had been expanded in the previous year to
informal meetings, including committee work and plan- include procurement policies and procedures in its review
DIRECTORS
BOARD OF
ning the Board agenda. of risk management.

The Board held 45 formal meetings. It approved or dis- The committee was satisfied that all audits were appro-
cussed a number of strategy or policy papers (Appendix 3) priate and in accordance with ADB’s approved policies and
and approved 67 projects and programs. It held 36 infor- applicable auditing standards. The committee reviewed
mal seminars or sessions on a variety of sectoral, thematic, quarterly financial statements and the annual manage-
or country-related topics. ment discussion and analysis, and considered applying
Although the Board focuses mainly on strategic and key financial and accounting systems using information
policy issues, it also tries to stay in close touch with the technology.
operational part of ADB’s work. One means of doing this The committee made several recommendations, includ-
is through visits by groups of Board members to developing to establish an integrated risk management framework;
ing member countries, both to have policy discussions monitor prepayments and any associated possible impact
with the country authorities and to get firsthand informa- on operating income; review progress in implementing cost
tion on the implementation of selected projects through accounting systems and cost information systems in ADB;
field visits. Two such Board group visits were arranged. and continue to periodically monitor the implementation
In March 2006, a group of five Board members went to of accounting standards, including Financial Accounting
Afghanistan, Pakistan, and Sri Lanka, and in September Standard 133 covering derivative instruments.
another group of five Board members visited Indonesia and The committee met 10 times.
the Philippines, ADB’s host country. The Board appreciates Budget Review Committee. The committee discussed
the experience and knowledge gained through such visits the President’s planning directions in preparation for the
and is grateful for the support of the host country authori- work program and budget framework (2007–2009) and
ties as well as of ADB Management and staff, particularly exchanged views with the vice presidents on its key thrusts.
in the resident missions. The committee noted that the work program and
budget framework is conceived as a business plan to allow
BOARD COMMITTEES implementation of the second medium-term strategy,
ADB’s commitments to the Paris Declaration on Aid
The Board has standing committees for audit, budget Effectiveness, and managing for development results. The
review, compliance review, and development effectiveness. committee further noted ADB’s efforts to scale up devel-
In 2006, the Ethics Committee was created. Membership opment effectiveness and improve institutional efficiency.
of the committees is shown in Appendix 6. It reviewed the implementation status of the enhanced
Audit Committee. The committee helps the Board separation program, discussed the sequestration and
oversee ADB’s financial reporting and audits, including redeployment of professional staff positions, and noted
the realignment of regional departments as an attempt to
balance resources among departments.
At midyear, the committee reviewed the operations
program and budget utilization status, including ADB-wide
efficiency measures supporting the second medium-term
strategy. The committee was also briefed about the price
and volume aspects of the 2007 budget; cost implications
The committee noted that the work

program and budget framework is
Board members visit the Day Care Room in a Women’s Resource Center
conceived as a business plan to allow
in Panabo City, Davao del Norte, Philippines, funded by the $1 million implementation of the second
Social Protection for Poor Women Vendors in Mindanao Cities Project
under ADB’s Japan Fund for Poverty Reduction medium-term strategy
10
individual operation evaluations to broader evaluations
at the country, sector, thematic, and policy levels. The
committee reviewed nine independent evaluation reports
DIRECTORS
BOARD OF
by the Operations Evaluation Department, including three
country program evaluations. The committee is encour-
aged by increasing referrals to country assistance program
evaluation findings in the design of new country strategies.
The committee reviewed Management’s annual reports
on the implementation of the poverty reduction strategy
and progress in managing for development results.
The committee ensured that Management adequately
considered key recommendations in the evaluation re-
ports of the Operations Evaluation Department and that
these resulted in operational actions when Management
Board members tour projects in Colombo Port, Sri Lanka
accepted them. Special attention was paid to monitor-
ing implementation of the action plan to improve loan
of new policies, strategies, and initiatives; and the budget and technical assistance portfolio performance that
carryover concept for implementation, beginning from the Management had initiated at the end of 2005 in response
2007 budget. to the committee’s recommendation. The committee en-
The committee discussed the draft 2007 budget and couraged the Operations Evaluation Department to make
noted the need to provide an appropriate level of staff findings more accessible and to disseminate them more
and budgetary resources to support ADB’s priorities. The widely. The committee continued to search for additional
committee made recommendations to ensure the effective ways of strengthening Board–Management dialogue on
use of budgetary resources through strengthened linkage portfolio performance and quality assurance.
between performance and budgetary allocations. The com- The committee met 11 times.
mittee recommended approval of ADB’s 2007 budgets for Ethics Committee. The Board established the com-
internal administrative expenses and annual capital expen- mittee to address matters of ethics that may arise under
ditures as well as the 2007 budget of the ADB Institute. the Code of Conduct adopted by the Board in September
The committee met seven times. 2006. The code provisions apply to all Board members
Compliance Review Committee. The committee, (directors, alternate directors, and temporary alternate
set up under the ADB accountability mechanism, clears the directors) and to the President.
Compliance Review Panel’s proposed terms of reference The committee is responsible for advising directors, alter-
and time frame for conducting compliance reviews, and nate directors, or the President when they request guidance
reviews the panel’s draft monitoring reports on implemen- on actual or potential conflicts of interest or other ethical
tation of remedial actions approved by the Board before issues concerning themselves. The committee also considers
the panel finalizes them. any allegations of misconduct against directors, alternate
The committee discussed the panel’s draft monitoring directors, or the President that relate to the performance of
reports on the implementation of the Board-approved their duties. It recommends appropriate action to the Board.
remedial actions in the Southern Transport Development The committee did not meet in 2006.
Project in Sri Lanka and the Chasma Right Bank Irrigation
Project (Stage III) in Pakistan. The committee met informally
with Management to be briefed on the progress in imple- The Development Effectiveness
menting the remedial actions. The committee checked on
the status of implementation as reported by the panel in its Committee continued to shift
monitoring reports and discussed whether Management’s the focus of its review work from
actions had brought the project into compliance. individual operation evaluations to
The committee met three times.
Development Effectiveness Committee. The com- broader evaluations at the country,
mittee continued to shift the focus of its review work from sector, thematic, and policy levels
11
BOARD OF DIRECTORS
DIRECTORS
BOARD OF
AND MANAGEMENT
Board of Directors
President and Chairman of the Board of Directors (top right): Haruhiko Kuroda
Board of Directors (middle spread [left to right]): Executive Directors David Taylor (Austria,
Germany, Luxembourg, Turkey, United Kingdom); Patrick Pillon (Belgium, France, Italy, Portugal,
Spain, Switzerland); Agus Haryanto (Cook Islands, Fiji Islands, Indonesia, Kyrgyz Republic, New
Zealand, Samoa, Tonga); Ashok Saikia (Afghanistan, Bangladesh, Bhutan, India, Lao People’s
Democratic Republic, Tajikistan, Turkmenistan); Emile Gauvreau (Canada, Denmark, Finland,
Ireland, The Netherlands, Norway, Sweden); Stephen Sedgwick (Australia; Azerbaijan; Cambodia;
Federated States of Micronesia; Hong Kong, China; Kiribati; Nauru; Palau; Solomon Islands;
Tuvalu); Masaki Omura (Japan); Chol-Hwi Lee (Republic of Korea; Papua New Guinea; Sri Lanka;
Taipei,China; Uzbekistan; Vanuatu; Viet Nam); Xiaosong Zheng (People’s Republic of China); Sibtain
Fazal Halim (Kazakhstan, Maldives, Marshall Islands, Mongolia, Pakistan, Philippines, Timor-Leste);
Md. Saad Hashim (Brunei Darussalam, Malaysia, Myanmar, Nepal, Singapore, Thailand); Alternate
Executive Directors Tsuen-Hua Shih; Siew Juan Aw; Paul W. Curry; Atsushi Mizuno; Xiaolong Mo;
Marita Magpili-Jimenez; Richard Stanley; Richard Moore; Nima Wangdi; Pasi Hellman; Sebastian
Paust; João Simões de Almeida
Management (bottom right [left to right]): Managing Director General Rajat Nag; Vice Presidents
Ursula Schaefer-Preuss, Khempheng Pholsena, Liqun Jin, and C. Lawrence Greenwood, Jr.; and
Secretary Jeremy Hovland
12
President and Chairman
of the Board of Directors
DIRECTORS
BOARD OF
Management
13
ADB at 40
1960s As 2006 drew to a close, ADB celebrated 40 years of fruitful cooperation
with the governments and peoples of the Asia and Pacific region, looking
back on phenomenal economic growth in the region alongside abiding
development challenges.
Opening in late 1966 in Asia, ADB helped its members develop what were
then largely agricultural economies.
63
In the postwar period
66
Takeshi Watanabe was
67
ADB focused its assistance
68
ADB made its first loan
69
ADB approved its first
of rehabilitation unanimously elected on food production and to a Thai development loan on concessional
and reconstruction, ADB’s first president rural development. ADB finance institution for terms from its Special
the United Nations during the inaugural approved its first technical onlending to private Funds resources for
Economic Commission meeting of the Board of assistance project to industries. The first an irrigation project in
for Asia and the Far Governors, held in Japan support Indonesia’s food agriculture loan was Indonesia. ADB also
East held the first on 24–26 November grain production, and made to Sri Lanka for made its first energy
Ministerial Conference 1966. its first regional technical the modernization of tea sector loan to Malaysia
on Asian Economic assistance project, for an factories. for an electricity supply
ADB opened in Manila,
Cooperation, which Asian agricultural survey. project.
Philippines, on 19
passed a resolution to
December 1966, To augment ordinary
establish a financial
with 31 members to capital resources for
institution that would
serve a predominantly lending to developing
be Asian in character to
agricultural region. members, ADB issued its
foster economic growth
first bond, a Deutsche
and cooperation in
mark bond issue for
the region, one of the
DM60 million ($16
poorest in the world.
ll )
Manila, capital of the
Philippines, was chosen
from among several
cities that offered to
host the new bank.
Subscribed capital $978.0 million President Takeshi Watanabe (1966–1972)

Members 33 Regional 20 Nonregional 13
Cumulative lending $139.7 million Cumulative technical assistance $5.1 million as of end of 1969
1970s In the 1970s, ADB explored new sources and modalities of financing the region’s
development.
ADB assistance expanded from agriculture into education and health, and then
to infrastructure and industry. When the world suffered its first oil price shock,
ADB shifted more of its assistance to support energy projects, especially those
promoting the development of domestic energy sources in member countries.
70
As operations expanded,
72
Shiro Inoue assumed
74
The Asian Development
78
ADB approved its first
79
ADB approved its
ADB mobilized additional the presidency, to be Fund was established loan in the health sector first program loan for
resources from bilateral succeeded by Taroichi to provide concessional to Hong Kong, China. industry, for the cement
and other multilateral Yoshida in 1976. lending to ADB’s poorest industry program in
ADB’s annual lending
institutions. members. Myanmar; its first loan
Technical assistance reached the $1 billion
for rural electrification,
Cofinancing operations projects emphasized mark. At the close of
in Sri Lanka; and its first
began to provide institution building and the decade, some Asian
multiproject loan, in
additional resources training of local staff. economies had improved
Tonga.
for ADB projects and considerably and
programs. graduated from ADB’s
regular assistance.
ADB’s first bond
issue in Asia—worth The gradual emergence
$16.7 million—was made of Asian economies
in Japan. This was the first in the 1970s spurred
time that yen bonds were demand for better
sold to the public in Japan infrastructure to support
by a foreign entity. economic growth.
ADB focused on
improving roads and
providing electricity.
Subscribed capital $8.9 billion Presidents Shiro Inoue (1972–1976), Taroichi Yoshida (1976–1981)
Cumulative lending $6.7 billion Cumulative technical assistance $71.5 million as of end of 1979
1980s As it became clear that the private sector was an important ally in driving growth,
ADB made its first direct equity investment in the private sector. ADB also began
to use its track record to mobilize additional resources for development from the
private sector.
As global awareness grew about the sometimes uneven benefits and negative
impacts of unregulated development, ADB strengthened its monitoring of gender
and environmental issues. While still assisting energy and other infrastructure
projects, ADB also increased its support to social infrastructure.
81
Masao Fujioka became
82
To bring operations
83
Private sector development
84
ADB opened its first
85
The Board of Directors
ADB President in 1981, closer to their intended was deemed crucial to regional office in the Pacific took action to include
to be succeeded by beneficiaries, ADB opened economic growth, leading in Port Vila, Vanuatu. women more effectively in
KimimasaTarumizu in its first resident office, in ADB to make its first direct the development process,
1989. Dhaka, Bangladesh. equity investment in a approving a policy on
private sector project to a the role of women in
In the wake of the second
development investment development.
oil crisis, ADB continued its
corporation in the Republic
support to infrastructure
of Korea.
development, particularly
energy projects.
86 87 88
ADB increased its support
to social infrastructure,
including gender, micro-
A pool-based variable The Board of Directors The first loan for primary
lending rate system was approved a policy education was approved
introduced at a time of supporting collaboration for Pakistan.
increasing globalization with nongovernment
and deregulation. organizations (NGOs) to
Subscribed capital $21.1 billion Presidents Masao Fujioka (1981–1989), Kimimasa Tarumizu (1989–1993)
Members 47 Regional 32 Nonregional 15 First resident office Dhaka, Bangladesh First regional office Port Vila, Vanuatu
Cumulative lending $28.6 billion Cumulative technical assistance $418.9 million as of end of 1989
1990s ADB declared poverty reduction as its overarching goal.
When several Asian countries suffered a severe financial crisis, ADB responded
with projects and programs to strengthen financial sectors and create social safety
nets for the poor.
92
ADB began promoting
95
As the Internet continued
96
ADB established its
97
Following the end of
99
ADB adopted poverty
regional cooperation, to expand its reach into representative offices in the cold war, the former reduction as its
forging close ties among homes and offices, ADB Europe and Japan. Soviet republics of Central overarching goal and
neighboring countries set up its website (www. Asia, in transition from approved several vital
through an economic adb.org). centrally planned to policies relating to
cooperation program market economies, joined indigenous peoples,
ADB became the first
in the Greater Mekong ADB and the Central cooperation with NGOs,
multilateral organization
Subregion. Asia Regional Economic and anticorruption
to have a Board-approved
Cooperation program efforts.
governance policy to
formed by ADB and other
ensure that development
93
multilateral institutions in
assistance benefits the
1997.
poor. Policies on the
inspection function, A severe financial crisis
involuntary resettlement, hit, setting back economic
and indigenous peoples— gains in Asia. In response,
Mitsuo Sato assumed designed to protect the ADB approved its largest
ADB’s presidency, and rights of people affected single loan—a $4 billion
was succeeded by Tadao by a project—were also emergency loan to the
Chino in 1999. approved. Republic of Korea—and
established the Asian
Currency Crisis Support
Facility to accelerate
assistance.
The ADB Institute was
established as a subsidiary
to conduct research and
build capacity to help
developing member
countries identify
development strategies
and improve project
management.
Subscribed capital $47.6 billion Presidents Mitsuo Sato (1993–1999), Tadao Chino (1999–2005)
Members 58 Regional 42 Nonregional 16 First representative offices Washington, DC Tokyo, Japan Frankfurt, Germany
Cumulative lending $82.3 billion Cumulative technical assistance $1.7 billion ADB Institute as of end of 1999
2000s The new century brought both hope and tragedy. Responding to unprecedented
natural disasters and conflict in its member countries, ADB provided disaster relief
and postconflict assistance.
ADB introduced clean energy initiatives to make the region, and the world, a better
place. It initiated a Water for All program to provide clean water around the region.
01
ADB formulated its first
02
ADB assisted countries
03
When the severe acute
04
ADB adopted a reform
05
Haruhiko Kuroda became
long-term strategic in postconflict situations respiratory syndrome agenda that includes ADB President.
framework to guide such as Afghanistan, (SARS) hit the region, it various initiatives, chief
operations from 2001 to where ADB resumed became clear that fighting among them managing The Board of Directors
2015. operations after 22 infectious diseases was a for development results. approved a policy of
years, and the newly public good that required ADB approved the first disclosure of information
Two medium-term to increase transparency
independent country of regional cooperation. project under its clean
strategies were approved, and accountability. ADB
Timor-Leste. ADB began providing development mechanism
covering 2001–2005 and committed more than
support at both national facility for a coal mine
2006–2008 to strengthen The Board of $850 million for recovery
d i ll l t methane project in the
the poverty-reducing Directors approved an in the tsunami-hit areas
People’s Republic of China.
impact of ADB assistance. environment policy, of India, Indonesia,
which aims to promote The Board of Directors Maldives, and Sri Lanka.
A major reorganization
the environmental approved a policy to help It opened a $1 billion
at the start of the
sustainability of ADB’s countries prepare for line of assistance to help
decade focused on
development assistance. and mitigate the impact victims of the earthquake
country operations. ADB
of disasters. At the end in Pakistan.
committed to help its
of 2004, a tsunami hit
developing members
06
many ADB member
achieve the Millennium
countries in the Indian
Development Goals and
Ocean. ADB hosted a
to enhance development
high-level meeting on the
ff ti
reconstruction of affected
areas and established the A strategy promoting
Asian Tsunami Fund to regional cooperation
channel funds specifically and integration was
to regional disaster relief adopted in 2006 to
and reconstruction. fight poverty through
ADB’s first female vice regional collective action.
president, Khempheng A new medium-term
Pholsena was appointed strategy was approved to
Subscribed capital $53.17 billion President Haruhiko Kuroda (2005–present)

Cumulative lending $123.2 billion Cumulative technical assistance $3.0 billion as of end of 2006
20
POLICY
OVERVIEW:
OVERVIEW
POLICY
IMPROVING
EFFECTIVENESS
ADB continued to operate in an economically buoyant region, where aggre-
gate gross domestic product (GDP) grew 8.3% in 2006 (Asian Development
Outlook 2007). Steady growth kept the region on track to achieve the
Millennium Development Goal of halving the number of people living on
less than $1 per day between 1990 and 2015. Growth, however, was not
evenly distributed among and within countries, and the Asia and Pacific
region remained home to more than 620 million people living on less than
$1 per day. The region made much less progress in achieving the non-income
Millennium Development Goals such as access to safe drinking water and
proper sanitation facilities, and improved health and education. The rapid pace
of growth highlighted the pressing need to develop and upgrade the region’s
infrastructure and to ensure sustainable management of natural resources.
As part of the efforts to enhance its relevance, responsiveness, and
results orientation, ADB continued to sharpen its strategic focus under its
ongoing internal reform agenda to make ADB more cooperative, flexible,
and efficient. This agenda aims to strengthen operational policies, strate-
gies, and approaches; mainstream managing for development results;
refine organizational processes and structures; reinforce knowledge man-
agement; and improve human resources management and staff incentives.
Five new or revised initiatives identified under the agenda were adopted
in 2006: ADB’s second medium-term strategy, the regional cooperation
and integration strategy, the revised strategic private sector development
framework, enhanced ADB support to middle-income countries and
ordinary capital resources (OCR) borrowers, and the second governance
and anticorruption plan. Business processes have been refined and new
financial instruments introduced.
ADB worked closely with other multilateral development banks and
bilateral donors to harmonize strategies, programs, and procedures to
improve aid effectiveness regionally. ADB hosted the 2006 Asian Regional
Forum on Aid Effectiveness to facilitate the implementation of the Paris
Declaration in Asia. ADB played a key role in the Asia 2015 conference held
in London in March 2006 to identify future challenges and solutions for the
21
in the region. As a strategy for this transitional period, the
second medium-term strategy combines continuity and
change. The main purpose of the strategy is to strengthen
the poverty impact of ADB’s assistance programs. Hence, in
many respects, the priorities identified in the strategy reflect
themes that were already identified in the poverty reduction
strategy and the first medium-term strategy. Some of these
OVERVIEW
themes were further elaborated in separate papers.

POLICY
As a result of rapid development in the region, ADB

deals with a diverse set of client countries, from weakly
performing countries to low-income Asian Development
Fund (ADF) recipients to rapidly growing middle-income
countries. Recognizing this diversity, particularly the special
needs of weakly performing countries, ADB undertook
other initiatives parallel to the second medium-term
strategy. These include preparation of ADB’s Approach to
Engaging with Weakly Performing Countries: Achieving
Development Effectiveness in Weakly Performing Countries.
To be presented to the Board of Directors in 2007, this
paper is expected to call for greater use of grant assistance
and closer partnership. Other initiatives in 2006 included a
midterm review of operations under the eighth replenish-
The second medium-term strategy (2006–2008) aims to strengthen the ment of ADF resources (ADF IX) in eligible ADF recipient
poverty reduction impact of ADB’s assistance programs
countries, which was discussed with representatives of ADF
donor countries in Frankfurt, Germany, on 4–5 December
region, and to build new alliances to fight poverty in Asia. 2006; and the development of a coherent framework of
More specifically, ADB took joint action with other multi- initiatives for enhancing ADB support to middle-income
lateral development banks to promote better governance countries and OCR borrowers.
and combat corruption, promote clean energy, and reduce The second medium-term strategy recommends several
vulnerability to the avian influenza pandemic. Together adjustments in ADB’s operational model. These include
with other development partners, ADB helped establish greater sector focus and selectivity; product and process
an International Financial Institutions Anti-Corruption Task innovations to enhance ADB’s responsiveness, flexibility,
Force, which developed a uniform framework for prevent- and efficiency; and greater emphasis on portfolio perform-
ing and combating fraud and corruption. Jointly with other ance, development effectiveness, and results. Most of the
multilateral development banks, ADB has helped develop a innovations were introduced in the context of the innova-
joint investment framework for clean energy and development, tion and efficiency initiative. ADB pays greater attention to
with a progress report discussed at the September meeting of the readiness and implementation of current projects and
the Development Effectiveness Committee. ADB has taken is streamlining managing for development results into the
the lead in energy efficiency in the transport sector under this entire project cycle, from development of results-based
framework. country partnership strategies to systematic application
The development of the second medium-term strat-
egy, which was finalized after discussion by the Board of ADB took joint action with other
Governors at the 2006 Annual Meeting in Hyderabad,
India, marked a milestone in taking forward the internal
multilateral development banks to
reform agenda. The strategy was prepared to guide promote better governance and
ADB’s operations for 3 years, from 2006 to 2008. This is combat corruption, promote clean
a transitional period during which the long-term strategic
framework will be reviewed, and a new long-term strategic
energy, and reduce vulnerability
direction established to respond to the emerging challenges to the avian influenza pandemic
22
of results-monitoring frameworks in projects and internal The second medium-term strategy
processes at all levels.
strengthens the poverty reduction
impact of ADB’s assistance and helps
PRIORITIES UNDER THE SECOND developing member countries meet
MEDIUM-TERM STRATEGY their Millennium Development Goals
OVERVIEW
POLICY
The second medium-term strategy strengthens the poverty strategy enables ADB to be a more proactive and effective
reduction impact of ADB’s assistance and helps developing financing partner by shifting the focus from reactive and in-
member countries meet their Millennium Development put-oriented cofinancing toward proactive and value-added
Goals. The strategy has five priorities: catalyzing investment, financing partnerships, improving client orientation and
strengthening inclusiveness, promoting regional cooperation selectivity, deepening and expanding the range of financing
and integration, managing the environment, and improving partnerships, ensuring relevance of products and services,
governance and preventing corruption. In many respects, they improving access to knowledge, and fostering innovation in
reflect themes already identified under the first medium-term ADB, and introducing new approaches and changes in the
strategy and carry forward its unfinished agenda. business model in a phased manner.
CATALYZING INVESTMENT STRENGTHENING INCLUSIVENESS

The sharp reduction in income poverty in the region in Although growth has helped reduce poverty, the benefits
recent years is primarily attributable to high growth. have not been evenly distributed. To strengthen inclusive-
However, there is a risk that growth may falter because ness, the second medium-term strategy underlines the
of the poor investment climate. The second medium-term importance of expanding productive employment in rural
strategy emphasizes the need to help developing member areas and generating higher productivity and wage incomes
countries improve the investment climate by supporting in the informal urban sector, combined with measures to
policy and institutional reforms, infrastructure develop- address the non-income dimensions of poverty.
ment, and the development of quality human resources ADB helps its developing member countries strengthen
through investments in education and health. ADB will also inclusiveness to ensure equitable and sustainable develop-
seek to use its wide range of products to leverage cofinanc- ment. Through its policy of inclusiveness, ADB encourages
ing with public and private sector partners. ADB’s revised greater equity in access to services, resources, and oppor-
strategic framework for private sector development (adopted tunities; the active participation of poor and marginalized
in February 2006) provides greater strategic clarity on private groups in social, economic, and political life; and house-
sector development at the corporate level. The new strategic hold-level security to cope with chronic or sudden risks,
framework aims to create an enabling environment for especially among poor and marginalized groups.
private sector development, mobilize additional finance, and The second medium-term strategy lays fresh emphasis
develop ways of financing public goods and services. ADB’s on investing in key social development interventions to
new financing partnership strategy (adopted in July 2006) promote gender equality by supporting education for
will also facilitate the implementation of this framework. This girls, better health for girls and women, and microfinance
projects that help women.
ADB’s revised strategic framework
for private sector development aims PROMOTING REGIONAL
to create an enabling environment COOPERATION AND INTEGRATION
for private sector development, Regional cooperation and integration strengthens the
mobilize additional finance, growth potential of individual countries, thereby strength-
ening their capacity to reduce poverty. Integration helps link
and develop ways of financing and better align growth in the smaller and less-developed
public goods and services countries with the faster-growing economies. Regional
23
cooperation and integration also serve as a platform for ADB’s regional cooperation and integration strategy,
regional initiatives to manage cross-border environmental adopted in July 2006, lays out in greater detail how ADB
and health risks. The second medium-term strategy main- plans to intensify its support in this area. It lists four ways
streams regional cooperation and integration as a means by which ADB can support and promote cooperation and
to reinforce country-level efforts to reduce poverty by integration in the Asia and Pacific region: provide financial
supporting cross-border infrastructure to strengthen con- resources for regional cooperation and integration projects
nectivity, promoting monetary and financial cooperation, and programs, provide related technical assistance, and
OVERVIEW
developing advisory capacity for trade and investment help countries mobilize funds and technical assistance
POLICY
cooperation and integration, and playing a larger role in from other sources; create, consolidate, and disseminate
providing regional public goods. knowledge and information on regional cooperation and
Gender and refine, and implement a detailed gender action plan.

The rapid gender assessments provide strong
Development Policy evidence that including comprehensive project gender
action plans in loans significantly improves the project’s
results for women, promotes gender equality, and
Two thirds of the world’s poor live in the Asia and Pacific
empowers women. Project gender action plans are
region. Most are women. In many societies, women
found to be an effective tool for gender mainstreaming
are denied access to basic services and essential assets
as they provide a road map for implementing
such as land, and are excluded from decision making.
the project’s gender design features. It is thus
Empowering women economically and socially is
recommended that they be applied more systematically
crucial to achieving ADB’s goal of poverty reduction.
to the design of ADB loans.
ADB adopted its policy on gender and development
The full reports of the implementation review of
in 1998. A review of the policy’s implementation
ADB’s policy on gender and development and the rapid
experience after 5 years was completed in 2006,
gender assessments are at www.adb.org/Gender/gad-
and included desk studies, consultations with and
review.asp.
technical inputs from ADB’s External Forum on Gender
and Development, and selective consultations with
Empowering women
developing member country officials and ADB staff.
Aside from assessing the gender quality of ADB loans
economically and socially is
at entry, the implementation review also involved rapid crucial to reducing poverty
gender assessments of the impacts of selected loans
with gender-responsive designs being implemented
in Bangladesh, Cambodia, Nepal, and Pakistan.
While the projects and programs were at various
stages of implementation, the gender assessments
were able to identify some with intermediate gender
impacts. The most impressive were found in projects
that included a detailed project gender action plan
linked to the project’s main components with clear
targets and indicators for monitoring. These were
mainly agriculture and rural development projects in
which ADB’s resident mission gender consultants had
worked closely with the executing agency to develop, ADB’s gender policy helps empower poor women
24
OVERVIEW
POLICY
ADB works to minimize the adverse impact of growth on the environment
integration; help countries and regional or subregional efficiency, develop the necessary institutional capacity in
bodies build institutional capacity to manage regional ADB to scale up as well as to monitor and evaluate ac-
cooperation and integration; and catalyze and coordinate tivities implemented under the initiative, and implement
regional cooperation and integration in Asia. immediate energy efficiency investment opportunities.
ADB’s carbon market initiative was adopted in
MANAGING THE ENVIRONMENT November 2006 to respond to issues of energy security
and global climate change. It aims to enhance the viability
Strong demographic pressures and high growth are both of alternative clean energy sources in developing countries
taking a heavy toll on rural and urban environments. Poor and help developed countries meet their greenhouse gas
people typically bear the greatest burden of pollution and emission commitments under the Kyoto Protocol.
environmental degradation. ADB will focus its assistance ADB has launched three interrelated programs to
on energy efficiency, urban environment improvement, fill existing market gaps to help project designers in
and sound natural resources management. As part of its developing member countries positively engage
this effort, ADB completed the first phase and began with the carbon market: the establishment of the Asia-
implementing the second phase of the energy efficiency Pacific Carbon Fund, a dedicated project cofinancing
initiative, a three-phase program launched in 2005 that facility; the provision of specialist technical support for
aims to expand ADB’s investments in clean energy projects. clean development mechanism developers and projects
More specifically, the second phase of the initiative will through a technical support facility; and the provision
aim to develop country-level and regional strategies and of marketing support services to the project developers
action plans to meet the targets already set, explore the to promote the sale of carbon credits through a credit
possibility of establishing an Asia-Pacific fund for energy marketing facility.
ADB will focus its assistance IMPROVING GOVERNANCE

AND PREVENTING CORRUPTION
on energy efficiency, urban
environment improvement, Good governance is critical for poverty reduction, as
weak governance hurts the poor disproportionately. ADB
and sound natural resources recognizes the essential role of governance in develop-
management ment. Governance is closely related to equitable and
25
inclusive growth. It is also important for private sector
efficiency. Under the second medium-term strategy, ADB
will undertake more focused governance activities and
renew its commitment to fighting corruption. Priority
activities will focus on public financial management,
including procurement, public expenditure management,
legal and regulatory work, and capacity development
OVERVIEW
in sectors and subsectors where ADB is active. ADB

POLICY
will work closely with other multilateral development

banks to develop a common framework for preventing
corruption. To enhance ADB support in these areas, the
implementation of ADB’s governance and anticorruption
policies was comprehensively reviewed. The second govern-
ance and anticorruption action plan was adopted in July
2006 based on the findings and conclusion of the review.
The plan is focused on improving risk assessments, ensuring
that risks are properly taken into account during project
design, increasing attention to project implementation, and Poor people typically bear the greatest burden of pollution and
improving staff skills in these areas. environmental degradation
ment with them. ADB’s current approach is based on its

MEETING DIVERSE CLIENT NEEDS strategic framework and its performance-based allocation
system, which tends to channel more funds to countries
As a result of rapid development in the region, ADB deals that perform well based on set criteria, including good
with a significantly more diverse set of countries today governance. However, this could mean that the countries
than it did a few decades ago. ADB’s support therefore needing the most assistance in improving governance
needs to be highly customized to the development needs and reducing poverty may get less help because of their
of each group of countries. In parallel to the overall in- poor performance.
stitutional strategy laid out in the second medium-term Effective assistance programs in weakly performing
strategy, ADB worked on distinct approaches to deal with countries must be based on country ownership and bol-
these different groups of countries. stered by systematic capacity development. ADB plans to
respond to the need for capacity building by mobilizing
WEAKLY PERFORMING COUNTRIES greater technical assistance and other grant financing
from its partners. ADB operations in weakly performing
Many of the region’s poor people live in developing countries will involve partnerships at all stages and will
member countries with weak governance, ineffective require ADB to pursue cofinancing opportunities. ADB
public administration, and civil unrest. In many of these continues to refine its approach to identifying and defining
countries, large-scale and violent civil conflict has impaired weak performance, rethink its operational planning, and
the government’s ability to guarantee people’s security. adapt its business processes and instruments to ensure
In such a setting, achieving the Millennium Development that its engagement is suitable and effective for individual
Goals is difficult. weakly performing countries and is consistent with the
The second medium-term strategy calls for a special Paris Declaration.
approach to dealing with weakly performing countries A background paper on the subject was prepared and
and warns of the dangers of a lack of, or limited, engage- discussed during the ADF IX midterm review exercise in
Frankfurt, Germany, in December 2006. A Board paper
ADB will undertake more focused on ADB’s Approach to Engaging with Weakly Performing
Countries: Achieving Development Effectiveness in Weakly
governance activities and renew its Performing Countries is expected to be submitted to the
commitment to fighting corruption Board of Directors in 2007.
26
ADF RECIPIENT COUNTRIES, THE greater effort to demonstrate a link between ADF opera-
ADF IX MIDTERM REVIEW tions and poverty reduction.
In this context, a midterm report prepared by ADB’s
On 4–5 December 2006 in Frankfurt, ADF deputies from Operations Evaluation Department was submitted to ADF
donor countries, representatives from ADF borrowing donors. To provide some indication of the results achieved
members, and observers from other international de- by ADF-funded public sector projects, their success rates
velopment institutions met with ADB Management and were compared with those of OCR-funded projects over
OVERVIEW
staff to review the progress of ADF IX implementation time. The analyses found that 70% of OCR projects were
POLICY
(2005–2008). Two vice presidents for operations headed rated successful compared with 58% of ADF-funded
the ADB team. The discussion emphasized the need for projects, although both OCR and ADF ratings converged
ADB to continue its focus on poverty reduction, with and improved markedly in recent years. This result should
Pathways Out automatically reduces poverty, and that the solution to

poverty in a poor region lies within that region.
of Poverty The study found that the bulk of the rural poor live in
less-poor regions, the location of projects in poor regions
A study completed in 2006 challenges some key does not guarantee significant poverty reduction, and
assumptions underlying ADB’s poverty targeting in rural solutions to persistent rural poverty in remote and poorly
areas. Given that poverty reduction is ADB’s overarching endowed regions often lie in economic growth outside
goal and that most of the poor still live in rural areas, the those regions.
study has far-reaching implications for future projects. The full report is at http://adb.org/Documents/SES/
A key recommendation of Pathways Out of Rural REG/Rural-Poverty-Targeting/ses-poverty-targeting.asp
Poverty and the Effectiveness of Poverty Targeting
is to tailor projects to address the specific causes of Supporting economic activity
poverty in a particular area instead of providing a
led by the nonpoor could
standard package of rural infrastructure and agricultural
development.
create jobs for the poor and
The study argues against a too-narrow focus on lift them out of poverty
poor households in poor areas as this can isolate the
poor from the more dynamic actors in society and
from the mainstream of economic growth. Supporting
economic activity led by the nonpoor could create jobs
for the poor and lift them out of poverty.
The study—conducted in the People’s Republic of
China, Malaysia, and Viet Nam—found that most of
those who had risen out of poverty had done so by
migrating to areas with more dynamic growth.
Poverty targeting has been widely used in
development projects to channel funds to poor regions
or deliver benefits to poor households and, in particular,
to upgrade rural infrastructure or support agricultural
production. The study challenges the assumptions that
this approach is based on—that poor people live in
poor regions, that public investment in poor regions Most of the region’s poor live in rural areas
27
ADF IX resource mobilization has was willing to discuss burden sharing to cover those
costs. Management will consider these issues, and a
been smooth so far because of Board paper further analyzing the financial implications
timely donor contributions of debt relief under various scenarios will be prepared.
ADB noted that ADF IX resource mobilization has been
not be surprising as ADF is allocated to poorer countries, smooth so far because of timely donor contributions.
which often face daunting development challenges mainly Participants endorsed the proposal to use the special
OVERVIEW
because of country-specific initial conditions and weaker drawing rights composite discount rate to calculate credits
POLICY
institutional capabilities. for new donor participants in the accelerated note encash-
Overall, ADF participants supported aligning the ADF ment program. They endorsed the proposal to reduce
grant framework with that of the International Development Nauru’s contribution to ADF. Participants supported an
Association 14 in 2007, and requested further review and ADF liquidity management policy and investment guide-
analysis of the financial implications of the change to be lines, which ADB will prepare by the end of 2007.
made before ADF X negotiations. Participants also suggested Participants agreed to hold an informal meeting on
that ADB participate in preparing a joint debt sustainability the sidelines of the ADB Annual Meeting in May 2007 to
assessment with the International Monetary Fund and the plan for ADF X negotiations. In particular, participants
World Bank, and prepare a separate assessment only in indicated that they hoped to see more progress in the
countries where these institutions are not preparing one. implementation of the ADB human resources strategy
ADB will prepare a Board paper on the proposed changes to and clearer reporting on ADF outcomes during ADF X
the ADF grant framework that will reflect the comments. negotiations. While noting some progress by ADB,
Participants voiced strong support for the revised they felt much more needed to be accomplished. Some
performance-based allocation policy and especially wel- participants raised concerns on the centralized admin-
comed the increased rigor and transparency in the system.
Participants appreciated the issues raised by ADB regarding
the new system’s outcomes such as the shift of resources
away from countries eligible only for ADF funding, the
volatility of allocations, and the challenge of ensuring
cross-country comparability of assessments conducted
by different country teams. Participants requested further
analysis of the issues raised and urged ADB to continue
the close coordination with the International Development
Association and the African Development Fund to address
performance-based allocation implementation issues. ADB
will present its analysis and recommendations on such
issues to the donors during ADF X negotiations.
Donors agreed that ADB should participate in debt
relief of heavily indebted poor countries if any ADF
recipient country becomes eligible, while reaffirming
the need to maintain the financial viability of the ADF
and not to impair support for ADF recipient countries.
Donors noted their willingness to discuss additional
funding for financing debt relief to heavily indebted
poor countries—consistent with the treatment of debt
relief by other multilateral development banks—during
the ADF X negotiations. They stressed that ADB should
maximize the use of its internal resources but that any
financing should not undermine the financial integrity of
ADB. The vice presidents noted that, in light of donors’ ADB encourages greater equity in access to services, resources, and
willingness to cover some of the cost of debt relief, ADB opportunities
28
istration of human resources and budget, emphasizing whether the current set of reforms under adoption and
insufficient control and flexibility over these functions by implementation was sufficient to meet the development
the vice presidents and decisions that are not seen as needs of middle-income countries. The event promoted an
transparent. Many participants called for the next staff active exchange of views and valuable feedback.
engagement survey to be brought forward and sug- The work culminated in the preparation of a paper,
gested an independent progress review of the human Enhancing ADB Support to Middle-Income Countries and
resources strategy. Participants welcomed the changes OCR Borrowers, outlining a coherent framework for ongo-
OVERVIEW
in staff evaluation embodied in the performance and ing and planned initiatives in this area. The paper, which the
POLICY
development plans. They urged greater effort to institute ADB Board of Directors discussed in August 2006, would
a merit-based system of staff selection and promotion serve as a basis to monitor progress over time. The initiatives
at all levels. Participants pressed for greater efforts to were grouped into three main areas: reducing the costs of
achieve gender balance in ADB also at the senior levels. doing business with ADB, expanding and enhancing ADB’s
ADB acknowledged the importance of these issues and operational instruments, and enhancing the quality of
agreed to consider ways to address them. ADB’s services. Many of these initiatives were developed as
part of the innovation and efficiency initiative.
MIDDLE-INCOME COUNTRIES
AND OCR BORROWERS
MODERNIZING THE
Providing effective assistance to middle-income countries
and borrowers from OCR is essential if ADB is to achieve its
OPERATIONAL MODEL
vision of an Asia and Pacific region free from poverty. OCR-
borrowing countries are home to two thirds of the world’s The second medium-term strategy proposes several adjust-
poor living below $1 dollar a day and account for the bulk ments in ADB’s operational model to better align it with
of ADB lending operations. In recent years up to 2004, the the five strategic priorities outlined under Strengthening
OCR public sector portfolio had experienced little change Strategic Priorities under the Second Medium-Term Strategy
in the annual numbers of new loans approved, increased (pages 23–26). The most important of these include
concentration in a limited number of countries and sectors, greater sector focus and selectivity; product and process
stable disbursements, and high cancellation rates. In 2006, innovations to enhance responsiveness, flexibility, and
disbursements and new approvals increased significantly. efficiency—most were developed as part of the innova-
To address these concerns, in June 2004, ADB began tion and efficiency initiative; and increased emphasis on
exploring how it could enhance its support to OCR bor- portfolio performance, development, and results as part of
rowers. The work focused on three mutually reinforcing ADB’s broader effort to manage for development results.
objectives: review the main development challenges facing
this diverse group of countries, articulate the countries’ GREATER SECTOR SELECTIVITY
demands and expectations of ADB’s role in helping them
meet these challenges, and discuss how ADB can improve ADB recognizes that it cannot be effective in all sectors
its services to OCR borrowers. and in all countries. Selectivity and focus are important
On 7 April 2006, ADB and the World Bank jointly organ- determinants of ADB’s ability to deliver quality develop-
ized a consultation meeting with senior officials from various ment results. The second medium-term strategy identifies
Asian middle-income countries at ADB headquarters. The core sectors where ADB will focus its operations and build
main objective of the consultation meeting was to assess a critical mass of expertise. These sectors have been iden-
tified based on their relevance to ADB’s broad strategic
priorities, clients’ demand for ADB assistance in these
Providing effective assistance sectors, and ADB’s track record of quality project delivery.
to middle-income countries and Group I covers core operational sectors where ADB will
build up a critical mass of expertise and be a leading pro-
borrowers from OCR is essential if vider of financing and expertise. These sectors include road
ADB is to achieve its vision of an Asia transport, energy, urban infrastructure, rural infrastructure,
and Pacific region free from poverty education, and financial services. Group II comprises sectors
29
for which building ADB capacity is not a priority but which the use of staff resources and skills through operational
are identified as important for ADB to be able to meet synergy and focus by regrouping countries with congruent
the diversity of needs across different countries. Group development challenges and priorities.
II includes agriculture and natural resources, railways,
health, trade (related to regional cooperation and integra- INNOVATION AND EFFICIENCY
tion), law and the judiciary, public finance, and economic INITIATIVE
management. Group III covers sectors with limited demand
OVERVIEW
and where ADB’s performance has sometimes been poor. Another important adjustment to the operational model is
POLICY
Operations in group-III sectors are to be gradually phased the introduction of new products and processes to enable
out, thereby freeing up resources for focusing operations ADB to more flexibly and innovatively meet the needs of
in group-I and -II sectors. Three of ADB’s most poorly developing member countries and improve real develop-
performing sectors (fisheries, livestock, and development ment outcomes on the ground. Greater efficiency in this
finance institutions) are in group III. Group III also includes regard is required to reduce transaction costs that develop-
some sectors where ADB has had success (airports, water ing member countries incur by doing business with ADB,
transport, and communications, for example), but demand including measures to accelerate loan processing. Many
from developing member countries for ADB financing in plans are already under way as part of the innovation and
these sectors is likely to be limited. efficiency initiative.
This selective approach has been working well so far. Launched in November 2003, the initiative focused on
For public sector loans and ADF grants, 73% of total the following priority areas: cost sharing and eligibility of
approvals in 2006 were for group I, 17% for group II, and expenditures, procurement and consulting services, busi-
4% for group III. ness processes, country strategies, safeguard policies, and
ADB realigned its regional departments to remove new financing instruments and modalities. These initiatives
structural constraints identified during the independent are now being implemented.
assessment of the 2002 reorganization. These adjustments
were aimed to ensure greater synergy between country Cost Sharing and Eligibility of Expenditures. On 25
and regional operations by regrouping countries more August 2005, the Board approved a new policy framework
in line with existing regional and subregional initiatives, on cost sharing, expenditure eligibility, and local cost
strengthen country focus as a result of more balanced financing for public sector assistance. In the past, cost-
workload across regional departments, and optimize sharing limits were fixed up-front and equally for all projects
based on the developing member country’s classification. The
new policy harmonizes ADB’s approaches and practices with
those of other development institutions, including the World
Bank. In March 2006, new staff instructions and operations
manual sections were issued to provide detailed guidance on
the implementation of the new policy.
Under the new policy, cost-sharing ceilings and financ-
ing parameters for each developing member country will
normally be established in conjunction with the country
partnership strategy. Occasionally, the ceilings and pa-
rameters may be reviewed and redefined on a stand-alone
basis. In both cases, they will be approved by Management
and submitted to the Board for information. Until a coun-
try cost-sharing ceiling under the new policy is agreed for
a specific developing member country, the old project
cost-sharing ceiling applicable to the member country will
constitute the country cost-sharing ceiling.
The Water Financing Program (2006–2010) seeks to make water a core Pilot Financing Instruments and Modalities. On 25
investment area for ADB August 2005, the Board approved the 3-year pilot-testing
30
of three new financing instruments and modalities: the sector financing facilities, refinancing facilities are to be
multitranche financing facility, the nonsovereign public sector processed in accordance with private sector operations
financing facility, and the refinancing facility. The innovation procedures.
and efficiency initiative pilot financing instruments and As a precondition for the pilot instruments, the in-
modalities do not replace ADB’s existing instruments, but dependent Risk Management Unit was created in 2005
rather expand the range of alternatives available in ADB’s to evaluate nonsovereign finance transactions. The unit
portfolio of development finance solutions. They are intended became fully operational in 2006 with respect to credit
OVERVIEW
to provide ADB clients and operational teams with additional risk assessment on individual transactions of nonsovereign
POLICY
and flexible alternatives to help finance individual projects operations, provision and reserve measurement, credit
and investment programs. portfolio management on nonsovereign operations, and
Multitranche Financing Facility. The multitranche financ- market and treasury risk management. The unit reviewed
ing facility allows ADB to offer financial resources to clients two policies in cooperation with other departments: the
for an agreed investment program or a set of interrelated loss provisioning policy for nonsovereign operations (jointly
investments. These resources may be provided in a series of with the Controller’s Department) and ADB’s investment
separate financing tranches over a fixed period. Of the vari- strategy and authority (with the Treasury Department).
ous pilot financing modalities, the multitranche financing Completing the risk framework for nonsovereign opera-
facility is the most in demand among clients. From August tions will continue in 2007.
2005 to December 2006, 10 multitranche financing facility ADB also reviewed and revised its major financial and
proposals were submitted to and approved by the Board. liquidity policies in 2006 to update and align the financial
Financing made available through this facility amounted to policies and practices with ADB’s business activities and
$5.3 billion. As of 31 December 2006, two loans amount- initiatives and to harmonize with best practices. ADB for-
ing to $360 million had been declared effective. malized a comprehensive asset and liability management
Nonsovereign Public Sector Financing Facility. The policy framework for managing the financial assets and
nonsovereign public sector financing facility allows ADB liability and updated the liquidity policy and investment
to provide loans and guarantees directly to selected authority and guidelines.
nonsovereign public sector entities, without need for a Procurement and Consulting Services. On 1 January
central government or sovereign guarantee. In the first 2005, streamlined procedures became effective for the
year since the facility was adopted as a pilot instrument, procurement of goods and services and the engagement
the Private Sector Operations Department has processed of consultants. In February 2006, the Board approved
two nonsovereign public sector financing facilities: the additional amendments to ADB procurement and
National Thermal Power Corporation Capacity Expansion consulting services policies, which further streamlined
Financing Facility in India and the South Sumatra to West the procedures, improved project implementation per-
Java Phase II Gas Pipeline Project in Indonesia. In both formance, and responded to borrowers’ demands for
cases, the clients were state-owned enterprises. Staff more flexibility and modernization in procurement and
instructions and guidance notes for nonsovereign public consultant engagement. The revised policies became
sector financing facilities were issued on 15 December effective on 1 April 2006.
2006. They reiterate the policy directive that these Country Strategies and Business Processes. In August
facilities should be processed in accordance with private 2006, Management approved new business processes
sector operations procedures. to improve the preparation of country strategies and
Refinancing Facility. Using the refinancing facility, programs as well as project processing of sovereign
ADB can restructure the existing debt of public, private,
or public–private clients who are burdened by a legacy of The innovation and efficiency
inappropriate or onerous financing plans. No refinanc-
ing transaction has yet been processed and no concept
initiative pilot financing
paper for a refinancing transaction has been cleared. instruments and modalities
There is potential demand for this type of facility, but expand the range of alternatives
two factors continue to affect its uptake: skills mix and
ability to restructure financing plans, and tight condi-
available in ADB’s portfolio of
tions and criteria for its use. As with nonsovereign public development finance solutions
31
operations. The improvements will make ADB program- ment results agenda at the country and institutional levels
ming and processing more responsive, relevant, and results and through global partnerships. This is in line with its revised
oriented by ensuring strategic clarity at the country level action plan for managing for development results for 2006–
and selectivity in operations pipelines, results orientation 2008, approved by Management in August 2006.
and operational quality at entry, and procedural efficiency ADB approved 13 technical assistance projects to help
and improvement. build capacity in managing for development results in its
The Strategy and Policy Department, in close consulta- developing member countries. Some of the projects are
OVERVIEW
tion with operations and non-operations departments, funded through the agenda’s cooperation fund. A com-
POLICY
prepared the operations manual section on country munity of practice on managing for development results
partnership strategy and the detailed country partnership was launched in March 2006 to help build capacity in
strategy guidelines, which Management finalized and developing member countries.
approved in February 2007. The department and the At the institutional level, ADB has adopted a results-
Office of the Secretary prepared templates on the country based country strategy and program for 11 countries.
partnership strategy, partnership strategy midterm review Strategic planning processes, including the work program
report, and country operations business plan. The entire and budget framework, the annual report on the poverty
set of documents was discussed at a workshop conducted reduction strategy, and other policy documents, are now
on 6–7 November 2006 with staff concerned, including more results oriented. ADB has introduced a curriculum for
those from resident missions. managing for development results to promote staff learning
Safeguard Policy Update. ADB’s review of its safeguard and development at all levels. Vice presidents now convene
policies continued. These policies—on the environment regular development effectiveness meetings with depart-
(2002), indigenous peoples (1998), and involuntary ment heads to focus on performance and outcomes.
resettlement (1995)—aim to avoid, minimize, mitigate, ADB has been active in the global partnership in manag-
and/or compensate for any adverse environmental impacts, ing for development results. ADB still chairs the Multilateral
social costs to project-affected people, or marginaliza- Development Bank Working Group on Managing for
tion of vulnerable groups that might result from project Development Results and co-chairs the Organisation for
interventions supported by ADB. The ongoing review Economic Co-operation and Development–Development
takes into account two special evaluation studies by the Assistance Committee Joint Venture on Managing
Operations Evaluation Department on the environment for Development Results. ADB conceived and initiated the
and involuntary resettlement. ADB also held consultations
with representatives of nongovernment, civil society, and
indigenous peoples’ organizations. The review is expected
to be completed in 2008.
PORTFOLIO PERFORMANCE
AND DEVELOPMENT RESULTS
Another adjustment in the operational model under the
second medium-term strategy relates to the enhanced
emphasis on project implementation and portfolio
performance in the framework of ADB’s institutional
results agenda. In assessing the effectiveness of develop-
ment efforts, attention is increasingly focused on country
outcomes, and particularly progress toward the Millennium
Development Goals. Consequently, the development
effectiveness of the strategy will depend on mainstream-
ing the results agenda in ADB.
Managing for Development Results. ADB continues to ADB’s safeguard policies help avoid marginalization of vulnerable
make progress in implementing its managing for develop- groups
32
first Multilateral Development Bank Common Performance Improving Portfolio Performance and Results. The
Assessment System Report and worked with many development Operations Evaluation Department presented its Annual
partners in sharing knowledge and experience in this area. Report on Loan and Technical Assistance Portfolio
Performance for 2005 in September 2006. The main
Strengthening Project Performance Management recommendation arising from the analyses is to see that
Systems. ADB’s enhanced project performance the action plan to improve loan and technical assistance
management system helps manage projects for greater portfolio performance is fully implemented. The action
OVERVIEW
development results. It outlines a systematic way of plan was prepared by Management in 2005 in response
POLICY
designing and implementing projects. The design and to the previous year’s report. Seven action plan items were
monitoring framework, the key element of the project flagged for importance and are being acted upon. These
performance management system, is a results-based tool are a closer alignment of staff and budget allocations with
for analyzing, conceptualizing, designing, implementing, specified output deliverables in the work program and
monitoring, and evaluating projects. It structures the budget framework for 2006–2008, provision of career
project-planning process and helps communicate incentives and development for staff involved in project
essential information about the project to stakeholders implementation and portfolio management, improvement
in an efficient, easy-to-read format. The design and in the strategic application of technical assistance
monitoring framework can be applied to the analysis resources, more accurate costing of actions to complete
and planning of country programs, and sector strategies, project preparatory work, revision of project and technical
programs, and projects. assistance performance report formats to improve efficacy
Operations manual sections on project performance and efficiency, review of the private sector development
management systems were issued in January 2006 strategy and private sector operations, and full functioning
and Guidelines on Preparing a Design and Monitoring of the Risk Management Unit.
Framework was published in March. These guidelines
focus on applying the design and monitoring framework Assessing Project Quality. The Operations Evaluation
at the program, project, and technical assistance levels. Department analyzed successful projects in the group-I
The guidelines are being translated into Afghanistan’s sectors identified in the second medium-term strategy as
Dari language, Mandarin (Chinese), Russian, and Viet- those where ADB’s operations are expected to grow—
namese. Capacity building for officials of developing irrigation and water management, power, water supply and
member countries, executing agencies, and ADB staff sanitation, education, and roads. Project success rates in
focused on the participatory process in designing a these sectors have ranged from 55% to 90%. The analyses
project, stakeholder analysis, problem and objectives found that common factors across sectors contribute to
analyses, results chains, and analysis of alternatives. good project performance: strong ownership by govern-
The results of the participatory process are summarized ments and executing agencies; continuity of ADB’s involve-
and presented in a results matrix format in the design ment; an ability to learn lessons and incorporate them into
and monitoring framework. Workshops and training project design; careful project preparation; strong executing
programs were conducted for ADB staff and for of- agencies that operate in the right policy environment, are
ficials in 13 developing member countries: Fiji Islands, autonomous, and have the necessary human resources,
Indonesia, Kazakhstan, Kyrgyz Republic, Lao People’s technical skills, and access to adequate financing for project
Democratic Republic, Mongolia, Nepal, Papua New implementation and for operation and maintenance;
Guinea, Philippines, Sri Lanka, Tajikistan, Uzbekistan, and an ability to identify and solve problems during project
Viet Nam. In all, 325 officials from developing member implementation; a clear unmet demand for the goods and
countries and executing agencies, 56 consultants, and services provided by the project; use of a participatory ap-
376 ADB staff were trained. proach and involvement of stakeholders and beneficiaries
in all project phases; successful institutional impacts; and
ADB’s enhanced project good performance by consultants and contractors.
performance management
Improving Country Strategies. Experience in 2005
system helps manage projects for through early 2006 suggests that the influence of country
greater development results assistance program evaluations in formulating new country
33
OVERVIEW
POLICY
ADB’s enhanced project performance management system helps manage projects for greater development results
partnership strategies has been mainstreamed. The Board society as this enhances ownership and often helps
does not normally discuss a country strategy and program achieve better development results.
until after the Development Effectiveness Committee has • ADB should intensify its coordination with develop-
considered the corresponding country assistance program ment partners and stakeholders.
evaluation and informed the full Board of the committee’s • Governance, including the need to control corruption,
views based on the findings. should be explicitly addressed in country strategies
All country strategies and programs discussed by the and programs, and not just as a crosscutting theme.
Board in 2005 and 2006 were reviewed to assess whether • The understanding of corruption and the risks that it
the respective country assistance program evaluations had has for ADB operations remains superficial in country
influenced them. In most instances, the corresponding strategies and programs.
country assistance program evaluation recommendations • Failure of project designs to recognize and address
were used as inputs. institutional weaknesses in implementing agencies
The lessons from the review of the country strategies early on leads to weak project performance.
and programs discussed by the Board in 2005 fall broadly
into 10 areas: Promoting Quality at Entry. An interdepartmental panel
• Future assistance should be prioritized based on selec- reported on quality at entry of ADB projects and country
tivity and focus, with successful ADB performance in a strategies approved during 2004–2005. For projects, the
sector as one key criterion. panel said that improvements to overall project quality at
• Country strategies and programs should be results entry will occur if particular attention is paid to implemen-
based—the lack of monitorable indicators made it tation arrangements, fiduciary matters, risk, and policy
difficult to evaluate past strategies and programs. and institutional aspects. Regarding country strategies,
• Success has been greatest when ADB maintains a it noted that thematic country diagnostics are usually
long-term involvement in a sector and combines pro- comprehensive but that they tend to be descriptive rather
grams of capacity building with investment support. than analytical. Sector diagnostics tend to be inadequate
• Projects and programs using relatively simple designs or missing. A common problem is that diagnostic work
that are rooted in local conditions are more likely to is insufficiently distilled to identify a set of constraints on
succeed than complex interventions. development, which should provide the focus of ADB’s
• Steps must be taken to strengthen the impact of the operations.
technical assistance used to support policy reform, In 2007, the Operations Evaluation Department will
capacity building, and institutional strengthening. conduct a special evaluation study on the effectiveness of
• ADB should deepen its relationships with broader ADB’s loan-processing system by documenting the expe-
34
rience and insights of ADB mission leaders and officials as poverty reduction, governance, gender, HIV/AIDS,
of developing member countries. The study will identify natural disasters, and others. The 34 funds include the
issues that impinge on the effectiveness of ADB’s loan- Asian tsunami and Pakistan earthquake special funds,
processing system, evaluate the system’s effectiveness in established in 2005 as Special Funds with ADB as the
screening projects and facilitating incorporation of lessons initial sole contributor but with the possibility for other
into new operations, and recommend improvements. It donors to join. Subsequently, external donors joined these
may also explain why the average number of months from funds, agreeing to ADB’s administration of their respective
OVERVIEW
POLICY
fact finding to Board approval has remained constant, at contributions.
about 24 months, despite the introduction of revised busi- Four single-donor trust funds were established in
ness processes in 2001 (Table 1). 2006. The Republic of Korea contributed $20 million
to the e-Asia and Knowledge Partnership Fund. The
ADB–Australia South Asia Development Partnership Facility
COOPERATION FUNDS was set up with an initial Australian contribution of $8.5
million equivalent. Luxembourg made an initial commit-
ADB continued to manage several Special Funds in 2006: ment of $1.8 million to the Financial Sector Development
Partnership Fund. Denmark contributed $3.6 million
the Asian Development Fund; Technical Assistance Special
equivalent to the Second Cooperation Fund for Renewable
Fund; Japan Special Fund, including the Asian Currency Crisis
Energy and Energy Efficiency in Rural Areas.
Support Facility; ADB Institute Special Fund; Asian Tsunami
In addition, ADB approved the Water Financing
Fund; and Pakistan Earthquake Fund.
Partnership Facility, which will accept resources from
In addition, ADB also managed and administered
bilateral, multilateral, and corporate sources to boost
the Japan Scholarship Program, Japan Fund for Poverty
ADB’s water financing program in its developing mem-
Reduction, Japan Fund for Information and Communication
ber countries. Such resources may be provided through
Technology, and channel financing arrangements of a
project-specific loans, grants, guarantees, or other forms
number of cooperation funds provided by bilateral donors
of assistance. In response to the need for significant
to support technical assistance and soft components of
investments needed in the water sector and recommenda-
loans. The cooperation funds supplement ADB’s regular
tions made by the independent panel that reviewed the
resources and help it respond more effectively to the needs
implementation of ADB’s water policy, ADB announced,
of its developing member countries.
at the fourth World Water Forum in March 2006, the
ADB administered 34 funds financed by its member
Water Financing Program 2006–2010. The program seeks
countries, of which 20 were single-donor funds and 14
to make water a core investment area for ADB. Under the
multi-donor thematic funds. The thematic funds sup-
program, ADB proposes to double its water investments
plement ADB funding in priority thematic areas, such
to over $2 billion annually, combined with reforms and
capacity building.
TABLE 1 Average Processing Time Some existing funds were replenished during the
Average Number of Months from Fact Finding year. Spain contributed $30.0 million equivalent to the
to Board Approval multi-donor Asia Pacific Carbon Fund. Finland provided
Sovereign Private Sector the equivalent of $5.5 million to the Pakistan Earthquake
Year Loan Projects Operations a Grants
Fund and Norway contributed to the fund through a
1998 21 9 –
swap-to-development modality by converting $20.0 mil-
1999 26 14 –
2000 26 9 – lion equivalent in outstanding loan repayment obligations
2001 24 10 – into a grant to be administered by ADB. Ireland joined
2002 25 9 – ADB and the Governance Cooperation Fund in 2006,
2003 27 6 –
contributing $1.0 million equivalent to the fund. It also
2004 23 6 –
2005 23 12 8 contributed $1.0 million to the Gender and Development
2006 22 8 12 Cooperation Fund. The Canadian Cooperation Fund on
– = data not applicable. Climate Change was replenished with the equivalent of
a Concept clearance date is used where the fact-finding date is not available.
about $200,000.
35
36
FINANCING
OPERATIONS
OPERATIONS
FINANCING
FINANCIAL RESOURCES
Authorized and subscribed capital stock amounted to $53.2 billion as of
31 December 2006. ADB raised funds totaling $5.6 billion, of which $1.0 bil-
lion was raised through a global public offering as of 31 December 2006.
Gross income, which includes revenue and net realized gains, amounted
to $1.9 billion, $1.2 billion of which was generated from the loan portfolio,
$573.1 million from the investment portfolio, and $136.4 million from other
sources, of which $105.0 million came from equity investment operations.
ADB’s Special Funds are the Asian Development Fund (ADF) with 2006
committed resources amounting to $1.3 billion, Technical Assistance
Special Fund with $89.4 million, Japan Special Fund with $35.2 million,
ADB Institute Special Fund with $11.3 million, Asian Tsunami Fund with
$15.3 million, and Pakistan Earthquake Fund with $28.5 million.
FUNDING
About 73% of cumulative lending is from ordinary capital resources (OCR).
Funding from the OCR comes from three distinct sources: private placements
and capital markets in the form of borrowing; paid-in capital provided by
shareholders; and accumulated retained income (reserves), which provides
a buffer for risks.
The main instruments for providing help to ADB’s developing member
countries are policy dialogues, loans, equity investments, guarantees, grants,
and technical assistance.
ADB offers a range of modalities and terms for loans aimed at improving
performance.
Loans are also provided from Special Funds. The ADF offers loans on con-
cessional terms to members with low per capita gross national product and
weak debt-repayment capacity. It is the only multilateral development bank
concessional fund dedicated exclusively to economic and social development
in the Asia and Pacific region. The ADF is financed by periodic voluntary
contributions from donors. The current and eighth replenishment of the ADF
(ADF IX) program is $7 billion for 1 January 2005–31 December 2008. ADF IX
grants are helping countries reduce the debt burden of development finance,
37
make the transition from conflict to peace and stability, and LOANS
combat HIV/AIDS and other infectious diseases.
ADB also manages and administers Special Funds (see Sovereign lending amounted to $6.8 billion in
pages 29–30) and grants provided by bilateral and multilateral 71 loans (59 projects and programs), compris-
donors to support technical assistance and soft components ing 26 loans from ADB’s OCR for $5.5 billion, and
of loans. In recent years, thematic trust funds were estab- 45 loans from the ADF for $1.3 billion. These amounts in-
lished focusing on gender and development, governance, clude six OCR loans for $930.8 million and three ADF loans
poverty reduction, water, energy, and the environment. for $30.0 million from the multitranche financing facili-
Technical assistance funded through grants or loans ties. Overall, sovereign lending increased by 30% over the
helps maximize ADB’s development impact. Technical $5.2 billion approved in 2005 (an increase of 43% for OCR
assistance grants are used for preparing projects, and for lending and decrease of 6% for ADF lending). Two nons-
OPERATIONS
FINANCING
supporting advisory and regional activities in areas such overeign public sector loans to state-owned enterprises for
as law and policy reform, strengthening fiscal policies $150.0 million were approved. Seven nonsovereign loans
and procedures, good governance, capacity building, and (six projects) to the private sector for $425.0 million were
natural resources management. also approved—17% less than the $513.0 million that
ADB has a triple-A credit rating and actively mobilizes went to six loans (six projects) in 2005.
financial resources through its cofinancing operations, Of the 67 projects and programs approved, 18 (27%)
tapping official, commercial, and export credit sources. were targeted interventions, and 49 (73%) were general
Assistance to its developing member countries creates interventions. Sustainable economic growth was the most
an enabling environment for private sector development. prevalent theme and was associated with 57 projects. Finance
ADB also directly finances private sector projects to assist received the largest share of lending (24%) (Table 3).
commercial investors and lenders. The 52 projects approved will result in total invest-ments
of about $17.5 billion: $4.3 billion (25%) will be financed
OVERVIEW OF OPERATIONS by ADB; $4.9 billion (28%) by governments and borrowers;
$8.2 billion (47%) by cofinanciers, equity sponsors, and local
ADB approved 80 loans (67 projects) for $7.4 billion, financial institutions; and $22.3 million (0.1%) by project
14 equity investments for $260.5 million, 3 guarantees for beneficiaries. Four projects, amounting to $314.2 million,
$124.8 million, 5 syndication operations for $530.0 million, will be financed under sector lending, compared with eight
43 grant projects for $538.4 million, 260 technical assistance projects amounting to $1.0 billion in 2005.
projects for $241.6 million, and 8 multitranche financing The 15 policy-based programs approved in 2006 were
facilities for $3.8 billion. valued at $3.2 billion, compared with 10 programs for
TABLE 2 Top Recipients by Approval, 2006

($ million)
Loans
Recipient Sovereign Nonsovereign TA Grants Total
China, People’s Rep. of 1,522.00 50.00 13.58 1,585.58
Pakistan 1,535.80 7.60 34.50 1,577.90
India 1,260.00 275.00 30.57 5.00 1,570.57
Indonesia 709.80 75.00 7.05 36.56 828.41
Philippines 650.00 4.65 4.40 659.05
Viet Nam 308.19 16.52 32.49 357.21
Bangladesh 255.10 5.71 56.70 317.51
Afghanistan 113.20 40.00 7.95 151.20 312.35
Nepal 86.00 6.38 84.90 177.28
Kazakhstan 125.00 0.60 125.60
Regional 102.24 25.00 127.24
Other DMCs 381.20 10.00 38.77 107.65 537.62
Total 6,821.29 575.00 241.63 538.40 8,176.32
DMC = developing member country, TA = technical assistance.
Note: Totals may not add up because of rounding.
38
$1.1 billion in 2005. Four program loans approved were COFINANCING AND
coupled with an investment project loan. GUARANTEE OPERATIONS
Total direct value-added cofinancing amounted to
EQUITY OPERATIONS
$1.5 billion for 103 projects, of which $1.4 billion was for
Fourteen equity investments for $260.5 million were ap- 29 investment projects and $92.7 million was for 74 tech-
proved, compared with eight for $196.5 million in 2005. nical assistance projects. Direct value-added cofinancing
TABLE 3 Operations by Sector, 2005 –2006

Loans Grants
OPERATIONS
2005 2006 2005 2006
FINANCING
Sector $ million % $ million % $ million % $ million %
Agriculture and Natural Resources 301.21 5 807.17 11 67.28 6 133.60 25
Education 58.06 1 250.90 3 34.57 3 46.66 9
Energy 1,073.80 19 1,369.50 19 28.50 2 3.00 1
Finance 261.22 5 1,787.00 24 2.00 0.2 72.05 13
Health, Nutrition, and Social Protection 57.90 1 – – 92.18 8 71.99 13
Industry and Trade 25.00 0.4 10.00 0.1 2.70 0.2 0.50 0.1
Law, Economic Management, and Public Policy 778.00 14 220.00 3 8.30 1 8.30 2
Transport and Communications 1,722.80 30 1,433.20 19 70.80 6 131.40 24
Water Supply, Sanitation, and Waste Management 618.00 11 638.82 9 28.00 2 1.00 0.2
Multisector 864.62 15 879.70 12 815.60 71 69.90 13
Total 5,760.61 100 7,396.29 100 1,149.93 100 538.40 100
– = no data available.
TABLE 4a Direct Value-Added Cofinancing Arrangements, 2003–2006

($ million)
2003 2004 2005 2006
Sovereign Nonsovereign Total Sovereign Nonsovereign Total Sovereign Nonsovereign Total Sovereign Nonsovereign Total
Investment Projects
Guarantees 65.0 105.0 170.0 0.0 10.0 10.0 18.4 50.0 68.4 0.0 124.8 124.8
Syndications 0.0 70.0 70.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 530.0 530.0
Grants 404.0 0.0 404.0 68.2 0.0 68.2 223.4 0.0 223.4 166.1 0.0 166.1
Official Loans 77.0 0.0 77.0 142.0 0.0 142.0 30.5 0.0 30.5 569.2 0.0 569.2
Subtotal 546.0 175.0 721.0 210.2 10.0 220.2 272.3 50.0 322.3 735.3 654.8 1,390.1
Technical Assistance Projects
Grants 67.9 0.0 67.9 75.2 0.0 75.2 78.9 0.0 78.9 92.7 0.0 92.7
Total DVA Cofinancing 613.9 175.0 788.9 285.4 10.0 295.4 351.2 50.0 401.2 828.1 654.8 1,482.9
DVA = direct value added.
TABLE 4b Direct Value-Added Cofinancing Arrangements, 2003–2006

(number of projects a)
2003 2004 2005 2006
Sovereign Nonsovereign Total Sovereign Nonsovereign Total Sovereign Nonsovereign Total Sovereign Nonsovereign Total
Investment Projects
Guarantees 1 1 2 0 1 1 1 1 2 0 3 3
Syndications 0 1 1 0 0 0 0 0 0 0 5 5
Grants 2 0 2 6 0 6 12 0 12 12 0 12
Official Loans 3 0 3 7 0 7 3 0 3 11 0 11
Subtotal 6 2 8 13 1 14 15 1 16 22 7 29
Technical Assistance Projects
Grants 87 0 87 96 0 96 95 0 95 74 0 74
Total 93 2 95 109 1 110 110 1 111 96 7 103
a A project with more than one source of cofinancing is counted as one.
39
for investment projects comprised $124.8 million for
Table 5 Top Recipients of Grants by Approval, a 2006 3 guarantee operations, $530.0 million for 5 syndication
Country $ million operations, $166.1 million for 12 grant operations, and
Afghanistan 151 $569.2 million for 11 official loan cofinancing operations
Nepal 85
(Tables 4a and 4b). Nondirect value-added cofinancing
Bangladesh 57
Indonesia 37 amounted to about $4.5 billion in the form of paral-
Pakistan 34 lel grants and loans for 20 ADB-financed projects and
Viet Nam 32
Solomon Islands 25
programs.
Lao PDR 22
Papua New Guinea
Sri Lanka
22
17
GRANTS
OPERATIONS
Other DMCs 31
FINANCING
Regional 25
ADB approved 43 grant projects for $538.4 million in
Total 538
2006 (Table 5). Of this amount, $274.9 million was
DMC = developing member country. funded from the ADF IX; $28.5 million from the Asian
a Includes cofinanced grants.
Tsunami Fund and Pakistan Earthquake Fund; and $235.0
million from external sources with full or partial adminis-
Table 6 Top Recipients of Technical Assistance tration by ADB, comprising $67.9 million from the Japan
by Approval, 2006 Fund for Poverty Reduction, $1.0 million from the Japan
($ million)
Fund for Information and Communication Technology,
Country TASF JSF Others Total %
and $166.1 million from other bilateral and multilateral
India 6.00 2.30 22.27 30.57 12.7
sources (Australia, Canada, Finland, Republic of Korea,
Viet Nam 4.03 4.00 8.49 16.52 6.8
China, People’s the Netherlands, New Zealand, Norway, Sweden,
Rep. of 12.66 – 0.93 13.58 5.6 Switzerland, and United Kingdom).
Afghanistan 6.95 – 1.00 7.95 3.3
Of the 43 grant projects, sustainable economic growth
Pakistan 2.20 5.40 – 7.60 3.1
Indonesia 5.27 1.48 0.30 7.05 2.9 was the most prevalent theme and was associated with
Nepal 1.30 2.45 2.63 6.38 2.6 25 projects. Agriculture and natural resources received the
Cambodia 1.80 3.15 1.30 6.25 2.6
largest share among the sectors (25%) (Table 3).
Bangladesh 2.00 3.45 0.26 5.71 2.4
Philippines 2.55 1.60 0.50 4.65 1.9 In addition, parallel grants of $111.9 million were pro-
Other DMCs 12.27 13.73 7.12 33.12 13.7 vided from multilateral and bilateral institutions without ADB
Regional 35.27 19.03 47.95 102.24 42.3
administration services for five ADB-financed projects.
Total 92.30 56.59 92.74 241.63 100.0
TECHNICAL ASSISTANCE
DMC = developing member country, JSF = Japan Special Fund, TASF = Technical
Assistance Special Fund
ADB approved a total of 260 technical assistance projects

for $241.6 million, including 234 new projects and 26
Table 7 Resource Transfers to
Developing Member Countries supplementary projects. This amount is 21.7% more than
($ million) the $198.5 million for the 299 projects approved in 2005.
2005 2006 Of the 260 technical assistance projects, 73 were for
OCR project preparation, 98 were advisory, and 89 were for
Loan Disbursements 3,498 4,420 regional assistance. Of the total amount approved, $92.3
Principal Repayments a (3,491) (1,736)
million was financed from the Technical Assistance Special
Payments of Interest/Charges (1,041) (1,185)
Net Equity Investment 47 (14) Fund, $56.6 million from the Japan Special Fund, and
Net (987) 1,486 the remaining $92.7 million from other multilateral and
ADF
bilateral sources (Table 6).
Loan Disbursements 1,247 1,338
Principal Repayments (434) (468)
Payments of Interest/Charges (201) (204) MULTITRANCHE FINANCING
Net 612 666
FACILITIES
Total (375) 2,152
( ) = resource inflow from developing member countries, ADF = Asian Development
Fund, OCR = ordinary capital resources.
Eight multitranche financing facilities totaling $3.8 billion
a Includes prepayments of $460.3 million ($597.4 million in 2005). were approved in 2006, compared with two for $1.5
40
billion in 2005 (see The Record). These were one facility 7 private sector loans of $425.0 million, of which $75.0
($430.0 million) for Bangladesh, three ($1.1 billion) for million has been reinsured, 2 public sector loans of $150.0
India, three ($2.2 billion) for Pakistan, and one ($50.0 million, two partial credit guarantees of $109.8 million, a
million) for the People’s Republic of China (PRC). political risk guarantee of $15.0 million, and $455.0 million
in commercial loans under ADB’s B-loan program (Table 9), of
RESOURCE TRANSFERS which $105.0 million is for B-loans for private sector projects
and $350.0 million is for B-loans for public sector projects.
The year showed significant improvement in disburse- As of 31 December 2006, the overall exposure of
ment, compared with the past 10 years. In discussions nonsovereign operations amounted to about $2.6 billion,
with borrowers, countries highlighted the need for ADB consisting of $915 million in equity investments, loans of
to expand support for poverty reduction programs. The $1.3 billion, and guarantees of $401 million. ADB’s non-
OPERATIONS
FINANCING
Board discussed a range of new financial mechanisms and sovereign exposure is largest in the infrastructure sector
business procedure reforms under the innovation and ef- with a total of $1.2 billion in exposure, followed by ex-
ficiency initiative to respond to client demands. posure to the financial sector of $822 million, investment
Compared with the net inflow of $0.4 billion to ADB funds and capital markets of $446 million, and exposure
from its developing member countries in 2005, there was to other sectors at $110 million.
a net transfer of resources of $2.2 billion from ADB to its The exposure of nonsovereign operations is the larg-
developing member countries. There was a net transfer est in the PRC (21%), followed by Indonesia (14%), India
of $1.5 billion from ADB to OCR borrowers/investors. The (13%), and Kazakhstan (9%). Regional projects account
four countries with largest net resource transfers were the for roughly 10% of the total.
PRC, Pakistan, Philippines, and India.
Loan disbursements totaled $5.7 billion compared
Table 8 Cumulative Nonsovereign Operations
with $4.7 billion in 2005. Of the total, OCR disbursements
by Top Countries, 1983–2006 a
were $4.4 billion or 77% and ADF disbursements were ($ million)
$1.3 billion or 23% (Table 7). India 1,026
Loan service payments reached $3.6 billion in 2006, China, People’s Rep. of 766
compared with $5.2 billion in 2005. The decrease was Indonesia 729
Pakistan 505
mainly because of the bullet repayment of the financial
Philippines 448
sector program loan to the Republic of Korea of $1.7 bil- Thailand 319
lion in 2005. Viet Nam 255
Bangladesh 242
Sri Lanka 232
NONSOVEREIGN OPERATIONS Kazakhstan 225
Other DMCs 330
ADB approved a total of 21 financial markets and infra- Regional 830
structure nonsovereign projects providing $1.4 billion Total 5,906
in assistance in 2006 (Table 9). The interventions are DMC = developing member country.
a Net of full cancellations before effectivity.
composed of 14 equity investments of $260.5 million,
Table 9 Nonsovereign Operations, 2003–2006 a

($ million)
2003 2004 2005 2006
Loan 167 93 513 575
Equity 36 164 197 261
Partial Credit Guarantee 170 – 18 110
Political Risk Guarantee – 10 50 15
B-loan 170 – – 455
Total Approvals 543 267 778 1,415
Total Project Cost 2,300 2,228 8,776 8,586
– = nil, B-loan = an ADB loan funded by third parties without recourse to ADB (see Glossary, page 122).
a Net of full cancellations before effectivity.
41
42
OPERATIONS
OVERVIEW
OPERATIONS
OVERVIEW
For the second year running, ADB scaled up its assistance to its developing
member countries. It also continued to increase its development effective-
ness through internal reform initiatives and external efforts to harmonize
strategies, programs, and procedures with other multilateral development
banks and bilateral donors. ADB’s operations reflected the priorities of
its second medium-term strategy: catalyzing investment, strengthening
inclusiveness, promoting regional cooperation and integration, managing
the environment, and improving governance and preventing corruption.
CATALYZING INVESTMENT
Financing infrastructure development in the Asia and Pacific region poses
a challenge that can only be met by involving the private sector. ADB
provides funds, makes equity investments, and catalyzes financing from
other sources to support infrastructure development.
ADB’s nonsovereign operations supported the infrastructure, capital
market, and banking sectors, among others. ADB approved 21 nonsover-
eign projects (projects without sovereign guarantee), totaling $1.4 billion
in assistance, an 81.9% increase over the $777.9 million approved in
2005. The projects were in the form of traditional direct lending amount-
ing to $575.0 million, equity investments of $260.5 million, a political
risk guarantee of $15.0 million, two partial credit guarantees amounting
to $109.8 million, and commercial cofinancing through B-loans totaling
$455.0 million.
For the first time, ADB supported private sector projects in the Central
Asian republics of Azerbaijan and Kazakhstan. It also approved its first
nonsovereign public sector loans: $75 million to increase power genera-
tion capacity in India and $75 million to transport gas from South Sumatra
to West Java in Indonesia. For the India loan, ADB leveraged three times
its own loan ($75 million from ADB’s own resources and $225 million
to be underwritten and syndicated from international commercial banks
through the B-loan), showing ADB’s commitment to crowd in private lend-
ers. The loan will help fund two projects in Chhattisgarh and Bihar states,
43
which will add 4,480 megawatts of electricity to India’s ADB focuses particularly
national grid in 2006–2009. The Bihar project mobilized
an additional $125 million from commercial banks as well
on investments to support
as Kreditanstalt für Wiederaufbau (KfW) and the Islamic rural development
Development Bank.
ADB’s private sector portfolio has improved signifi-
cantly. As of the end of the year, the impaired portfolio STRENGTHENING INCLUSIVENESS
had been reduced to 4% of the total private sector out-
standing portfolio, compared with 9% in 2005. With a The second medium-term strategy emphasizes strength-
fully functioning independent risk management group ening inclusive patterns of growth and social development
rigorously screening nonsovereign projects at point of to enable disadvantaged groups to benefit equitably from
entry, the quality of the private sector portfolio is expected the opportunities that development provides. The strategy
to improve further. Impaired projects are being monitored focuses particularly on investments to support rural devel-
closely by a work-out team and continue to be sold or opment—as the vast majority of the poor remain in rural
disposed of. areas—as well as investments in key social development
OPERATIONS
OVERVIEW
A $400 million program loan to Pakistan will establish interventions.

a comprehensive framework to address key policy, ADB invested substantially in projects that sup-
regulatory, and institutional constraints on private sector ported rural road construction (India, Papua New Guinea,
investment in the power, transport, and water sectors and People’s Republic of China [PRC]); rural water supply
eventually help mobilize private sector resources for them. systems (Sri Lanka); irrigation (Pakistan); rural finance
ADB focused on encouraging public–private part- (India); and rural electrification (PRC). About a quarter
nerships and private investment through projects in of approved loans cited inclusive social development as a
railways (Cambodia, $42.0 million); infrastructure theme. ADB strengthened inclusiveness through projects
reform (Indonesia, $426.5 million); forest plantation to develop education (Bangladesh, Indonesia, Lao People’s
development (Lao People’s Democratic Republic, $10.0 Democratic Republic [Lao PDR], Mongolia, Nepal, and Viet
million); financial market regulation and intermediation Nam); improve the environment (India); reduce poverty
(Philippines, $200.0 million); and power sector develop- (Viet Nam); and support sustainable livelihoods through
ment (Philippines, $450.0 million), among others. livestock development (Lao PDR).
ADB invested substantially in rural finance projects in India
44
plan presents a detailed forward-looking framework for
cooperation among the eight participating countries of the
region and includes a pipeline of 42 projects in 2006–2008
with anticipated financing of more than $2.3 billion from
the program’s six multilateral partners.
ADB endorsed a new regional cooperation strategy and
program update and subsequently approved 2 loans and
11 technical assistance projects for the Greater Mekong
Subregion (GMS). ADB supported studies and cooperation
programs in transport, trade facilitation, energy, agricul-
ture, and environmental management.
In East Asia, ADB is facilitating a number of coopera-
tion initiatives between the PRC and Mongolia.
In the Pacific, ADB continued to help eight of its
members establish the multi-country Pacific Aviation
OPERATIONS
OVERVIEW
Safety Office. The project is financed through a public
sector regional loan to an intergovernmental organization,
supported by guarantees of its member countries.
In the Pacific, ADB recognizes that with the endorse-
ment of the Pacific Plan by 16 Forum island countries
Safe water, sanitation, and responsible environmental management are in October 2005, the time is ripe to promote regional
all ADB priorities cooperation. The Pacific Plan is an evolving document
which presents initiatives supporting the achievement
REGIONAL COOPERATION of four strategic goals—economic growth, sustainable
development, good governance, and security. ADB has
AND INTEGRATION
directly supported implementation of the Pacific Plan in
In cooperation with governments in the region, ADB drew 2006 through approval of two regional technical assis-
up its first regional cooperation strategy and program for tance projects to strengthen regional cooperation among
South Asia (2006–2008). The ADB-supported South Asia Pacific developing member countries, and governance and
Subregional Economic Cooperation Program took a major financial management in these countries.
step in developing four investment projects for informa- In 2006, 42.3% of ADB’s technical assistance—$102.2
tion and communications technology, tourism, transport, million—supported regional initiatives.
and trade. ADB also supported studies and cooperation
activities of the South Asian Association for Regional MANAGING THE ENVIRONMENT
Cooperation and the Bay of Bengal Initiative for Multi-
Sectoral Technical and Economic Cooperation in transport To ensure compliance with its safeguard policies, ADB re-
and energy. viewed all projects before Board consideration. In a review
The Central Asia Regional Economic Cooperation proof 81 projects and equity investments approved in 2006,
gram took a major step forward in October 2006 when ADB found that 55 projects required the preparation of
ministers endorsed its comprehensive action plan. The environmental assessment reports and management
system frameworks, 20 required the preparation of a plan
ADB’s private sector portfolio has or framework or specific actions for indigenous peoples,
and 35 required resettlement plans and frameworks—to
improved significantly. As of the end address potential adverse impacts on the environment and
of the year, the impaired portfolio affected people. ADB issued revised operational procedures
had been reduced to 4% of the for each of the three safeguard policy areas, taking into
account the new disclosure requirements of the recently
total private sector outstanding approved public communications policy. ADB organized
portfolio, compared with 9% in 2005 orientation and training for its own staff and developing
45
member country officials on safeguard requirements. It States Agency for International Development on the
also enhanced knowledge capture and dissemination premise that sustainable development depends on
through regular updates of its websites on the environ- good governance, supported pilot activities, including
ment, involuntary resettlement and indigenous peoples, regional training and consultation to develop national
and safeguards. environmental compliance and enforcement indicators
ADB continued to enhance legal frameworks and ca- in the Philippines, Thailand, and Viet Nam. During the
pacity development related to involuntary resettlement in network’s first annual forum held in Ha Noi, Viet Nam,
Bangladesh, Cambodia, Nepal, and Sri Lanka. As a continu- participants discussed general principles for compliance
ing commitment to global dialogue on indigenous peoples’ and enforcement tailored to Asia, and lessons from
issues, ADB participated in the Fifth Session of the United country case studies.
Nations Permanent Forum on Indigenous Issues, which high- The Clean Air Initiative for Asian Cities progressed well,
lighted the need to redefine the Millennium Development with rapid expansion of country-level air quality analysis
Goals to include indigenous peoples’ concerns. and investment planning. The Better Air Quality Conference
Of the 67 projects approved in 2006 (excluding equity held in Yogyakarta, Indonesia, highlighted the success of
investments), 17 (25%) had environmental sustainability as a Asian countries, cities, and communities in reducing air
OPERATIONS
OVERVIEW
theme—up from 10 (16%) in 2005. Total ADB assistance for pollution, and efforts needed to improve air quality.
the 17 projects amounted to $1.6 billion (22% of total ADB The Poverty and Environment Program continued to
funds), twice the $794 million (14%) committed in 2005. accelerate learning on the link between environment
Nearly half of ADB funds (44%) approved aimed to and poverty, and effective approaches for poverty reduc-
improve urban environments by providing or rehabilitating tion. ADB’s Poverty and Environment Net website—a
water supply, sanitation, and waste management systems. repository of successful poverty and environment strat-
More than 30% of ADB funds supported cleaner produc- egies, programs, and projects—has become a much
tion processes and controlled industrial pollution. Other sought-after knowledge management tool inside and
projects helped conserve natural resources. outside the region.
Several approved technical assistance projects aimed
to strengthen capacity, start policy reforms, make project IMPROVING GOVERNANCE
implementation more effective, and help achieve the
AND PREVENTING CORRUPTION
Millennium Development Goals, among others. For
example, ADB will help the Government of the PRC estab- ADB is committed to working with its client countries to
lish the Clean Development Mechanism Fund by designing improve governance and reduce vulnerability to corrup-
a governance structure and building its initial operational tion, which is key to reducing poverty.
capacity. ADB is financing a study to help Bangladesh, Eighteen of 67 approved public and private sector loan
Bhutan, India, and Nepal improve and develop policy and projects and 85 technical assistance projects had improving
regulations for managing hazardous wastes. governance as a theme. Assistance to strengthen gover-
ADB is working in partnership with other institutions. nance in developing member countries totaled $2.7 billion,
The Global Environment Facility provided $9 million in including technical assistance to improve public auditing
cofinancing for a coastal resources management project capacity in Pacific island member countries and to help
in the Philippines and a commitment of $20 million in develop the Afghanistan National Development Strategy
grant support for the first phase of the ADB-led Central (including support to develop a national anticorruption
Asian Countries Initiative for Land Management. strategy); preparation of a governance reform and decen-
The Asian Environmental Compliance and Enforce- tralization cluster program in Nepal; and a program cluster
ment Network, established by ADB and the United to support the Development Policy Support Program of
Indonesia, which, among other things, will strengthen the
public financial management and anticorruption framework
Nearly half of technical assistance and improve the delivery of public services.
aimed to provide or rehabilitate ADB’s five regional departments have begun to imple-
ment the second governance and anticorruption action plan.
water supply, sanitation, and Preparations have begun to apply this action plan to five new
waste management systems country partnership strategies scheduled for completion in
46
OPERATIONS
OVERVIEW
Involving stakeholders strengthens their support for, and reduces challenges to, ADB-assisted activities
2007. Initial assessments of governance, institutional, and and improve their procurement capacity. These measures
corruption risks have been completed for projects and pro- include executing agency capacity assessment, training to
grams with a high perceived exposure to governance issues. develop a project procurement plan, and improvement of
One such assessment, for example, was for a rural coopera- executing agency staff’s skills in project implementation
tive credit restructuring and development program in India. through seminars and customized training programs. An
ADB approved the revised Guidelines on the Use of important role of executing agency capacity assessment is
Consultants and Procurement Guidelines in 2006. They to evaluate the project risks that may hinder the ability of
are now substantially harmonized with those of the Inter- an executing agency to carry out effective, efficient, and
American Development Bank and the World Bank, and transparent procurement. Assessments will feed into plans
streamline ADB’s procurement processes, enhance their to develop institutional capacity to mitigate such risks, and
transparency, and allow greater flexibility in procurement a procurement plan commensurate with the capacity of
for experienced executing agencies. The guidelines include a each executing agency. ADB introduced capacity assess-
provision for declaring misprocurement when agreed proce- ment with executing agencies and procurement plans,
dures are not followed, and contain harmonized definitions and will expand activities in 2007.
of corrupt, fraudulent, coercive, and collusive practices. ADB’s NGO Center approved small grants amounting
Ensuring adequate project implementation capacity to $150,000 to nonprofit, nongovernment groups in
is the responsibility of ADB’s borrowers and requires a Mongolia, Pakistan, and the Philippines to pilot-test and
commitment to provide resources, develop skills, and put demonstrate the relevance and impact of nongovernment
in place the necessary systems and procedures. ADB has mechanisms and approaches to improving transparency
introduced a number of measures for borrowers to assess and accountability and fighting corruption.
47
CENTRAL AND
WEST ASIA
Afghanistan, Armenia, Azerbaijan, Kazakhstan,
CENTRAL AND
WEST ASIA
Kyrgyz Republic, Pakistan, Tajikistan,
Turkmenistan, Uzbekistan
ADB’s Central and West Asia Department was established on 1 May 2006.
It includes members from the Caucasus, Central Asia, and two countries
from the previous South Asia Department.
These countries lie at the heart of an increasingly integrated Eurasian
continent. Surrounded by opportunity, the area is growing rapidly. Its
countries are also examining how best to work together to turn potential
into shared and sustainable economic prosperity.
The area’s strong economic growth comes amid efforts to develop the
private sector, further the transition toward a market system, and deal
with conflict. A large percentage of the population in many countries also
continues to live on less than $2 a day.
ADB assistance supports actions to encourage productive economic ac-
tivity, provide and promote public goods and services, and facilitate private
sector development. ADB finance covers financial market development,
energy security, connectivity, urban services improvement, and agriculture
productivity.
ADB approved 23 loans for Central and West Asia totaling $1.9 billion,
an increase of 57% from the annual average of $1.2 billion during
2001–2005. Total lending to the subregion comprised $1.6 billion from
ADB’s ordinary capital resources (OCR), and $274.8 million in Asian
Development Fund (ADF) loans (Table 12). ADF grants in 2006 totaled
$106.5 million. In addition, 43 technical assistance grants totaling more
than $33.0 million and 7 projects financed from the Japan Fund for
Poverty Reduction totaling $49.5 million were approved in 2006.
Of the assistance, 80% went to Pakistan, for which 13 loans total-
ing $1.5 billion were approved. Two public sector investments and one
49
nonsovereign loan totaling $153.2 million were approved
for Afghanistan. Two loans totaling $125.0 million were TOP 5 ACHIEVEMENTS IN 2006
approved for Kazakhstan, two loans totaling $27.0 mil-
lion for Tajikistan, two loans totaling $60.2 million for • Established the Central and West Asia Department and
developed strategic directions
Uzbekistan, and one loan amounting to $10.0 million for
Azerbaijan. • Continued to increase the department’s contract awards and
disbursements
Lending to Pakistan included seven blended loans (OCR
and ADF) under multitranche financing facilities. These • Focused policy-based lending in Pakistan on encouraging private
sector participation in infrastructure development and improving
transactions accounted for $758.8 million in lending in access to finance
2006 and involved total anticipated lending of $3.0 billion
• Approved a regional power interconnection project that will bring
in the coming years. Cumulative lending for the region
power from Tajikistan to Afghanistan
amounted to $20.1 billion (Table 11).
• Adopted the Central Asia Regional Economic Cooperation
In line with the priorities set out in the second medium-
Comprehensive Action Plan
term strategy and the regional cooperation and integration
strategy, the Central and West Asia Department continued
its active support for the Central Asia Regional Economic
Cooperation Program, an alliance of eight countries and linking the hydropower stations on Tajikistan’s Vakhsh
six multilateral institutions that promotes cooperation and River to Kunduz and, ultimately, to Kabul, Afghanistan.
integration in transport, energy, and trade. The program The total net economic benefits from the project are es-
CENTRAL AND
WEST ASIA
adopted a comprehensive action plan, marking a transition timated at $114.0 million, split fairly evenly between the
to a results-oriented program with tangible targets and two countries.
outputs, based on strong country ownership, pragmatic
approaches, and mutual accountability. Portfolio Management
One regional project was approved during the year. The Contract awards topped $1.2 billion and disbursements
$56.5 million Regional Power Transmission Interconnection reached $1.0 billion in 2006, both up substantially from
Project will tap Tajikistan’s power surplus to meet serious 2005. Program loan tranche releases to Pakistan in the
shortfalls in neighboring Afghanistan. The project will last quarter contributed to this performance. Pakistan ac-
construct a 220-kilovolt double-circuit transmission line counts for 85% of the department’s total contract awards
and 79% of disbursements (Table 10). The department
Contract awards topped $1.2 bil- took a number of initiatives to improve project supervision
lion and disbursements reached and portfolio management, including a special review of
the portfolio, establishment of a project administration
$1.0 billion in 2006, both up unit network, and the initiation of regular portfolio review
substantially from 2005 meetings at the division and department levels.
TABLE 10 Central and West Asia: Portfolio Performance Indicators for Sovereign Lending, 2005–2006
No. off Contract Awards/Commitments Disbursements Loans at Risk
Ongoing Loans 2006 2005 2006 2005 2006 2005
Country (as of Dec 2006) ($ million) ($ million) ($ million) ($ million) (%) (%)
Afghanistan 11 44.35 97.73 67.15 23.91 9.1 –

Azerbaijan 5 20.74 1.38 4.08 0.50 40.0 40.0
Kazakhstan 4 – – 2.42 26.06 – 25.0
Kyrgyz Republic 10 36.88 20.05 42.82 30.40 10.0 18.2
Pakistan 80 1,048.41 734.14 790.19 563.51 12.5 5.7
Tajikistan 12 28.28 43.73 35.17 26.07 8.3 –
Uzbekistan 17 49.26 90.03 59.31 91.69 11.8 –
Total 139 1,227.91 987.05 1,001.14 762.14 12.2 7.1
– = nil.
50
COUNTRY HIGHLIGHTS TABLE 11 Central and West Asia: Cumulative
Lending and Disbursements by Country
as of the end of 2006
AFGHANISTAN ($ million) a
Country Lending Disbursements
Despite impressive economic growth, Afghanistan remains
Afghanistan 892.28 367.26
one of the poorest countries in the Asia and Pacific region. Azerbaijan 114.00 8.58
Ongoing security problems and capacity constraints impede Kazakhstan 626.60 560.00
progress, including the implementation of donor-supported Kyrgyz Republic 588.50 495.23
Pakistan 16,571.04 11,320.88
projects and programs. Tajikistan 300.84 134.75
ADB assistance has focused on building capacity, helping Uzbekistan 974.90 433.61
establish policy and institutional frameworks, and rehabilitat- Total 20,068.16 13,320.31
ing essential infrastructure. Donor coordination is critical, a Loan component of regional projects distributed to the countries.
and ADB actively contributes in this area as a member of

the Afghanistan Compact Joint Coordination Monitoring FIGURE 1 Central and West Asia:
ADB Lending by Country, 2005–2006
Board as well as to the management committees for both (Sovereign and Nonsovereign)
the Afghanistan Reconstruction Trust Fund and the Counter ($ million)
Narcotics Trust Fund. ADB is also the lead donor agency for Afghanistan
121.80
153.20
the energy and road sectors.
CENTRAL AND
52.00
WEST ASIA
ADB provided $213.2 million in ADF loans and grants, Azerbaijan
10.00
and $8.0 million in technical assistance grants. The ap- Kazakhstan
0.00
125.00
proval of two Japan Fund for Poverty Reduction grants
15.50
totaling $38.0 million complemented ADB’s overall pro- Kyrgyz Republic
0.00
gram of assistance. 776.30
Pakistan
Public sector approvals included a $118.2 million project 1,535.80
29.50
($78.2 million ADF loan and $40.0 million ADF grant) in Tajikistan
27.00
support of the North–South Corridor, a road project that 55.00
Uzbekistan
will rehabilitate 140.3 km of the Mazar-e-Sharif–Dara-i-Suf 60.20
0 400 800 1,200 1,600
road and 98.9 km of the Bamian–Yakawlang road. A $20.0
2005 2006
million Japan Fund for Poverty Reduction project will support
the construction of a link road to Bamiyan.
FIGURE 2 Central and West Asia:
ADB Disbursements by Country, 2005–2006
(Sovereign and Nonsovereign)
($ million)
58.91
Afghanistan
80.61
0.50
Azerbaijan
8.08
26.06
Kazakhstan
127.42
30.40
Kyrgyz Republic
42.82
563.51
Pakistan
790.19
26.07
Tajikistan
35.17
91.69
Uzbekistan
59.31
0 200 400 600 800
2005 2006
The second medium-term strategy identifies infrastructure as a core

operational sector
51
A $60 million ADF grant for the Private Sector and Financial risk guarantee product. As a result of additional financ-
Market Development Program will encourage private sector ing, Roshan was able to provide service to more than
activity and improve access to financial services. 1 million Afghan subscribers.
A $35 million ADF loan will support the Afghanistan Since resuming operations in Afghanistan in 2002, ADB
component of the Regional Power Transmission Inter- has approved more than $1 billion in assistance to the coun-
connection Project to connect the Afghanistan and Tajikistan try. This has been complemented by $126.2 million in donor
power grids. cofinancing, largely through the Japan Fund for Poverty
A $40 million nonsovereign loan and guarantee of Reduction. ADB has pledged up to $200.0 million a year over
up to $15 million will help accelerate the expansion of 2006–2010.
Afghanistan’s leading cellular network. The investment Because of lack of capacity and procurement delays,
builds upon ADB’s 2004 investment of $35 million in overall implementation progress has been slower than
Roshan, a telecommunications company owned by the
Aga Khan Fund for Economic Development (see story, Since resuming operations in
page 55). Roshan’s cellular network was the first private Afghanistan in 2002, ADB has
sector project to attract international commercial bank
financing to Afghanistan for some 30 years, made approved more than $1 billion
possible through ADB’s B-loan program and political in assistance to the country
CENTRAL AND
WEST ASIA
TABLE 12 Central and West Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
Country OCR ADF Total Project Cost a Approved
SOVEREIGN
Afghanistan
North–South Corridor – 78.20 78.20 140.90 26 Sep
Regional Power Transmission Interconnection (Afghanistan) – 35.00 35.00 55.50 19 Dec
Pakistan
Mega City Development – 10.00 10.00 13.33 2 Feb
Rural Enterprise Modernization – 5.00 5.00 6.50 7 Feb
National Highway Development Sector Investment Program (Subproject 1) 180.00 – 180.00 220.30 15 Feb
Federally Administered Tribal Areas Rural Development – 42.00 42.00 60.40 25 Apr
Private Participation in Infrastructure Program (Subprogram 1) 400.00 – 400.00 400.00 31 Oct
Renewable Energy Development Sector Investment Program (Subproject 1) 105.00 10.00 115.00 145.00 13 Dec
Power Transmission Enhancement Investment Program (Subproject 1) 226.00 10.00 236.00 294.50 13 Dec
Improving Access to Financial Services (Phase 1) Program 300.00 20.00 320.00 320.00 14 Dec
Punjab Irrigated Agriculture Investment Program 217.80 10.00 227.80 281.38 18 Dec
Tajikistan
Sustainable Cotton Subsector – 5.50 5.50 15.29 3 Nov
Regional Power Transmission Interconnection (Tajikistan) – 21.50 21.50 54.00 19 Dec
Uzbekistan
Land Improvement 32.60 27.60 60.20 76.18 24 Jul
Subtotal 1,461.40 274.80 1,736.20 2,083.28
NONSOVEREIGN
Afghanistan
Roshan Phase II Expansion 40.00 – 40.00 210.20 29 Jun
Azerbaijan
Private Banks and Leasing Companies in Azerbaijan 10.00 – 10.00 15.00 30 Mar
Kazakhstan
JSC Alliance Bank 50.00 – 50.00 50.00 15 Jun
Bank TuranAlem JSC 75.00 – 75.00 75.00 15 Jun
Subtotal 175.00 – 175.00 350.20
Total 1,636.40 274.80 1,911.20 2,433.48
– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.
a Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and subborrowers; cofinancing from official, export credit, and commercial sources;
equity sponsors; and local participating private companies and financial institutions.
52
targeted. Some 228 km (51%) of the 450 km of the AZERBAIJAN
northern link road (from Pul-e-Khumri to Andkhoy)
have been completed. A project to rehabilitate 241 km In March 2006, ADB approved its first nonsovereign loan
of 220-kilovolt double-circuit transmission lines will be and equity investment to Azerbaijan, totaling $15 million.
completed by mid-2007. ADB has helped develop policy This will strengthen the emerging private banking sector.
and institutional reforms related to fiscal management, The financial assistance will improve regulation, growth
restructuring of state-owned enterprises, public admin- of the small- and micro-loan portfolio, and support the
istration, and the country’s statistical system, as well implementation of professional banking practices by three
as road sector and energy master plans. ADB, together local private banks—Micro Finance Bank of Azerbaijan,
with other donors, will help the Government prepare a Azerigazbank, and Bank Respublika. ADB approved $8
national anticorruption strategy. million to help facilitate trade. ADB has three ongoing loan
projects in Azerbaijan totaling $104 million. The disburse-
ARMENIA ment of these loans has been slow on account of lack of
familiarity with ADB procedures. ADB also supported the
Armenia joined ADB in September 2005. On 1 August Government’s campaign against avian influenza.
2006, the Board of Directors endorsed an economic Rich oil and gas resources are expected to continue to be major
report and interim operational strategy for 2006–2009. sources of export revenue. The Government significantly expanded
ADB’s strategic priorities are to accelerate rural and urban its investment program to develop infrastructure and the non-oil
development, promote the private sector, and enhance economy. ADB’s strategy in the country focuses on promoting
CENTRAL AND
WEST ASIA
regional cooperation. Continued progress in macro- sustainable and inclusive growth through rehabilitation of roads,
economic, fiscal, and debt management reaffirmed the and improvement of water and sanitation, good governance,
Government’s commitment to reform. ADB is developing private sector development, and regional cooperation.
an assistance program for 2007–2009 in consultation with
the Government. KAZAKHSTAN
ADB will focus initially on rehabilitating rural roads, water
supply, and social infrastructure. ADB approved two private sector loans totaling $125 mil-
A rural roads rehabilitation project preparatory technical lion. In line with Government priorities, ADB’s assistance
assistance for $150,000 was approved. focuses on private sector activity.
Azerbaijan significantly increased investment in infrastructure and the non-oil economy
53
KYRGYZ REPUBLIC
As of 31 December, the country had received 25 loans
and 4 grants (including 3 from the Japan Fund for Poverty
Reduction) for project financing, totaling $607 million
equivalent. All loans were provided on concessional terms
from the ADF. ADB also provided 65 technical assistance
projects amounting to about $38 million. The transport and
communications sector received the largest share of ADB
assistance, and focused on rehabilitating key sections of the
national road network and strengthening sector manage-
ment and finance.
The Kyrgyz Republic was selected as a pilot country
during the February 2003 Rome conference on har-
monization. Much progress has been made among key
donors in coordinating and harmonizing procurement
procedures, financial management and monitoring, and
sharing project implementation units. ADB has conducted
country portfolio reviews jointly with other international
CENTRAL AND
WEST ASIA
ADB is helping rehabilitate the regional road network in the Kyrgyz

financial institutions since 2003. A results-based joint
Republic country support strategy for 2007–2010 is being prepared
with the United Kingdom’s Department for International
ADB approved two 5-year loans to two commercial Development, Swiss Agency for Development Cooperation,
banks—$75 million to Bank TuranAlem JSC and $50 million United Nations, and World Bank.
to JSC Alliance Bank—representing ADB’s first nonsover-
eign financing in Kazakhstan. They will help the two banks PAKISTAN
expand their small and medium-sized enterprise portfolio
by providing debt funding and bridging an unwarranted ADB’s large and diverse portfolio consists of 80 loans
maturity gap, allowing the banks to match their assets and totaling $6.4 billion. ADB approved $1.5 billion in 2006.
liabilities more closely. Six loans were approved under the multitranche financing
A partial credit guarantee was provided to JSC Alliance facility that provides long-term support in transport and
Bank for its first diversified payment rights securitization communications, energy security, and irrigation services.
program with a total issue amount of $200 million. This In addition, ADB also provided $180 million to modern-
will help develop Kazakhstan’s securitization market. The ize the national highway network under a $770 million
project is the first diversified payment rights securitization multitranche financing facility approved in 2005. A re-
of a medium-sized private sector bank in Kazakhstan. newable energy sector development program, through a
It is expected to help similar banks access this type of $510 million multitranche financing facility, will fund new
funding. investments in small to medium-sized hydropower units
Ongoing public sector technical assistance and invest- that will help realize Pakistan’s significant hydropower
ments support the Government as it strives to achieve potential. A power transmission enhancement project
environmentally sustainable development, wider access under an $800 million multitranche financing facility
to drinking water, improved water supply and sanitation aims to ensure reliable and high-quality power supply
services, long-term benefits from higher farm income, and to an ever-increasing number of industrial, commercial,
improved irrigation networks and water service institutions. and retail consumers. The Punjab Irrigated Agriculture
Investment Program, representing the first of a series of
ADB approved two private investments under a multitranche financing facility of
$900 million, will rehabilitate the canal system reduc-
sector loans totaling $125 ing water losses and improving irrigation efficiency and
million in Kazakhstan agricultural productivity.
54
Supporting Economic for the program and its political risk cover have
encouraged commercial lenders to join the program,
Reconstruction: a first for Afghanistan in several years. ADB’s presence
Afghanistan’s Cellular encourages international aid agencies and commercial

lenders to support private sector development.
Phone Net work This assistance will help the Roshan Cellular Phone
Network, Afghanistan’s leading network provider,
After more than 25 years of conflict, Afghanistan was upgrade its systems and services and expand its
left with no national fixed-line telecommunications coverage.
service, a barely functioning postal service, and poor The cellular network project will use global systems
roads. Cellular networks, while growing fast, are basic, for mobile communication, cellular, satellite, and radio
limited, and require over $300 million in investments to wave transmission technologies. The new funding
extend their coverage beyond major cities. will help Roshan—a private limited liability company
In mountainous and landlocked Afghanistan, providing cellular telephone, international gateway,
cellular telephony is the only way to provide reliable, and Internet services—expand coverage countrywide,
countrywide communications. National demand pilot a mobile banking service, and deploy public call
CENTRAL AND
for this service will continue to increase rapidly but offices that provide access to communications for
WEST ASIA
limited funds constrain its development. less-affluent users.
ADB is helping improve telecommunications
through a $120 million assistance package that ADB’s presence encourages
includes separate $35 million and $40 million
nonsovereign loans, a political risk guarantee of up
international aid agencies and
to $15 million, and a B-loan of up to $30 million that commercial lenders to support
leverages funds from other sources. ADB funding private sector development
Roshan—Afghanistan’s leading network provider—uses public call offices to give the less affluent access to telephones
55
CENTRAL AND
WEST ASIA
ADB supports a program to establish policy, legal, and regulatory frameworks and support reforms in Pakistan
A $400 million program loan was approved to promote

private sector participation in infrastructure development.
A flagship program in Pakistan’s
The program will establish policy, legal, and regulatory financial sector, approved
frameworks and support reforms in priority sectors such for $320 million, focuses on
as power, transport (highways), and water to make them
attractive for financing by the private sector.
improving access to microfinance
A flagship program in the financial sector, approved for and other financial services
$320 million, focuses on improving access to microfinance
and other financial services. Interconnection Project for Afghanistan and Tajikistan
ADB also approved $7.6 million in grant financing for (including a $35.0 million loan to Afghanistan). The loan
technical assistance projects, including $2.0 million to help will finance the construction of a 220-kilovolt double-
the Government develop a national strategy to support its circuit transmission line from the Sangtuda Hydropower
Access to Financial Services Program. Plant to Shekabandar, and rehabilitation of the Khatlon
Power System. ADB is cooperating with other develop-
TAJIKISTAN ment partners to support a larger regional proposal for the
Central Asia–South Asia Transmission Line Project, which
ADB approved a $5.5 million loan and a $6.5 million ADF will export power from Tajikistan to Pakistan.
grant for a sustainable cotton development project to help
restore the cotton subsector, the country’s main source of TURKMENISTAN
farm income, agriculture exports, and rural employment.
The project will target four major cotton-growing districts ADB maintains a liaison office in Ashgabat to facilitate
and use a two-tiered strategy to resolve cotton farm debt dialogue with the Government. No active operations took
on a pilot basis and to develop the cotton market. ADB place in Turkmenistan in 2006. Turkmenistan is involved
also supports the Government’s farm debt resolution in two regional technical assistance programs cover-
strategy. ing the sharing of environmental information and land
ADB assistance to the power sector continued, with a management. Consultations continued on the proposed
$21.5 million loan for the Regional Power Transmission Turkmenistan–Afghanistan–Pakistan pipeline.
56
UZBEKISTAN will improve basic education for children with special
needs to increase their learning, social confidence, and
ADB’s $60.2 million Land Improvement Project, approved social integration.
in July 2006, will address the degradation of about 162,000 ADB also approved a 5-year country strategy and
hectares of irrigated land in nine districts in Bukhara, program focusing on four strategic priorities: accelerat-
Kashkadarya, and Navoi provinces, where crop yields have ing rural development, building human capital through
declined by 30% since 1991, directly affecting about 1.4 basic education and early childhood development,
million people. The project will improve land reclamation promoting regional trade and transport, and enhancing
practices and establish three farms to demonstrate innova- private sector activities.
tive farm technologies and enhanced agronomic practices.
It will also rehabilitate drainage and irrigation systems to ADB approved a 5-year country
improve water control and efficiency. A technical assistance
grant for $800,000, cofinanced by the Poverty Reduction strategy and program focusing on
Cooperation Fund of the Government of the United accelerating rural development,
Kingdom, accompanies the loan and will help strengthen building human capital, promoting
institutions and prepare legislation.
In March 2006, ADB approved a $1.5 million Japan regional trade and transport, and
Fund for Poverty Reduction grant to pilot a project that enhancing private sector activities
CENTRAL AND
WEST ASIA
ADB continues to assist the power sector in Tajikistan
57
58
EAST ASIA
People’s Republic of China, Mongolia
In East Asia, the thematic priorities of ADB’s program are to diversify opera-
tions to promote inclusiveness and improve the environment; meet client
needs and expectations for quality knowledge products through new ideas
and approaches and their better dissemination; actively participate in the
Central Asia Regional Economic Cooperation and Greater Mekong Subregion
(GMS) programs, and expand cooperation to regional public goods and other
new initiatives in line with ADB’s new regional cooperation and integration
strategy; and explore opportunities to catalyze funds and add value through
private–public partnership operations and private sector transactions. ADB
aims to continue the diversification of its People’s Republic of China (PRC)
program beyond transport to agriculture and natural resources manage-
EAST ASIA
ment, urban development and environmental management, and energy
conservation. ADB’s Mongolia program is exploring assistance to address
urgent problems in natural resources management, and promote private sec-
tor development including through expanding or replicating successful pilot
projects financed by the Japan Fund for Poverty Reduction and other bilateral
sources. Regional cooperation with neighboring countries—particularly the
PRC—is receiving greater attention to leverage the significant investments
Mongolia is making to develop its regional road network.
A multitranche financing facility is being pilot-tested in the PRC energy
sector, and new approaches for energy conservation are being devel-
oped. ADB’s public sector operations are exploring avenues to promote
private–public partnerships as in the Nanjing Qinhuai River Environmental
Improvement Project in the PRC and introduce new approaches and in-
novative instruments.
ADB approved 13 sovereign loans amounting to $1.6 billion for the PRC
and Mongolia (Table 13, Figure 3). The program included a multitranche
financing facility project for the PRC’s Gansu Heihe Rural Hydropower
Development Investment Program for $50.0 million. The first tranche of
this facility is $22.0 million. In Mongolia, a customs modernization proj-
ect is cofinanced with $0.5 million in grant funds from the Korea e-Asia
and Knowledge Partnership Fund. ADB also provided $180.0 million in
assistance to the private sector in the PRC including equity investments
and B-loans. The nonlending program for the two countries included
31 technical assistance projects (including 2 supplementary technical
assistance approvals) for $16.0 million. Of these, 15 ($8.7 million) were
for project preparation and 16 were for advisory technical assistance
59
($7.3 million). One Japan Fund for Poverty Reduction
project for $1.0 million was processed for Mongolia to TOP 5 ACHIEVEMENTS IN 2006
impart nonformal skills training to unemployed youth and
poor adults. Cumulative lending for the region amounted • Launched new regional cooperation initiatives in East Asia
involving the PRC and Mongolia
to $18.6 billion (Table 14).
ADB is pursuing a more focused approach to producing • Mainstreamed knowledge management into loans and technical
assistance to add value to operations
and disseminating knowledge products by mainstreaming
knowledge management into technical assistance and loans. • Implemented innovative projects and project components,
including clean development mechanism carbon credits and a
The objective is to incorporate knowledge products into all pilot multitranche financing facility energy project
loan and technical assistance operations to add value to ADB’s
• Promoted a coordinated sector-wide approach to primary
operations. This is considered essential and operationally
education in Mongolia with the Government and other donors in
relevant, particularly in the PRC, which is seeking high-quality an initiative that will also give significant grants for education
international know-how and advice on good management
• Achieved good portfolio performance, with few “at risk” projects
practices. ADB has set up a knowledge management unit in and a largely project-based disbursement ratio of 20.9%
its East Asia Department under senior staff supervision and is
building a knowledge network. A knowledge management
plan is being developed. ADB established a knowledge net- Cooperation programs, and Mongolia’s participation in
work on climate change in the PRC’s Tsinghua University. the latter, particularly in cross-border infrastructure con-
nections and trade facilitation that cover the PRC and
Regional Cooperation Mongolia. The PRC hosted two senior officials’ meetings
In line with the second medium-term strategy’s priorities and the Fifth Ministerial Conference on Central Asia
and the regional cooperation and integration strategy, Regional Economic Cooperation in Urumqi, Xinjiang Uygur
active support is being provided for the PRC’s participa- Autonomous Region. ADB provided technical support to
EAST ASIA
tion in the GMS and Central Asia Regional Economic help the PRC organize an in-country consultation work-
TABLE 13 East Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
SOVEREIGN
China, People’s Rep. of
Shandong Hai River Basin Pollution Control 80.00 – 80.00 160.36 21 Jun
Guangxi Nanning Urban Environmental Upgrading 100.00 – 100.00 262.70 26 Jun
Wuhan Wastewater and Stormwater Management 100.00 – 100.00 266.40 26 Jun
Hunan Flood Management Sector 200.00 – 200.00 497.40 29 Jun
Heilongjiang Road Network Development 200.00 – 200.00 524.55 26 Jul
Inner Mongolia Autonomous Region Environment Improvement 120.00 – 120.00 330.40 29 Sep
Taiyuan–Zhongwei Railway 300.00 – 300.00 3,752.90 23 Nov
Southern Gansu Roads Development 300.00 – 300.00 1,660.00 18 Dec
Erlongshan Hydropower Project (Subproject 1) 22.00 – 22.00 49.09 18 Dec
Nanjing Qinhuai River Environmental Improvement 100.00 – 100.00 236.10 18 Dec
Mongolia
Third Education Development – 13.00 13.00 16.38 21 Jun
Urban Sector Development – 28.20 28.20 37.60 19 Dec
Customs Modernization – 5.00 5.00 6.76 20 Dec
Subtotal 1,522.00 46.20 1,568.20 7,800.64
NONSOVEREIGN
Municipal Natural Gas Infrastructure Development 50.00 – 50.00 1,157.00 30 Aug
Subtotal 50.00 – 50.00 1,157.00
Total 1,572.00 46.20 1,618.20 8,957.64
60
shop that brought together key decision makers from all loans it administers. Technical assistance administra-
government agencies for in-depth discussions of issues tion improved significantly. Several technical assistance
related to regional cooperation. ADB also supported the projects were financially closed and savings realized to
inaugural forum of the Beibu Regional Economic Cooperation augment the scarce resources.
Program to promote regional cooperation between the PRC’s Portfolio performance in the PRC continued to be
Guangxi Zhuang Autonomous Region and the Association of good with only one project (2.1% of the portfolio) at risk.
Southeast Asian Nations (ASEAN) and the GMS. Disbursements (all for projects) totaled $984.8 million.
ADB is facilitating a number of cooperation initiatives For Mongolia, contract awards totaled $52.5 million.
between the PRC and Mongolia under a regional techni- Disbursements amounted to $28.6 million (Table 15).
cal assistance project covering transport, trade facilita-
tion, and capacity building for participation in regional
cooperation. TABLE 14 East Asia: Cumulative Lending and
Another approved regional technical assistance project Disbursements by Country as of the end of 2006
on subregional cooperation in Northeast Asia focuses on ($ million)
mitigating transboundary air pollution from coal-fired power Country Lending Disbursements
plants. The project’s major outputs will include closer envi- China, People’s Rep. of 17,947.40 10,908.23
Mongolia 666.54 520.57
ronmental cooperation among countries of Northeast Asia
Total 18,613.94 11,428.80
on transboundary air pollution, increased technical capacity
and knowledge transfer on prevention and management of
transboundary pollution, and greater capacity for manage- FIGURE 3 East Asia:
ment of coal-fired power plant emissions in Mongolia. (Sovereign and Nonsovereign)
($ million)
Portfolio Management China, People's 1,499.52
EAST ASIA
A strong focus on portfolio management continued to Rep. of 1,572.00
yield good performance in the region. Portfolio quality 10.00

Mongolia
continued to be relatively satisfactory; 2 of the 65 ongoing 46.20
loans to the region were at risk (3.1%). The disbursement 0 400 800 1200 1,600
performance was also good, with $1 billion disbursed. 2005 2006
Contract awards were $786.1 million. To improve

project administration, the role of resident missions was FIGURE 4 East Asia:
strengthened through increased delegation of projects. ADB Disbursements by Country, 2005–2006
(Sovereign and Nonsovereign)
Six additional loans were delegated to the PRC Resident
($ million)
Mission and one loan to the Mongolia Resident Mission.
To further streamline project administration, the PRC China, People's 892.12
Rep. of 987.97
Resident Mission assumed full disbursement functions for
29.92
Mongolia
A strong focus on portfolio 0
28.59
200 400 600 800 1,000

management continues to yield 2005 2006
good performance in the region
TABLE 15 East Asia: Portfolio Performance Indicators for Sovereign Lending, 2005–2006
No. of Contract Awards/Commitments Disbursements Loans at Risk
Ongoing Loans 2006 2005 2006 2005 2006 2005
China, People’s Rep. of 47 733.70 1,385.53 984.84 874.77 2.1 –

Mongolia 18 52.45 19.45 28.59 29.92 5.6 –
Total 65 786.14 1,404.98 1,013.43 904.69 3.1 –
61
lion loan (Heilongjiang Road Network Development
COUNTRY HIGHLIGHTS Project) to upgrade 428 km of the Jixi–Nehe highway
in the northeast, along with 170 km of rural link roads.
THE PEOPLE’S REPUBLIC OF CHINA A second transport sector project for $300 million is
in southern Gansu, one of the poorest provinces. The
The new country partnership strategy (2008–2010), which project will support the construction of the 134-km
is being prepared, will align ADB’s country strategy with Wudu–Guanzigou expressway, the upgrading of 357 km
the PRC’s 11th Five-Year Plan and the priorities set out in of rural roads in the Lanzhou–Haikou corridor, and the
ADB’s second medium-term strategy. ADB approved 10 improvement of road transport services by constructing
sovereign loans to the PRC totaling about $1.5 billion and 200 township bus stations and pilot-testing the road
secured $3.2 billion in nondirect value-added cofinancing. transport action plan. These two road projects help
In addition, 27 technical assistance projects (includ- diversify ADB assistance within the sector by supporting
ing two supplementary approvals) provided grants provincial roads and integrating logistics services and
amounting to $13.6 million. ADB began diversifying its rural development into expressway projects.
operations away from transport, which still accounted The third transport sector project in 2006 is a
for more than half of total lending (52.6%). Other key $300 million loan to finance the construction of 944 km
sectors were water supply, sanitation and waste man- of railway line from Taiyuan in Shanxi to Zhongwei and
agement (25.0%), agriculture and natural resources Yinchuan in Ningxia. This will be the first east–west railway
(13.1%), and energy (9.3%). linking the provinces of Shanxi, Shaanxi, and Ningxia. The
project will link Beijing, Qingdao, and other major cities
Increasing Connectivity and ports in the east with Yinchuan, Zhongwei, Lanzhou,
Removing constraints on transport infrastructure remains and Urumqi in the west on its way to Kazakhstan. The
a high priority for the Government. Since 1989, ADB has project introduces strategic and private investors and
provided $9.8 billion for 48 transport infrastructure projects
EAST ASIA
to construct, upgrade, and improve railways, expressways,

and feeder or access roads. About $8.8 billion, or 90% of ADB began diversifying its
this investment, was allocated to the poorer central and operations away from transport,
western regions.
All three transport sector projects approved in 2006 which still accounted for more
are in less-developed regions. These include a $200 mil- than half of total lending
ADB-supported railway projects give inland provinces access to ports
62
helps transform railway enterprises from cost centers in
a planned economy into profit centers in an increasingly
competitive transport market.
Environmental Protection
Land degradation and air and water pollution have
caused losses of up to the equivalent of 8% of gross
domestic product (GDP) per year, and depleted natural
resources that rural residents need. ADB continues to
support the PRC in environmental protection through
lending and technical assistance. ADB directly sup-
ported environmental improvement by lending $200
million to a flood control project in Hunan province, and
$120 million to an energy conservation project in the
Inner Mongolia Autonomous Region, and providing
Cleaning up the Suzhou creek: ADB supports environmental protection
a $50 million multitranche financing facility for rural and regeneration in the PRC
hydropower projects in a remote region of western
Gansu province. Private Sector Development
The clean development mechanism (CDM) allows The domestic private sector contributes more than 40% of
developed countries to fulfill their greenhouse gas emission GDP, 60% of economic growth, 75% of new jobs in the
reduction obligations under the United Nations Framework organized sector, and more than half the tax revenue in
Convention on Climate Change (Kyoto Protocol) through many areas. ADB supports government efforts to improve
investments in emission reduction projects in developing the enabling environment for the private sector. An ADB-
EAST ASIA
countries such as the PRC. In June 2006, ADB approved supported study on private sector development was submit-
technical assistance to help the PRC establish the CDM Fund ted to the Chinese People’s Political Consultative Conference
to manage the fees applied to the large revenue from CDM and the National People’s Congress in March 2006. ADB
projects. The CDM Fund will be used to support domestic provided technical assistance to formulate the supervisory
climate change-related activities. ADB introduced innovative framework for small and medium-sized enterprise credit
carbon financing to the Shandong Hai River Basin Pollution guarantee companies, and to improve corporate govern-
Control Project through the CDM, which introduced ad- ance of companies in which ADB has invested.
ditional financing from international carbon markets. The In addition to policy advice and assistance in improving
Government proposed to pilot-test the recently approved the enabling environment, ADB provides project-based
carbon market initiative for the ADB-assisted medium-sized financial support, focusing on infrastructure and the
hydropower project in Gansu. financial sector. In December 2006, ADB invested $30 million
to take a 5% minority stake in Hangzhou City Commercial Bank,
Urban Development, Environmental Management the fourth largest commercial bank in Hangzhou, a city that
ADB approved loans totalling $380 million for four water thrives on private sector economic activity. City commercial
supply, sanitation, and wastewater management projects. banks in the PRC play a vital role, especially in developing
These urban projects aim to support the Government’s small and medium-sized enterprises. However, they have
effort to promote sustainable economic growth through weaknesses in a number of areas, including strategic risk
urbanization while protecting the environment and improv- management, corporate governance, credit risk manage-
ing the health and well-being of urban residents. The $100
million Nanjing Qinhuai River Environmental Improvement
Project has innovative features to promote private–public ADB helps the PRC establish the
coordination in urban infrastructure management and to Clean Development Mechanism
catalyze alternative sources of investments with help from (CDM) Fund to manage the
ADB’s technical assistance. ADB also provided assistance,
through its private sector window, to enhance the supply fees applied to the large
of clean energy in urban areas. revenue from CDM projects
63
20 Years of ADB–PRC Partnership
The ADB–PRC partnership has grown in many ways since
the PRC became a member of ADB in March 1986. The
PRC has become the third largest shareholder of ADB,
with 6.5% of subscribed capital and 5.5% of voting
power, and an important middle-income country client.
Its cumulative borrowing reached $17.9 billion by the
end of 2006. The PRC has also received project prepara-
tory and advisory technical assistance grants amounting
to $270.4 million.
Since 2003, ADB’s lending to the PRC has focused on
four sectors: infrastructure, mainly transport and energy;
agriculture and natural resources; urban development; and
environmental protection, largely in the central and western
regions. Increased attention is being given to integrating
ADB assistance into the Government’s socioeconomic
development priorities, and to promoting balanced and
sustainable development.
ADB support has played an important role in the PRC’s
economic development and structural reforms. Before the
late 1990s, capital was scarce in the PRC. As the economy
boomed and reforms deepened, financing became less
of a constraint. ADB’s lending and nonlending assistance
EAST ASIA
also evolved with client requirements and continues to

focus on innovative approaches in management, new
modalities in project implementation, and initiatives for
ADB support has played an important role in the PRC’s economic
reform. ADB is becoming increasingly active in delivering
development knowledge-based products in agriculture and natural
resources, energy, environment, finance, governance,
ADB is exploring new areas in social macroeconomic management, transport, and urban
development. These products provide valuable inputs for
development, including education socioeconomic reforms.
The PRC has strengthened its partnership with ADB
ment, and inadequate capital. Through its investment, in new ways by contributing $30 million to the Asian
ADB will help the bank improve its corporate governance Development Fund (ADF), and establishing the $20 million
and internal control procedures. Fund for Regional Cooperation and Poverty Reduction in
ADB provided $150 million in assistance to the China Gas ADB, becoming the first developing country to set up such
Group, consisting of a $50 million direct loan, a $25 million a fund with an international development agency.
equity investment, and $75 million in commercial loans under The 11th Five-Year Plan period of 2006–2010 will see a
ADB’s B-loan program to help construct natural gas distribu- stronger ADB–PRC partnership on many new fronts. ADB is
tion infrastructure in municipalities for supplying natural gas exploring new areas in social development, including techni-
to residential, industrial, and commercial customers. The cal education and vocational training, and public health. ADB
project supports the Government’s efforts to promote the use is also looking to expand its assistance to rural development.
of natural gas to reduce particulates and sulfur dioxide emis-
sions from households and small industries. This will benefit MONGOLIA
the urban population, particularly the poor, who are exposed
to indoor and outdoor air pollution. ADB’s assistance to the In October 2005, the ADB Board approved a new country
project is expected to have a demonstration effect and help strategy and program for Mongolia that is closely aligned
catalyze support for more such projects in the PRC. with the Government’s poverty reduction strategy and more
64
Agricultural Waste of respiratory diseases. It is reducing the time women
spend collecting firewood for cooking, and helping
Raises Production in regenerate forests.
the PRC Biofertilizers from biogas digesters are helping

reduce the need for chemical fertilizers that pollute the
environment.
An innovative ADB pilot project to help develop efficient
Technical support and training are being provided
ways to use agricultural waste for sustainable rural
to promote and improve biomass technology
development in the People’s Republic of China (PRC) is
and to establish adequate service infrastructure
paying multiple dividends. A $6.4 million grant from
to ensure sustainability and the development of
the Global Environment Facility supplemented ADB’s
biomass systems in rural areas. This project will also
assistance of $33.1 million and improved the project’s
provide valuable field experience to prepare effective
sustainability.
interventions to implement the Government’s new
The Efficient Utilization of Agricultural Wastes
thrust to develop sustainable rural energy sources as
Project, approved in 2002, is boosting farm production
part of its rural development strategy.
and the income of poor farmers, reducing household
costs, and helping tackle the PRC’s environmental and
energy challenges by using agricultural waste from “This is the best development
crops and animals to fuel biogas digesters and biomass project in 30 years in our county.
gasification plants. The project implementation is clear,
More than 13,000 households in 145 villages
simple, and the benefits
EAST ASIA
in Henan, Hubei, Jiangxi, and Shanxi provinces are
benefiting as operators of smallholder biogas digesters
to farmers are sustainable”
incorporated into farming systems, or as consumers of
gas from medium-scale biogas and gasification plants.
In the project area, agricultural production has
increased between 10% and 25%, and the annual
production of biogas in the project area has reached
about 104,000 cubic meters.
“This is the best development project in 30 years
in our county,” says Huang Lingqiang, deputy
governor, Jing’an county, Jiangxi province. ”Project
implementation is clear, simple, and the benefits to
farmers are sustainable.”
The project is promoting local and national awareness
of the advantages of biomass rural energy development.
It has created a high level of interest and participation in
the project area with increasing direct private investment
in biogas digesters at the farmer, technician, and digester
production levels, and greater understanding and
management capacity for further expansion and after-
installation management by farmers and local officials.
The use of biogas for cooking and lighting is helping
Contractors construct biogas digesters under ADB’s Efficient
improve household air quality and reduce the incidence Utilization of Agricultural Wastes Project
65
ADB helps the Government promote education in Mongolia
EAST ASIA
tightly focused on improving development impact. The priorities, and strengthen coordination with other devel-
country strategy and program aims to reduce poverty by opment partners to increase the inflow of funds.
supporting stable, broad-based growth, and socially inclu- ADB’s cumulative lending to Mongolia for 39 public
sive development. It programs an indicative lending level sector loans totaled $662.0 million. ADB provided
of $78 million from ADF resources for 2007–2009, supple- $4.5 million in assistance to the private sector through its
mented by an additional $40 million for regional projects private sector window. Eighteen sovereign loans and one
from the ADF. The country strategy and program will help nonsovereign loan were active at the end of 2006. Technical
the Government as it embarks on a results-based approach assistance grants totaled $61.3 million, and grants from
to development, formulating rigorous performance indica- the Japan Fund for Poverty Reduction, the Japan Fund for
tors and establishing systems to manage the Government’s Information and Communication Technology, the Republic
strategy for results. The strategy and program calls for of Korea e-Asia and Knowledge Partnership Fund, and
assistance in agriculture, transport, education, health, Norway totaled $9.7 million.
and urban development. ADB is preparing an agribusiness In 2006, three new loans for education, urban develop-
supply chain development project in Mongolia to target ment, and customs modernization totaling $46.2 million,
niche markets for premium value products. The project and four technical assistance grants of $2.5 million, were
has strategic implications for livelihood improvement, approved. ADB also approved a $1.0 million Japan Fund
economic diversification, and environmental protection. for Poverty Reduction project to develop nonformal skills
The ADB Board endorsed a country strategy and training for unemployed youth and poor adults.
program update in September 2006. While maintaining
the overall directions of the country strategy and program,
the update incorporates changes needed to support the The country strategy and program
strategic approach that the Government has adopted to aims to reduce poverty by supporting
achieve the Millennium Development Goals, increase the
effectiveness of development activities, boost governance, stable, broad-based growth, and
improve alignment with the Government’s and ADB’s socially inclusive development
66
Better Health for the project area, above the national target of 92%.
The average length of hospital stay has come down
Mongolian Villagers from 10 to 8 days. Contraceptive use in the project
aimag has reached 55% among women aged 15–44,
ADB is helping provide thousands of rural poor with above the national average of 43%.
access to improved health services. The project also trains community nurses, district
ADB, in close partnership with the Government doctors, district and provincial administrators,
and key stakeholders, has been supporting the economists of the health department, and staff
health sector in Mongolia since 1997. In 2003, ADB of the health insurance organization to help the
approved a $14 million loan for the Second Health Ministry of Health build institutional capacity. The
Sector Development Project to improve rural health project supports key reforms in the sector, including
services, especially for the poor and vulnerable, and strengthening primary health care through family
to build the capacity of the health sector through group practices, improving hospitals, and developing
reforms in sector efficiency, effectiveness, and human resources in the health sector. Twenty-three
sustainability. district health centers, five interdistrict hospitals, and
The project has helped improve rural health four provincial center hospitals have been built or
services in five aimags (provinces) chosen because renovated, and equipped.
of their high levels of poverty, infant and maternal
mortality, and infectious diseases. More than 422,000 Mongolians—
More than 422,000 Mongolians—about 17% of
about 17% of the population—are
the population—are benefiting from the project’s
EAST ASIA
rural health component, which has raised vaccination benefiting from the project’s
rates to 98% among children under 5 years of age in rural health component
ADB has helped raise health standards in five of the poorest provinces in Mongolia
67
68
PACIFIC
Cook Islands, Fiji Islands, Kiribati, Marshall Islands,
Federated States of Micronesia, Nauru, Palau,
Papua New Guinea, Samoa, Solomon Islands,
Timor-Leste, Tonga, Tuvalu, Vanuatu
ADB provides a range of services to its 14 Pacific developing member

countries, with lending and grant operations supplemented by extensive
technical assistance, analytical work, and policy advice. ADB’s key result
areas of stronger sustainable job growth, improved service delivery, and
strengthened development processes were identified in ADB’s Pacific
Strategy for 2005–2009: Responding to the Priorities of the Poor.
ADB approved a supplementary loan of $53.0 million for the
Papua New Guinea Road Maintenance and Upgrading (Sector) Project
(Table 18, Figure 5). It also approved two Asian Development Fund (ADF)
PACIFIC
grants: $15.0 million for the HIV/AIDS Prevention and Control in Rural
Development Enclaves Project in Papua New Guinea and $350,000 for
the Solomon Islands Road Improvement (Sector) Project. Cumulative
lending for the region amounted to $1.7 billion (Table 17). ADB also
raised $24.4 million in cofinancing from Australia and New Zealand
for the 2 ADF-supported projects and approved 21 technical assistance
grants of $22.9 million for the Pacific countries. Of these, 5 were for
project preparatory technical assistance at $2.6 million, 12 for advisory
technical assistance at $8.5 million, and 4 for regional technical assistance
at $11.8 million. While the number of project preparatory and advisory
technical assistance grants approved was lower than the annual average
of 24 in 2001–2005, the total value was $0.8 million higher.
ADB published two reports on the socioeconomic and poverty implica-
tions of HIV/AIDS in the Pacific. The reports concluded that, except for
Papua New Guinea, the HIV/AIDS epidemic in the Pacific generally affects
groups with high-risk behaviors. Papua New Guinea is particularly vulner-
able and will require strong political commitment of the Government and
development partners to combat HIV/AIDS. ADB approved the HIV/AIDS
Prevention and Control in Rural Development Enclaves Project, which
involves the public and private sectors and major development partners in
Papua New Guinea.
69
Engaging the Private Sector
Throughout the Pacific, ADB has strengthened its role in TOP 5 ACHIEVEMENTS IN 2006
promoting private sector development. Two regional techni-
cal assistance projects are driving this approach: Improving • Aggressively leveraged ADB grant resources by quickly
processing the Solomon Islands Road Improvement (Sector)
Delivery of Infrastructure Services, approved in 2005; and Project, which was well coordinated with partners and had
Private Sector Development Initiative, approved in 2006. significant cofinancing
By approving the second of these projects, ADB strength- • Employed an innovative approach to Public–Private Partnerships
ened its long-term commitment to the region. This initiative in the Papua New Guinea HIV/AIDS Project, which had significant
will be implemented in cooperation with the Government of cofinancing
Australia. The $8.7 million technical assistance grant is pro- • Drew up the first results-based country strategy and program for
moting long-term economic growth by creating an enabling Papua New Guinea
environment, including greater transparency, for private • Conducted performance assessments in weakly performing
sector development in the Pacific. It is focusing on reforming countries, which serve as a basis for policy dialogue aimed at
state-owned enterprises, improving access to finance, and improving governance and development effectiveness
strengthening the business environment through legal and • Launched regional initiatives in private sector development, audit,
regulatory reforms. ADB will conduct diagnostic studies; pro- statistics, and aviation
vide technical expertise in priority reform areas; strengthen
capacities in relevant government agencies and organizations;
support regional initiatives; and disseminate information on reduction. The Pacific strategy (2005–2009) provides the
good practices, reform opportunities, and results. framework for ADB operations in the 14 Pacific developing
The Improving Delivery of Infrastructure Services Project member countries and for support for regional cooperation.
made progress. A regional workshop was held in Sydney, Priority areas for ADB facilitation of regional cooperation in
Australia, in August 2006 for government officials and the Pacific are to be further identified in the regional coop-
private sector representatives from 11 Pacific countries who eration strategy (2007–2011) due for completion in 2007.
are directly involved in infrastructure financing and plan- ADB regional assistance in 2006 supported the Pacific’s
ning. Participants discussed service delivery and efficiency, own development strategy, the Pacific Plan endorsed by lead-
sustainable finance, and the role of the private sector. The ers of 16 Forum island countries in October 2005, and fol-
workshop was a success, with outputs being used as a plat- lowed on from earlier ADB support for analytical input to the
PACIFIC
form for the next phase of strategic action in the region. plan. Key priorities in the plan are supported by ADB’s private
sector development initiative and through ADB support for
Promoting Regional Cooperation and Integration regional statistical development. Two other regional techni-
ADB supports Pacific regional cooperation and integration as cal assistance projects were approved—one that focuses on
a mechanism to meet national priorities, including poverty improving governance and accountability in Pacific devel-
TABLE 16 Pacific: Portfolio Performance Indicators for Sovereign Lending, 2005–2006

Ongoing Loans 2006 2005 2006 2005 2006 2005
Cook Islands 1 0.01 0.63 0.33 1.17 – –

Fiji Islands 4 9.07 19.70 9.68 14.07 50.0 –
Kiribati 1 – 0.94 0.15 1.56 – –
Marshall Islands 1 – 1.45 0.10 0.80 100.0 –
Micronesia, Fed. States of 5 3.69 3.77 2.46 1.75 40.0 60.0
Papua New Guinea 12 23.07 24.95 29.28 21.50 8.3 10.0
Samoa 3 1.74 0.35 1.63 2.66 – 20.0
Solomon Islands 1 0.78 8.81 4.09 2.76 – –
Tuvalu 2 3.18 – 1.18 0.10 – 100.0
Regional 1 – – 0.15 – – –
Total 31 41.52 60.60 49.04 46.37 19.4 22.6
– = nil.
70
oping member countries and one that aims to strengthen
TABLE 17 Pacific: Cumulative Lending and
regional cooperation among them. A study on options to
Disbursements by Country as of the end of 2006
improve cooperation across the land border between Papua ($ million)
New Guinea and Indonesia was initiated. ADB continued its Country Lending Disbursements
support to ongoing regional cooperation initiatives, including Cook Islands 29.50 26.48
the Pacific Aviation Safety Office, Pacific Financial Technical Fiji Islands 249.90 170.24
Kiribati 15.14 13.70
Assistance Centre, and the regional HIV/AIDS strategy. Marshall Islands 78.13 64.09
Micronesia, Fed. States of 75.14 39.24
Pacific Aviation Safety Office Nauru 5.00 2.30
Papua New Guinea 926.99 663.30
To promote regional cooperation and create shared Samoa 129.98 104.29
capacity, ADB has helped eight Pacific countries—Cook Solomon Islands 79.31 62.00
Islands, Fiji Islands, Kiribati, Papua New Guinea, Samoa, Tonga 57.79 52.26
Tuvalu 7.82 5.44
Solomon Islands, Tonga, and Vanuatu—establish the Vanuatu 51.25 48.99
Pacific Aviation Safety Office. The project, approved Regional 1.50 120.23
in 2005, is financed through a sovereign public sector Total 1,707.43 1,372.56
regional loan to an intergovernmental organization and Note: Totals may not add up because of rounding.
supported by guarantees by the participating countries. It

is an example of how innovative intergovernmental finance
can enable regional technical cooperation to improve coming under increasing pressures. A broad consensus
service quality, reduce costs, and achieve financial sustain- has been reached over the past decade on the most
ability. The project is now being implemented through an significant environmental problems facing the Pacific.
associated technical assistance grant for legal and regulatory Eight priority concerns consistently emerge: threats to
harmonization, and is expected to conclude in 2010. freshwater resources, degradation of the marine and
coastal environment, degradation of land and forest,
Managing the Environment urbanization and waste management issues, depletion
Pacific countries are highly dependent economically of biological diversity, energy-related environmental
and culturally on their natural environment. However, concerns, adaptation to climate change, and weak
the health and productivity of natural systems are environmental governance.
PACIFIC
FIGURE 5 Pacific: ADB Lending by Country, FIGURE 6 Pacific: ADB Disbursements by Country,
2005–2006 (Sovereign and Nonsovereign) 2005–2006 (Sovereign and Nonsovereign)
($ million) ($ million)
Cook Islands 2.83 Cook Islands 1.17

0.33
Fiji Islands 25.00 14.07
Fiji Islands
9.68
Kiribati
Kiribati 1.56
Marshall Islands 0.15
Marshall Islands 0.80
Micronesia, 0.10
Fed. States of
Micronesia, 1.75
Nauru Fed. States of 2.46
Nauru 0.00
Papua 0.00
New Guinea 53.00
Papua 21.50
Samoa 8.06 New Guinea 29.28
Samoa 2.66
Solomon 1.63
Islands
Solomon 2.76
Tonga Islands 4.09
Tonga 0.00
Tuvalu 0.00
Tuvalu 0.10
Vanuatu 1.18
Regional 1.50 Vanuatu 0.00
0.00
0 10 20 30 40 50 60 0 5 10 15 20 25 30 35
2005 2006 2005 2006
71
Environmental management is crucial in Pacific countries, which are highly dependent economically and culturally on their natural environment
ADB has helped selected Pacific developing member ADB pays attention to compliance
countries prepare country environmental analyses, which
provide inputs to country strategies and programs and
with its environmental safeguard
updates, and medium-term development strategies, policy, rigorously reviewing
particularly in meeting the eight key environmental chal- projects during processing and
lenges. Country environmental analyses have been com-
pleted in 2006 in two countries—Kiribati and Samoa. The
implementation
studies identify priority areas in policy, institutional, and
legislative mechanisms, as well as in programs or projects Improving Governance and Preventing Corruption
that will help mainstream environmental concerns into Following ADB’s approval in July 2006 of the second
economic development planning. Country environmental governance and anticorruption action plan, the Pacific
PACIFIC
analysis recommendations have been incorporated into Department began preparing for its implementation.
the country strategy and program (2006–2010) of Papua Discussions were held with the Government of Samoa,
New Guinea and the strategy and program update which agreed to participate in the first phase of the plan
(2007–2011) of the Marshall Islands. in 2007. This will involve preparing risk assessment and
ADB pays attention to compliance with its environ- management plans for three themes (public financial
mental safeguard policy, rigorously reviewing projects management, procurement, and anticorruption measures)
during processing and implementation. In one case in in key operational sectors.
2006, the review of a proposed Papua New Guinea gas ADB approved in December 2006 a regional technical
project generated specific recommendations for protect- assistance of $1.6 million for Strengthening Governance
ing the unique tropical rainforests with high biodiversity and Accountability in Pacific Island Countries. Cofinanced
and for ensuring compliance with ADB’s forest policy. by Australia, this project has two components. The primary
TABLE 18 Pacific: Sovereign Loan Approval, 2006

($ million)
Total Date
Papua New Guinea

Road Maintenance and Upgrading (Sector) (Supplementary) 35.00 18.00 53.00 78.07 29 Jun
Total 35.00 18.00 53.00 78.07
ADF = Asian Development Fund, OCR = ordinary capital resources.
72
component is to strengthen public auditing capacity in Pacific
island countries. The secondary component will strengthen
the governance and anticorruption orientation of ADB’s
country partnership strategies in the Pacific region.
Portfolio Management
Actual performance achieved against projected targets
in contract awards ($41.5 million) and disbursements
($49.0 million) has been more than 100% (Table 16). Papua
New Guinea contributed 56% of contract awards and 60%
of disbursements, and Fiji Islands, 22% and 20%. Six loans
and seven technical assistance projects have been delegated
to the resident missions. The number of active technical as-
sistance projects has been substantially reduced from an aver-
age of 115 during the past 3 years to 87 in 2006. Technical
assistance savings of about $2.4 million were realized in
2006. Project-readiness criteria have been made mandatory
for all projects being processed. Project administration unit
meetings were held separately with resident missions.
ADB supports an Alternative Livelihood Development Project in the Fiji
Islands
COUNTRY HIGHLIGHTS Government develop an integrated system of regulations, by-

laws, and laws that will provide the institutional mechanisms
COOK ISLANDS for implementing the Environment Act 2003. No loans or
technical assistance projects were approved.
ADB assistance supports public sector management, private In April 2006, the Government, New Zealand’s
sector development, and improvement in infrastructure International Aid and Development Agency (NZAID), and
facilities in compliance with ADB’s environmental safeguards. Australian Agency for International Development (AusAID)
PACIFIC
Preparation of the country partnership strategy for 2007–2009 invited ADB to participate as an observer in the 2007 High-
began with an analysis of the economic conditions, develop- Level Discussions between the Government and NZAID/
ment constraints, and opportunities. AusAID. This sets the stage for possible joint programming
A cyclone in 2005 led to broad acknowledgement of beginning 2007.
the need to climate-proof infrastructure. ADB’s Cyclone
Emergency Assistance Project was implemented and helped FIJI ISLANDS
avert a shock to the economy. In particular, it catalyzed
significant grant funding to finance the overall reconstruc- ADB and the Government agreed that a country partner-
tion plan. With technical assistance from ADB, a master ship strategy to cover 2007–2011 would address macro-
plan for environmentally sustainable infrastructure was economic stability and fiscal governance, inclusive growth
completed in 2006. Technical assistance for the Legal and through increased levels of investment, and private sector
Institutional Strengthening of Environmental Management development.
Project was completed. The technical assistance helped the In support of the new country partnership strategy, ADB
prepared several thematic assessments, including the country
gender assessment. ADB also helped foster coordinated as-
In support of the new country sistance to the country, particularly in economic management.
partnership strategy, ADB prepared However, the military coup late in the year has given rise to
several thematic assessments, some economic uncertainty.
The public sector’s weaknesses in economic man-
including the Fiji Islands agement were acknowledged and Fiji Islands’ Strategic
country gender assessment Development Plan defined far-reaching targets. Policy
73
dialogue with the Government led to the adoption of
legislation that encourages private–public partnerships,
support for state-owned enterprise reform and manage-
ment of utilities, and development of a cohesive set of
policies to reform economic management. The program
continues to support economic infrastructure and the
development of alternative livelihoods.
ADB approved $1.5 million for three technical as-
sistance projects: Preparing the Renewable Power Sector
Development Project, Preparing Economic Restructuring
Program Loan, and Improving Infrastructure Services.
Ongoing projects included the Alternative Livelihood
Development Project, approved for $25.0 million in 2005.
KIRIBATI
A road upgrading project in the Fiji Islands
ADB’s strategy focuses on promoting balanced growth
throughout the archipelago to relieve the stresses parency and accountability. The approved country strategy
on the capital atoll, and on helping improve public and program update (2007–2011) continues to focus on
finance management. The strategy aims to develop strengthening the environment for improved public and
an economic growth center on Christmas Island and private sector performance. It also strengthens the focus
support sustainable urban development so that peo- on monitoring and managing for results. Technical as-
ple can move out of the overcrowded capital. ADB’s sistance was approved for the Pilot Collaborative Public
policy dialogue focuses on economic management, Services Delivery Project and for the Building Capacity for
improvement of fiscal conditions in collaboration with Independent Country Partnership Strategy and Country
development partners, and development of appropri- Performance Assessment Results Management in Republic
ate land allocation strategy for new development. ADB of Marshall Islands—A Pacific Pilot Project.
has participated in joint reviews of the public finance The country has outstanding loan service payments that
PACIFIC
management with development partners to prepare prevent further loan assistance from ADB.
coordinated assistance programs to help improve
fiscal governance. It approved a technical assistance FEDERATED STATES OF MICRONESIA
of $630,000 for the Integrated Land and Population
Development Program on Kiritimati Island. ADB assistance included five ongoing loans and three on-
going technical assistance projects. Activities under these
MARSHALL ISLANDS technical assistance projects included the release of the
Federated States of Micronesia 2005 Economic Report and
The continued emphasis of ADB’s country strategy and the development of secured-transactions legislation and
program on enhanced consultation and participation of implementation of a secured-transactions registry acces-
stakeholders appeared to bear fruit. Discussions on public sible via the Internet.
policies and programs increased between all levels of No loan was approved. One technical assistance proj-
government and civil society and helped enhance trans- ect to implement the public sector capacity-building road
map was approved for $600,000.
In March 2006, ADB supported a 3-day retreat for gov-
Discussions on public policies ernment, private sector, and civil society representatives
and programs increased between that focused on governance and the strategic develop-
all levels of government and ment of the Federated States of Micronesia. ADB hosted
a consultative group meeting in November to examine
civil society and helped enhance progress and problems in implementing the country’s
transparency and accountability Strategic Development Plan 2004–2023.
74
Pacific Leaders institutions, to meet the specific requirements of
governments, the private sector, and civil society.
LEAP Forward The program has assessed the training needs of
Pacific officials, created benchmarks of leadership
Leaders in ADB’s Pacific developing member countries are competencies, designed training courses, established a
finding better ways to implement development programs, monitoring and evaluation framework to measure the
thanks to the innovative Leadership Enhancement and impact of training, developed strategies to strengthen
Advancement Program (LEAP) funded by ADB. the network of learning institutions and service
The program has helped senior and middle-level providers in the Pacific, and trained trainers to continue
executives from the public and private sectors in the program after ADB assistance ends.
13 of the 14 Pacific developing member countries The most recent LEAP workshop included
understand and discuss common problems like 23 participants from seven Pacific developing member
poverty, slow growth, weak governance, weak countries who met at ADB headquarters in October
regulatory frameworks, conflict of traditional systems 2006 to gain practical insights, approaches, and tools
and formal organizational processes, underdeveloped to help implement strategic plans and programs; develop
human resources, and brain drain. their own perspectives and models for successful
The program has also helped officials from the 13 implementation within their respective contexts; and
participating countries network with each other and share design action points to improve implementation of
information and experience to tackle common issues. plans and programs.
Priscilla Maruariki, management accountant, Ministry Ryke Solomon, deputy secretary, Department of Finance
of Finance and Economic Planning, Cook Islands, had and Development Planning, Nauru, said of the workshop:
this to say of the workshop she attended in October “We learned much from the various experiences that
2006: “We have learned a lot about leadership, the had been shared in this workshop…hope we take
value of having visionary leaders and having a holistic them back to our respective countries and are able to
approach to issues, and the need to connect various implement our plans and programs effectively.”
PACIFIC
stakeholders and to uphold the principles of integrity
and fairness. Maybe in future meetings we will be sharing
The program has helped officials
our success stories. It’s a long journey but I believe our
journey starts today when we go back to our countries.”
from the 13 participating countries
The program has helped provide demand-driven network with each other and
training courses for selected leaders, including share information and experience
in-service training organized jointly with partner to tackle common issues
Executives from Pacific countries share information and experience
75
NAURU SAMOA
One technical assistance project was completed in 2006: ADB’s three-pronged strategy for Samoa is designed to
Reform of the Nauru Phosphate Corporation (cofinanced accelerate private sector growth and create a sound mac-
by the Government of Australia). Discussions on further roeconomic environment, strengthen basic social services
assistance are under way. Nauru has an outstanding loan by providing infrastructure, and provide access to qual-
service payment that prevents further loan assistance from ity education for all. The strategy is being implemented
ADB at present. through the Second Education Sector Project, the techni-
cal assistance for Preparing the Power Sector Expansion
PALAU Program, and continued implementation of the Drainage
and Sanitation Project and the Small Business Development
Palau’s first country strategy and program update Project. To support macroeconomic management, ADB is
was endorsed in August 2006. The strategic focus of providing technical assistance for Promoting Economic
ADB’s assistance to Palau during the update period Use of Customary Land and is supporting privatization.
of 2007–2009 is to strengthen economic and fiscal ADB was invited as an observer to join high-level
management, promote policies for private sector devel- strategy talks between the governments of Australia, New
opment, and facilitate sound infrastructure development Zealand, and Samoa to help harmonize donor assistance.
and management.
ADB’s major contribution in Palau over the medium term
SOLOMON ISLANDS
will involve policy advice and technical assistance. Country-
specific and regional technical assistance projects with ADB’s updated strategy for the Solomon Islands
Palau’s participation will be processed during the strategy (2007–2009) focuses on transportation infrastructure
and program update period. Palau is invited to participate and services, and private sector development. In early
in ongoing regional technical assistance projects, including 2006, the scope of the ongoing Post-Conflict Emergency
Strengthening Poverty Analysis and Strategies in the Pacific, Rehabilitation Project was significantly expanded, with
Strengthening Pro-Poor Policy in the Pacific, Diagnostic support from Australia and New Zealand. The Solomon
Studies for Secured Transactions Reforms in the Pacific Islands Road Improvement Project was approved, funded
Region, and Mainstreaming Environmental Considerations
PACIFIC
in Economic and Development Planning Processes in ADB’s major contribution in Palau

Selected Pacific Developing Member Countries.
over the medium term will involve
PAPUA NEW GUINEA policy advice and technical assistance
With strong support from the Government, ADB drew up
the first results-based country strategy and program for
2006–2010 based on the Government’s medium-term
development strategy. Consolidating earlier ADB pro-
gram themes, the country strategy and program focuses
on four strategic areas: public financial management,
private sector development, the transport sector, and
health and HIV/AIDS.
ADB increased its participation in policy dialogue and its
assistance for the preparation of new projects. It approved
the first ADF grant project for Papua New Guinea. The
project, which Australia and New Zealand are cofinancing,
will help prevent and control HIV/AIDS in rural development
enclaves, strengthen surveillance, and introduce the social
marketing of condoms. ADB continued its support to education in Samoa
76
jointly by ADB, Australia, and New Zealand, to restore Political crises and violence affected ADB operations in
and repair damaged infrastructure and improve the ef- Timor-Leste. Work was suspended on an ADB-supported
ficiency and effectiveness of the national transportation road rehabilitation project and the start of a follow-on project
network. No loans or technical assistance projects were was delayed. Technical assistance for preparing a proposed
approved in 2006. water supply and sanitation project for Dili under the Japan
Special Fund was also suspended.
TIMOR-LESTE Work on preparing the water supply and sanitation
project did not recommence in 2006 but resumed on the
ADB is intensifying its focus on infrastructure support in road rehabilitation project ahead of any other Government-
Timor-Leste. Reversing the decline in infrastructure assets or donor-funded project. By year-end, road works under the
and services is a high priority for the country. Meanwhile, Second Emergency Infrastructure Rehabilitation Project were
capacity constraints restrict the Government’s ability to fully 95% complete and road connectivity had been maintained in
utilize the capital development budget allocations. ADB very difficult terrain on several critical north–south routes.
and the Australian Agency for International Development
are preparing a $25 million 5-year joint technical assist- TONGA
ance program to help infrastructure ministries execute
their capital programs. ADB’s strategy supports macroeconomic stability and
continuing economic and public sector reforms in the
context of Tonga’s Strategic Development Plan Eight,
ADB’s three-pronged strategy for 2006/07–2008/09 (SDP-8) adopted in 2006 and the
Samoa is designed to accelerate approved technical assistance for the implementation of
SDP-8 and for Rationalization of Public Enterprises Phase
private sector growth and create a III. ADB prepared an urban development project for
sound macroeconomic environment, processing, and reviewed the project’s capacity to support
strengthen basic social services by the rebuilding effort in the aftermath of riots and the de-
struction of the capital’s business district in late 2006. ADB
providing infrastructure, and provide is developing pilot models under a technical assistance for
access to quality education for all Youth Microenterprise Development.
PACIFIC
The Tanavasa bridge is among those restored in the Solomon Islands under the Post-Conflict Emergency Rehabilitation Project
77
A Path to Progress in the country experienced extreme difficulties because
of civil unrest, which began in the capital, Dili, in April
Timor-Leste and continued until September, with further occasional
disturbances reported until the end of the year. As a
In one of the world’s poorest countries, roads provide result, public and private sectors companies based in
poor farming communities with a way to get their Dili faced severe operational difficulties for a significant
produce to market and the Government with the means part of 2006. The ADB team remained in the country
to deliver essential services to rural communities. Timor- during the crisis and was able to remobilize several
Leste has an extensive road network of about 6,000 contractors in June 2006 and recommence works—the
km, but lack of maintenance during years of conflict, first works anywhere in the country to restart. By the end of
combined with torrential rains and difficult geological December 2006, overall construction progress for the seven
conditions in the mountainous country, has resulted in road contracts and Cassa Bridge had been 93% completed.
rapid deterioration of the roads. Only 24% of national The project continues to create jobs, inject money
roads and 11% of district roads are in good condition, into poor communities, connect them to services,
leading to high operating and repair costs for providers and reduce economic costs.
of public transport. This means high passenger fares,
creating particular difficulties for the poor. The Emergency Infrastructure
The ADB-supported Emergency Infrastructure Rehabilitation Project has
Rehabilitation Project (Phase 2), in operation since provided much-needed work to
2002, has helped provide much-needed work to the
poorest of the poor while improving access to markets
the poorest of the poor while
and to education, health, and other basic services.
improving access to markets
Project implementation since September 2004 has and to education, health,
mostly kept pace with the revised schedule. In 2006, and other basic services
PACIFIC
The emergency infrastructure rehabilitation creates jobs and builds roads
78
Young people at the Maoro Community School on Malaita, Solomon Islands, where the community discussed the Post-Conflict Emergency
Rehabilitation Project
TUVALU were approved. An abbreviated public expenditure and finan-

cial assessment study was undertaken in October–November
ADB’s operational strategy focuses on harmonizing efforts 2006 and has been widely distributed for comments.
with other assistance agencies to improve governance
PACIFIC
and economic management; enhance job prospects VANUATU
through skills development, particularly through the
Tuvalu Maritime Training Institute; and improve services ADB’s updated program for Vanuatu for 2006–2009 focuses
on the outer islands, where poor and vulnerable groups on promoting sustainable economic growth led by the pri-
are concentrated, partly through sustainable financing vate sector. The 4-year country program consists of technical
mechanisms such as the Falekaupule Trust Fund. A country assistance grants amounting to $2.5 million to improve regu-
partnership strategy (2007–2011) is being formulated latory institutions and increase access to finance. Technical
jointly with the Government and the Australian Agency assistance was approved to help modernize commercial and
for International Development and in close consultation financial laws. ADB, in partnership with the National Bank
with New Zealand’s International Aid and Development of Vanuatu, has pioneered a project to create sustainable,
Agency. ADB hosts regular quarterly reviews with other profitable rural microlending. This rural microfinance project
development partners such as the European Union, United will be expanded in 2007. ADB is also working toward a plan
Nations Development Programme, France, and Japan. The to help reform the company registration process in 2008. This
interagency cooperation strategy focuses on joint commit- work complements ongoing activities to develop a secured
ment on macroeconomic performance benchmarks that will transactions framework that will increase access to finance.
underpin technical assistance for tax reforms and other fiscal No loans were approved.
management issues. ADB prepared an assessment of the
country’s public finance management conditions, published Technical assistance was approved
in the Pacific Islands Economic Report series.
ADB approved technical assistance worth $300,000 to to help modernize commercial
support Capacity Building for Taxation Reforms. No loans and financial laws in Vanuatu
79
SOUTH ASIA
Bangladesh, Bhutan, India, Maldives, Nepal,
Sri Lanka
ADB’s assistance to the region further strengthened with the approval of

$1 billion—ADB’s largest single loan from regular resources in 8 years—to
make affordable financial services available to India’s rural poor. The Rural
Cooperative Credit Restructuring and Development Program involves a
comprehensive reform of the cooperative credit structure to improve
poor farmers’ access to credit in five Indian states. The German Bank for
Reconstruction and Development, which has worked with ADB in design-
ing the project, will provide parallel financing of €140 million.
In its medium-term strategy and action plan for South Asia, ADB
has proposed to be more selective and focused in its operations in each
developing member country to achieve greater development results and
impact. ADB approved 18 loans for $2.0 billion for South Asian developing
member countries, with 21.5% of this amount financed from ADB’s con-
cessional window, the Asian Development Fund (ADF) (Table 21, Figure 7).
These loans support rural credit provision, primary and secondary educa-
tion, rural roads, urban infrastructure, and the financial sector. Cumulative
lending for the region amounted to $31.1 billion (Table 20). In addition,
ADB assistance to South Asia in 2006 included equity investments of $72.6
million, grants of $164.9 million, technical assistance of $64.4 million, and
SOUTH ASIA
four multitranche financing facilities of $1.6 billion.
Regional Cooperation
ADB approved its first regional cooperation strategy and program for
South Asia (2006–2008). ADB’s strategy focuses on five key operational
objectives: improve connectivity, facilitate trade and investment, develop
regional tourism, facilitate cooperation in energy, and promote private
sector cooperation.
The South Asia Subregional Economic Cooperation Program, which
brings together Bangladesh, Bhutan, India, and Nepal, gained new momen-
tum with the identification and implementation of projects as well as closer
coordination with the South Asian Association for Regional Cooperation
and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic
Cooperation. ADB supported the dialogue of various South Asia Subregional
Economic Cooperation working groups. These working groups prioritized
four loan projects that will establish a hub and a training and research center
on information and communications technology, develop tourism infrastruc-
ture, establish a transport link, and build trade facilitation infrastructure.
81
ADB further strengthened its cooperation with the
South Asian Association for Regional Cooperation by TOP 5 ACHIEVEMENTS IN 2006
implementing measures to improve regional multimodal
transport connectivity and by exploring an investment • Successfully led a joint effort with the Government and 10 other
development partners to support primary education in Bangladesh
financing mechanism. A $1 million regional technical as-
sistance was approved to facilitate energy sector dialogue • Pioneered the implementation of the second ADB governance
and anticorruption action plan in South Asia, developing a
and develop the capacity of the energy center of the South methodology that will become the tem plate for ADB risk
Asian Association for Regional Cooperation. assessments
ADB also stepped up support to the Bay of Bengal • Sharpened focus on outcomes that matter to developing member
Initiative for Multi-Sectoral Technical and Economic countries in South Asia by mainstreaming the managing for
Cooperation to enhance transport and logistics in the re- development results approach into country partnership strategies
gion. A regional technical assistance for $960,000 will help • Promoted new financing instruments and modalities through road
countries that are part of this initiative identify measures to shows and workshops in Bangladesh, India, and the Maldives
enhance transport infrastructure, improve logistics, reduce • Attracted wide media attention with the South Asia Economic
transport time, and lower transport costs. This initiative will Report, a biannual publication on economics and development
strengthen links between South Asia and Southeast Asia. in the region
An important development in regional cooperation
in South Asia was the ratification of the South Asian Free
Trade Agreement, effective 1 January 2006. The agreement In December 2006, the third annual economists’ confer-
marks an important milestone for the region and is a key step ence brought together ADB’s South Asia country economists
toward greater regional integration and the formation of a to discuss papers on the South Asia development model
South Asian economic union. Through the trade agreement, and the regional trade and integration in South Asia. The
customs tariffs for goods will be reduced to 0–5% by 2016 Australia–ADB South Asia Development Partnership Facility is
and a free trade area established in South Asia. providing $320,000 grant assistance for further research on
intraregional trade and investment in South Asia.
Knowledge Management Another important initiative is South Asia Economic Report,
ADB recognizes the critical importance of economic, thematic, a series of biannual reports on economic and development is-
and sector work as knowledge products that are fundamental sues in South Asia that provides a unique regional perspective.
to the preparation, design, implementation, and ultimate im- Against the background of increasing awareness of a regional
pact of ADB lending and nonlending to South Asia. Knowledge identity, this series discusses common regional trends as well
management initiatives in South Asia included the publication as differences among South Asian countries in socioeconomic
SOUTH ASIA
of Annual Report: SARD Economic, Thematic and Sector Work, development. Publication of South Asia Economic Reportt received
2005, which contains abstracts of 103 studies completed in wide attention in the international print and TV news media.
2005, and the creation of an intranet website that features an
online economic, thematic, and sector work library and the Portfolio Management
latest economic indicators for South Asian countries, as well as Focusing on results, ADB enhanced portfolio performance
recent external research and studies on South Asia. in South Asia by improving project readiness, strengthening
TABLE 19 South Asia: Portfolio Performance Indicators for Sovereign Lending, 2005–2006
No. off Contract Awards/Commitments Disbursements Loans at Risk
Ongoing Loans 2006 2005 2006 2005 2006 2005
Bangladesh 40 367.89 366.84 321.73 257.63 10.0 10.5
Bhutan 6 2.60 2.48 4.60 12.45 – –
India 32 1,714.75 1,037.36 701.41 641.00 6.3 24.2
Maldives 7 7.65 13.38 4.93 4.94 14.3 –
Nepal 23 101.59 69.59 108.01 43.66 17.4 30.4
Sri Lanka 47 144.89 201.27 180.42 206.00 17.0 8.3
Total 155 2,339.37 1,690.91 1,321.09 1,165.68 12.3 14.9
82
procurement and public financial management, and intro-
ducing a results reporting system. New record levels were
reached in contract awards and commitments ($2.3 billion, a TABLE 20 South Asia: Cumulative Lending and
38% increase over 2005) and disbursements ($1.3 billion, a Disbursements by Country as of the end of 2006
($ million)
13% increase over 2005) (Table 19, Figure 8).
Despite the challenging political situation in Bangladesh,
portfolio performance was improved through ADB’s Bangladesh 8,299.79 5,894.37
Bhutan 176.06 103.42
concerted efforts with the Government to reduce start-up
India 16,448.21 8,856.54
delays, prepare project proposals on time, and ensure project Maldives 91.48 62.18
readiness during processing. Disbursements for sovereign Nepal 2,300.98 1,545.20
loans increased to the highest level for Bangladesh over the Sri Lanka 3,763.25 2,754.33
past 10 years. A joint country portfolio review mission was Total 31,079.77 19,216.04
conducted with the joint strategy and program partners, and
an action plan was prepared in close consultation with the
FIGURE 7 South Asia:
Government to improve portfolio performance. ADB Lending by Country, 2005–2006
Joint efforts by ADB and the Government of India (Sovereign and Nonsovereign)
resulted in improved project readiness, project imple- ($ million)
mentation, and overall portfolio performance. A cluster
474.80
Bangladesh
technical assistance facility was created to prepare projects 255.10
and develop capacity so that projects in the program for 27.30

Bhutan
37.60
2007–2009 are ready to award contracts by the time
they become effective. Sector-focused, tripartite portfolio India
417.31
1,535.00
review meetings are held regularly with executing agen-
7.80
cies, and implementation problems are discussed upfront, Maldives
resulting in a marked improvement in contract awards

Nepal
and disbursements. Sovereign public sector loan disburse- 86.00
ments increased to the highest level for India since ADB 253.00
Sri Lanka
commenced lending operations in 1986. 60.00
0 400 800 1,200 1,600
The results-based country portfolio review for Nepal
2005 2006
adopted a portfolio management strategy that provided a
number of effective measures that clearly improved port-
SOUTH ASIA
folio performance. Specific actions included improving FIGURE 8 South Asia: ADB Disbursements by
Country, 2005–2006 (Sovereign and Nonsovereign)
($ million)
280.18
Bangladesh
321.73
12.45
Bhutan
4.60
698.28
India 711.92
4.94
Maldives
4.93
43.66
Nepal
108.01
206.00
Sri Lanka
180.42
0 100 200 300 400 500 600 700 800
2005 2006
ADB supports human resource development in South Asia
83
project readiness, harmonizing with donors on procure- a results-based approach. It was developed jointly with
ment, intensively engaging with the Government, improv- the United Kingdom’s Department for International
ing financial management, and intensive spring cleaning. Development, Government of Japan, and World Bank. The
The Sri Lankan portfolio weakened mainly because of joint country strategy and program allows ADB to be more
the security situation in the north and east of the country, selective and focused while providing coordinated sup-
which has slowed down reconstruction in all uncleared port, along with the other country strategy and program
areas, and because the post-tsunami reconstruction boom partners, to reforms that are difficult but fundamentally
continues to use up available construction materials and important to poverty reduction and economic growth.
skilled labor. Government ministries are also confronted The political situation remained the main challenge to
with increasingly scarce human resources to supervise and smooth program delivery, particularly in the last quarter of
administer complex projects. the year. However, close coordination with the Government
helped mitigate the constraints. Policy dialogue with the
Government helped foster reforms in the energy, education,
COUNTRY HIGHLIGHTS and railways sectors. The dialogue focused on improve-
ments in transparency and efficiency in public procurement,
BANGLADESH portfolio performance, and preparation of operational risk
mitigation action plans to address key governance risks.
The new country strategy and program (2006–2010), ADB operations helped remove critical constraints on
approved in 2005, was one of the first prepared using the investment climate and on empowering the poor by
TABLE 21 South Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
SOVEREIGN
Bangladesh
Improvement of Capital Market and Insurance Governance – 3.00 3.00 4.00 9 Mar
Second Rural Infrastructure Improvement – 96.10 96.10 260.50 18 Aug
Secondary Towns Water Supply and Sanitation Sector – 41.00 41.00 71.10 16 Oct
Secondary Education Sector Development Program
- Project Loan – 85.00 85.00 113.33 26 Oct
- Program Loan – 30.00 30.00 30.00 26 Oct
Bhutan
SOUTH ASIA
Urban Infrastructure Development – 24.60 24.60 30.75 27 Sep

Financial Sector Development Program
- Program Loan – 11.00 11.00 11.00 7 Dec
- Project Loan – 2.00 2.00 2.50 7 Dec
India
Rural Roads Sector II Investment Program (Subproject 1) 180.00 – 180.00 236.00 31 Jul
Rural Cooperative Credit Restructuring and Development Program 1,000.00 – 1,000.00 1,000.00 8 Dec
Kolkata Environmental Improvement (Supplementary) 80.00 – 80.00 113.60 14 Dec
Nepal
Rural Finance Sector Development Cluster Program (Subprogram I) – 56.00 56.00 64.70 26 Oct
Education Sector Program (Subprogram I) – 30.00 30.00 32.00 1 Dec
Sri Lanka
Secondary Towns and Rural Community-Based Water Supply
and Sanitation (Supplementary) 13.50 46.50 60.00 93.20 29 Nov
Subtotal 1,273.50 425.20 1,698.70 2,062.68
NONSOVEREIGN
India
NTPC Capacity Expansion Financing Facility 75.00 – 75.00 4,000.00 27 Jul
SREI Infrastructure Finance Limited, India 50.00 – 50.00 50.00 27 Jul
Dahej Liquefied Natural Gas Terminal Expansion 150.00 – 150.00 336.04 30 Aug
Subtotal 275.00 – 275.00 4,386.04
Total 1,548.50 425.20 1,973.70 6,448.72
84
improving governance in the energy, transport, educa- Bhutan’s two largest cities, as well as in Dagana, a regional
tion, and integrated urban infrastructure sectors. Energy center. The program will improve governance, promote a
reforms aimed to help the Government restructure the better investment climate, and encourage greater private
power sector to ensure adequate and reliable power sup- sector participation to ease constraints facing Bhutan’s
ply at competitive prices through increased private sector financial system.
participation and more efficient management and opera- ADB also approved five technical assistance grants
tions. Successful implementation of the Second Primary for a total of $1.9 million, four of which were for institu-
Education Development Program, which will improve tional strengthening and capacity development in urban
the quality of primary education and its accessibility to infrastructure, the financial sector, and debt manage-
poor children is under way with ADB as the lead agency, ment. Grant assistance from the Japan Fund for Poverty
together with 10 other development partners. Reduction amounting to $1.0 million was approved for
ADB approved four projects totaling $255.1 million rural electricians’ training. ADB also processed, through the
for rural infrastructure improvement, secondary educa- Australia–ADB South Asia Development Partnership Facility,
tion, secondary towns’ water supply and sanitation, and a grant assistance for $0.5 million (part of the approved
improvement of capital market and insurance gover- $8.5 million Development Partnership Program for South
nance. In addition, a multitranche financing facility for Asia regional technical assistance) to support anticorruption
the railways subsector ($430.0 million) was approved. efforts and good governance at the local level.
ADB also approved seven technical assistance grants
totaling $5.7 million. ADB’s India program has
The rural infrastructure improvement project will up-
grade about 9,920 km of tertiary roads that make up the supported the Government’s
rural road network to help reduce poverty in 23 districts efforts to combat poverty through
in north and central Bangladesh, providing the poor with infrastructure-led growth
ready access to services. In secondary education, the
focus is on strengthening the sector’s management and
governance, the curricula and national examinations, and
teacher education, as well as furnishing and equipping
schools, training personnel, and upgrading the curricula.
The secondary towns’ water supply and sanitation sector
project will help provide sustainable access to improved
and safe water supply and sanitation services to about
SOUTH ASIA
1.6 million people in 16 towns, helping the Government
meet the water-related Millennium Development Goals
and its own poverty reduction targets. Finally, a loan to
improve good governance practices in the capital market
and the insurance sector will reinforce investor confidence
in financial markets.
BHUTAN
ADB’s country operations were consistent with the goals
and objectives of the results-based country strategy and
program, which focuses on transport, power, urban
development, and financial and private sector develop-
ment. ADB approved loans for two projects—the Urban
Infrastructure Development Project ($24.6 million) and
the Financial Sector Development Program ($13.0 million).
The project aims to improve urban infrastructure facilities
and basic urban services in Thimpu and Phuentsholing, ADB supports primary and secondary education in South Asia
85
INDIA
The country is one of the fastest-growing economies in
the world. The approach paper to the 11th Five-Year
Plan (2007–2011) reinforces the need for a broad-based
and inclusive growth strategy to further reduce poverty.
The need for good social and economic infrastructure
to facilitate and sustain high and inclusive growth is
critical.
Since 2003, ADB’s India program has supported the
Government’s efforts to combat poverty through infra-
structure-led growth. The strategy’s continued relevance
is borne out by the high priority given by the Government
to infrastructure programs to improve power supply,
build highways, and promote urban development. ADB’s
assistance program for 2007–2009 continues to focus on A broad-based and inclusive growth strategy is critical to reducing
infrastructure. poverty
In 2006, ADB approved six loans amounting to $1.5 bil-
lion. In addition, three multitranche financing facilities ADB’s strategy under its private sector window is to
amounting to $1.1 billion were approved during the year. support infrastructure and financial sector projects by
Sovereign assistance includes loans for the Rural Cooperative providing long-term financial assistance. Approved loans
Credit Restructuring and Development Program ($1.0 bil- included two nonsovereign private sector loans amount-
lion), Kolkata Environmental Improvement Project (supple- ing to $200.0 million, one with $75.0 million reinsurance.
mentary financing) ($80.0 million), and Rural Roads Sector In addition to these loans, $72.6 million was provided
II Investment Program (first periodic financing request) for equity investments. Nonsovereign operations also
($180.0 million), as well as multitranche financing facility included a $75.0 million loan to National Thermal Power
operations for the Uttaranchal Power Sector Investment Corporation, a state-owned enterprise, with $225.0 mil-
Program ($300.0 million), the Uttaranchal State Roads lion in complementary financing under ADB’s B-loan pro-
Project ($550.0 million), and the North Karnataka Urban gram to finance its power generation capacity expansion
Sector Investment Program ($270.0 million). ADB also program and reduce the country’s power shortfall.
approved 12 technical assistance grants to India totaling
SOUTH ASIA
$30.6 million. MALDIVES

The Rural Cooperative Credit Restructuring and Develop-
ment Program will address the problems faced by farmers ADB is promoting energy, education, regional develop-
by undertaking a comprehensive reform of the cooperative ment, and private sector development.
credit structure, which is impaired on the governance, In October 2005, the Government requested ADB to defer
managerial, and financial fronts. The Uttaranchal Power all project-related assistance for 2006 and instead consider
Project will harness the capacity of one of India’s poorest providing a quick-disbursing program loan to help stabilize
states, which has undeveloped hydropower potential esti- the macroeconomic situation. ADB positively responded
mated at 20,000 megawatts, to meet the state’s needs for to this request and developed the Public Sector Resource
clean and efficient energy and enable it to export power to Management Program operation. The policy dialogue is
surrounding states. The Uttaranchal State Roads Project will continuing, with special emphasis on fiscal policy. ADB is
help improve the living standards of the rural population of also helping the Government transform its role from provid-
Uttaranchal through road upgrading. The North Karnataka ing social services to setting policy. A technical assistance for
Urban Sector Program will rehabilitate existing, and con- Restructuring and Privatization of State-Owned Enterprises
struct new, urban infrastructure in the north of the state. amounting to $400,000 was approved in December 2006.
The private sector accounts for three fourths of During the year, ADB continued to strengthen the capacity
both gross domestic product and investment in India. of the Public Service Division and the Ministry of Finance
Development of the sector is therefore critical for growth. and Treasury.
86
Lighting Up Lives and sit to weave. “Sometimes I keep on weaving till
late night because during the day I have to attend to
in Rural Bhutan other household works,” she said.
Educational opportunities have improved for
Darkness used to fall early in the Himalayan country children and adults: children can study after sundown
of Bhutan. In remote villages without electricity, this and adults attend evening classes conducted by the
meant parents stopped work early and children could Department of Education in the project areas.
not do much studying at home. The lack of electricity A villager in Gelephu village said, “Now we don’t
also limited the work of hospitals and the availability of have to depend on timber for cooking and our
school facilities. children can also do their studies in a better way.”
Since 2003, ADB and other international The project’s environmental benefits include
organizations such as the Japan International less pressure on forests as a source of household
Cooperation Agency have helped dispel some of the fuel. Since 1995, when ADB first supported a rural
darkness through a program of rural electrification. electricity project in Bhutan, kerosene use has come
The Rural Electrification and Network Expansion down from an average of 10 liters a month to 1 liter.
Project has brought electricity to over 8,000 new Electrified villages have also reported a drop in
consumers, including poor households, hospitals, theft, burglary, and vandalism with light deterring
and schools. criminals.
Part of the loan included a special feature to
provide electrification kits to the poorest households.
A large barrier for the poorest households is the cost
Fewer women now suffer
to connect the house to the distribution system in
from eye and respiratory
the village, which was about $75, as well as the cost ailments caused by kerosene
of doing internal wiring in the house. To address this, lamps and wood fires
the loan developed criteria to identify the poorest
households and provide them with the electrification
kits, which included a load limiter switch (instead
of a meter), cables for connecting to the distribution
SOUTH ASIA
system, and wires and outlets for wiring the house.
As more villagers use electricity for light, cooking,
and heating, people fall sick less often. In particular,
fewer women now suffer from eye and respiratory
ailments caused by kerosene lamps and wood fires.
As women increasingly use electrical appliances
like rice cookers, they have more time to augment
their meager family incomes with cottage industries
like weaving and tailoring. Both men and women are
able to work longer hours, thanks to electric lighting.
Other income-earning activities that have increased
in the project areas are microenterprises and cottage
industry, including carpentry and carving.
Dorji Wangmo of Decheling Gewog village is
delighted that she can now put on the rice cooker Economic activity has picked up with the provision of electricity
87
NEPAL ADB approved a total of $169.9 million in ADF as-
sistance for four projects. For the first time in Nepal,
Significant political changes took place. An alliance of about 50% of this assistance was in the form of ADF
seven political parties assumed power and Parliament grants. The significantly high assistance resulted mainly
was reinstated following a political movement. These because of the rollover from the 2005 country program,
developments facilitated peace negotiations with the the processing of which was hampered by the prevail-
Communist Party of Nepal/Maoist, resulting in a his- ing political and security situation. ADB also approved
toric peace accord in November 2006 and an end to the 13 technical assistance grants totaling $6.4 million. A
decade-long conflict. project funded by the Japan Fund for Poverty Reduction
The peace accord has increased Nepal’s development to improve the livelihoods of poor farmers and disadvan-
prospects. The improved security situation and environ- taged groups was also approved for $1.0 million. In the
ment for development have helped revive rural livelihoods medium term, ADB will support the Government in its
and economic and development activities. The peace postconflict reconstruction and rehabilitation activities.
process also promises a conducive political and security
environment for postconflict reconstruction and reha- SRI LANKA
bilitation and for the tackling of longer-term issues of
poverty, social exclusion, and weak governance—some The core sectors of ADB’s operations are transport,
of the root causes of the conflict. education, water supply and sanitation, energy, and
ADB prepared a country operations business rural development (small and medium-sized enterprises
plan—which updates the 2005 country strategy and and agriculture). The emphasis of the Government,
program—to guide its operations from 2007 to 2009 voted into power in November 2005, is spreading
in the changed political and development context. The development to rural areas to achieve the Millennium
business plan retains the strategic priorities of the country Development Goals and reduce regional inequality and
strategy and program: reducing poverty and addressing income poverty. The Government intends to finalize
the root causes of the conflict through broad-based eco- its 10-year development plan by early 2007. The plan
nomic growth, promoting inclusive social development, will form the basis for ADB’s country partnership strat-
and improving governance. The business plan seeks to egy, which will be finalized in late 2007. The security
strengthen the results orientation of ADB’s assistance to situation is likely to have an impact on ADB’s project
help make development effective. implementation and processing in the north and east
of the country. The ADB strategy will need to take into
ADB approved a total of $169.9 account the security situation and its possible overall
SOUTH ASIA
million in ADF assistance. For the impact on fiscal management.

ADB approved supplementary financing of $60.0 mil-
first time in Nepal, about 50% lion for the Secondary Towns and Rural Community-Based
was in the form of ADF grants Water Supply and Sanitation Project. It has a significant
community participation component, involving all stake-
holders in project design, which is especially relevant
for its components in the north and east of the country.
Considerable progress in processing was made in three
further loans. The project to expand Colombo Port moved
ahead with a memorandum of understanding signed
between the minister of ports and aviation and ADB in
September 2006, and the request for proposals for the
breakwater issued in January 2007. The bulk of the work for
a small and medium-sized enterprise development project
was completed in 2006. Major progress has been made
on the upgrading of a major expressway to the south to
four lanes. ADB approved four technical assistance grants
Education is a core sector for ADB operations in Sri Lanka in 2006 for a total of $2.3 million.
88
Women’s Female representatives mediated in nearly 4,000 cases
to settle issues important to villagers, including disputes
Empowerment over land, dowry, early marriage, and polygamy.
Supports In Nepal, women’s forums mobilized funds from

village development councils to fund 199 projects
Good Governance ranging from infrastructure development and income
in South Asia generation to forest and environmental management.

They also mediated disputes relating to domestic
violence and polygamy.
A region al technical assistance project has demonstrated
Women representatives from union councils in Pakistan
that encouraging participation of citizens, particularly of
mobilized resources for 190 development schemes,
women and poor people, is good for local government.
including water supply, road pavement, sewerage
By the time ADB funding ended in 2004, the project
and sanitation, school renovation, street lighting, and
had clearly improved governance and empowered
vocational training center for girls. These representatives
women in the project areas in Bangladesh, Nepal,
also helped resolve cases of domestic violence and divorce.
and Pakistan. As a result, development partners came
The project has demonstrated the advantages of citizen
forward in each country to continue the project.
participation at the grassroots level and is enthusiastically
Under the ADB-supported Gender and Governance
supported by its major stakeholders—local government,
Issues in Local Government Project, elected women
local communities, and civil society. It is now being
officials brought together government line officers and
implemented by a nongovernment organization (NGO) in
the poorest constituents at regular village and district
Bangladesh. In Nepal, the Ministry for Local Government
forums to discuss local needs and identify ways to
provided seed money to continue the work of the elected
mobilize government resources.
women’s forums. In Pakistan, an NGO has integrated the
As a result of this participatory process, in 2 years,
forums into its community organizing activities.
women local council members in Bangladesh have
helped train more than 9,500 poor women and young Encouraging participation
people through agriculture, livestock, and fishery
extension programs. Another 6,000 poor women
of citizens, particularly of
women and poor people, is
SOUTH ASIA
gained access to income-generating activities through
various poverty reduction programs from 2002 to 2004. good for local government
Women’s forums mobilized funds from village development councils for 199 projects in Nepal
89
90
SOUTHEAST ASIA
Brunei Darussalam, Cambodia, Indonesia,
Lao People’s Democratic Republic, Malaysia,
Myanmar, the Philippines, Singapore, Thailand,
Viet Nam
ADB’s Mekong and Southeast Asia Departments were merged in May 2006
as part of the realignment of ADB’s regional departments. The merger
placed the 10 countries in Southeast Asia under a single department
(Southeast Asia Department).
Southeast Asia is an economically dynamic and socioculturally diverse
region. Its countries have demonstrated strong economic performance,
with an aggregate gross domestic product growth rate of over 5% in
2006. They have also made progress in implementing their reform agenda,
including macroeconomic management, legal and regulatory frameworks,
and governance. Development opportunities and challenges are different
from one country to another.
Southeast Asia is known for its success in regional cooperation and
integration. Its countries, which are at different development stages
and have various needs, have benefited from working together toward
common development goals. ADB’s realigning regional departments and
Brunei Darussalam’s joining ADB in 2006 brought new opportunities to
promote regional cooperation and integration. ADB worked closely with
the governments to solve development problems facing countries eligible
only for Asian Development Fund (ADF) resources as well as countries eli-
gible for ordinary capital resources (OCR), while strengthening partnership
with others, including Malaysia and Singapore. ADB’s closer engagement
SOUTHEAST ASIA
with these countries strengthened the programming approach to promot-
ing connectivity and competitiveness and made it more meaningful, and
increased the region’s sense of community by enhancing the countries’
links with each other.
ADB provided a total of $1.8 billion in loans to countries in Southeast
Asia, of which 28% was from the concessional ADF resources. Lending op-
erations financed under the ADF and OCR were 48% higher than average
lending over the past 4 years. Cofinancing of $790.4 million was mobilized
for lending operations. ADB provided 59 technical assistance projects to-
taling $51.4 million for project preparation ($13.6 million), advisory ($27.2
million), and regional technical assistance ($10.6 million). It also processed
six Japan Fund for Poverty Reduction projects for $10.4 million, two Japan
Fund for Information and Communication Technology projects for almost
$1.0 million, and one project of $1.0 million for Indonesia from the Asian
Tsunami Fund.
91
Greater Mekong Subregion (GMS). Two loans for
the GMS were approved: the $42 million loan for the GMS TOP 5 ACHIEVEMENTS IN 2006
Rehabilitation of the Railway in Cambodia, and the $60
million loan to Viet Nam for the GMS Kunming–Hai Phong The merger of Mekong Department and Southeast Asia Department
under the 2006 realignment produced operational synergies that
Transport Corridor: Yen Vien–Lao Cai Railway Upgrading helped deliver services to DMCs more efficiently and effectively.
Project. ADB extended 11 technical assistance projects for These included:
project preparation, and studies and advisory support for • Three results-based country strategies and programs and one
regional cooperation from the Technical Assistance Special country operations business plan, and an enhanced engagement
with Indonesia and the Philippines
Fund and Japan Special Fund amounting to $6 million for
the GMS. Key knowledge products were also upgraded and • An updated regional cooperation strategy and program for
the Greater Mekong Subregion and strengthened links with
updated, including the GMS webpage, e-newsletter, and Association of Southeast Asian Nations members and programs
development matrix of priority subregional projects. The
• Emergency assistance to Indonesia, the Philippines, and Viet
GMS governments finalized the transport sector strategy Nam, and support for their long-term disaster preparedness
study. The GMS energy strategy study commenced and is programs
expected to be completed in March 2007. The GMS Core
• Enhanced inclusive development through projects and programs
Agriculture Support Program was prepared for endorsement that help ethnic minorities in Cambodia, the Lao People’s
by GMS agriculture ministers in April 2007. Support for the Democratic Republic (Lao PDR), and Viet Nam, particularly in
GMS Strategic Framework for Action on Trade Facilitation combating HIV/AIDS
and Investment was initiated in 2006. • Support for good governance and reform in the Lao PDR, the
The GMS Core Environment Program started during the Philippines, and Viet Nam
year. It is a 10-year program endorsed by the GMS Environment
Ministers Meeting in May 2005 and by the Second GMS
Summit of Leaders in July 2005. The program supports the effective implementation of the core environment program
broad-based sustainable development of GMS countries by in collaboration with various partners in governments, non-
mainstreaming the environment in the GMS Program. The government organizations (NGOs), and local communities.
Biodiversity Conservation Corridors Initiative, which aims to Greater synergy between the GMS and national pro-
establish sustainable development and management regimes grams and strategies has been a strategic priority of the
in five GMS biodiversity corridor sites, is the flagship program country strategy and program papers for the Lao People’s
of the core environment program. The Working Group Democratic Republic (Lao PDR) and Viet Nam, which the
on Environment, whose members include representatives Board endorsed in October 2006. The strategies and pro-
from the environment ministries of the GMS countries, is grams were closely aligned with the GMS regional coopera-
the steering and oversight body for implementing the core tion strategy and program update, which was approved in
environment program. The Environment Operations Center September 2006. The update includes an indicative lending
was established in Bangkok, Thailand, in April 2006 to serve pipeline totaling about $1.6 billion over 2007–2009. The
as the secretariat of the Working Group on Environment. lending program covers investments in power interconnec-
SOUTHEAST ASIA
The center also coordinates and facilitates the timely and tion and transmission, subregional roads and highways,
TABLE 22 Southeast Asia: Portfolio Performance Indicators for Sovereign Lending, 2005–2006
Ongoing Loans 2006 2005 2006 2005 2006 2005
Cambodia 21 39.10 96.40 54.55 84.47 4.8 –

Indonesia 35 780.97 914.51 861.48 1,014.99 – –
Lao PDR 25 56.18 87.03 76.06 78.74 8.0 –
Malaysia – – 2.15 0.70 7.52 – –
Philippines 21 844.13 238.59 832.98 239.57 9.5 4.3
Thailand – 5.30 15.62 5.20 12.93 – –
Viet Nam 37 252.14 209.80 184.07 223.66 10.8 11.1
TOTAL 139 1,977.81 1,564.10 2,015.04 1,661.86 6.5 3.4
92
sustainable tourism development, and flood management
and mitigation. The technical assistance program for the
3 years totals $16.2 million and consists of 19 projects, TABLE 23 Southeast Asia: Cumulative Lending and
including 10 to prepare investment projects and 9 to sup- Disbursements by Country as of the end of 2006
($ million) a
port advisory, research, and coordination work. ADB also
carried out a concerted program of outreach activities,
Cambodia 912.24 619.14
including Mekong development forums in Singapore in
Indonesia 21,513.30 16,138.83
March and in Stockholm in April 2006, which provided Lao PDR 1,218.34 990.53
a venue for engaging development partners, civil society, Malaysia 1,987.54 1,403.98
Myanmar 530.86 411.83
and the private sector on specific areas of interest in the
Philippines 9,249.03 7,116.92
GMS program. An Agence Française de Developpement Thailand 5,388.07 4,204.65
(French Development Agency)–ADB retreat was held in Viet Nam 4,040.56 2,139.23
January 2006 to improve coordination and effectiveness Total 44,839.94 33,025.11

a Loan component of regional projects distributed to the countries.
of the cofinanced programs of the two organizations
in the Mekong. ADB also discussed with the Australian
Agency for International Development the agency’s plan FIGURE 9 Southeast Asia:
to intensify its involvement in the subregion. (Sovereign and Nonsovereign)
The GMS program continued to promote inclusive ($ million)
development through regional technical assistance proj- 10.00
Cambodia
62.00
ects. In recognition of the risks of human trafficking in the
1,145.69
Indonesia
subregion, it supported a regional anti-trafficking and safe 784.80
migration project in cooperation with the United Nations Lao PDR
70.00
35.20
Inter-Agency Project on Trafficking and several NGOs. It 0.00
Malaysia
0.00
supported capacity building of developing member coun-
Myanmar 0.00
try agencies to combat human trafficking. It worked with 0.00
NGOs to develop safe migration initiatives and commu- Philippines

180.00
650.00
nity-based referral systems. It supported research on links 0.00
Thailand
0.00
between loss of land, livelihoods, and unsafe migration
577.70
Viet Nam
leading to trafficking. Under another regional initiative, 308.19
ADB cooperated with national research institutions to 0 200 400 600 800 1,000 1,200
2005 2006
carry out in-depth research on the impacts of regional
economic integration on poverty in the GMS.
FIGURE 10 Southeast Asia: ADB Disbursements by
Country, 2005–2006 (Sovereign and Nonsovereign)
($ million)
SOUTHEAST ASIA
Cambodia 84.47
54.55
Indonesia 1,014.99
1,025.88
Lao PDR 93.76

84.77
Malaysia 7.52
0.70
Myanmar 0.00
0.00
Philippines 279.89
836.63
Thailand 21.03
21.60
225.87
Viet Nam
184.07
0 200 400 600 800 1,000 1,200
2005 2006
A participatory poverty assessment of the Tonle Sap was done in

partnership with national research and statistics institutes in Cambodia
93
Indonesia–Malaysia–Thailand Growth Triangle. mit endorsed ADB’s status as a development partner of
The growth triangle comprises Sumatra (Indonesia), the the growth triangle. The ministerial meeting in September
eight southernmost provinces of Thailand, and eight 2006 in Selangor, Malaysia, requested ADB’s assistance in
states in Peninsular Malaysia, with a total population of implementing the road map after its formal endorsement,
more than 65 million. The year witnessed a substantial including the development of flagship cooperation projects
deepening of the relationship between ADB and the and the creation of financial mechanisms for increasing
growth triangle cooperation initiative. Following their first public and private investments in infrastructure and other
summit in December 2005, the leaders of the countries sectors. Under a new regional technical assistance, ADB
asked ADB to help them develop a 5-year road map and will also help the countries improve project implementa-
action plan to rebuild dynamism and refocus the initiative. tion, coordination, and monitoring, and identify sectoral
This road map was prepared and submitted for endorse- opportunities for private investment in regional projects.
ment at the second Indonesia–Malaysia–Thailand Leaders’ Brunei Darussalam–Indonesia–Malaysia–Philippines
Summit held in Cebu, Philippines, January 2007. The sum- East ASEAN Growth Area. ADB is the regional adviser
TABLE 24 Southeast Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
SOVEREIGN
Cambodia
Second Power Transmission and Distribution – 20.00 20.00 52.36 4 Oct
Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia – 42.00 42.00 73.00 13 Dec
Indonesia
Infrastructure Reform Sector Development Program (Subprogram I)
- Program Loan 400.00 – 400.00 400.00 21 Nov
- Project Loan – 26.50 26.50 38.76 21 Nov
Sustainable Aquaculture Development for Food Security
and Poverty Reduction – 33.30 33.30 44.52 12 Dec
Madrasah Education Development – 50.00 50.00 71.43 15 Dec
Second Development Policy Support Program (Subprogram I) 200.00 – 200.00 200.00 20 Dec
Lao PDR
Forest Plantations Development – 7.00 7.00 15.35 16 Jan
Rural Finance Sector Development Program
- Program Loan – 7.68 7.68 7.68 17 Aug
- Project Loan – 2.32 2.32 3.36 17 Aug
Northern Region Sustainable Livelihoods through Livestock Development – 9.30 9.30 18.40 29 Sep
Basic Education Sector Development Program – 8.90 8.90 8.90 20 Dec
Philippines
Financial Market Regulation and Intermediation Program (Subprogram I) 200.00 – 200.00 200.00 6 Dec
Power Sector Development Program (Subprogram I) 450.00 – 450.00 450.00 8 Dec
SOUTHEAST ASIA
Viet Nam
Support the Implementation of the Poverty Reduction Program III – 15.00 15.00 15.00 5 Oct
Forests for Livelihood Improvement in the Central Highlands Sector – 45.00 45.00 90.66 26 Oct
Central Region Small and Medium Towns Development – 53.22 53.22 66.72 17 Nov
Emergency Rehabilitation of Calamity Damage – 50.97 50.97 59.89 21 Nov
Agriculture Science and Technology – 30.00 30.00 40.00 11 Dec
Small and Medium Enterprise Development Program (Subprogram II) – 20.00 20.00 20.00 12 Dec
Upper Secondary and Professional Teacher Development – 34.00 34.00 43.18 18 Dec
Greater Mekong Subregion Kunming–Hai Phong Transport Corridor:
Yen Vien–Lao Cai Railway Upgrading – 60.00 60.00 160.00 19 Dec
Subtotal 1,250.00 515.19 1,765.19 2,079.21
NONSOVEREIGN
Indonesia
South Sumatra to West Java Phase II Gas Pipeline 75.00 – 75.00 652.50 10 Aug
Subtotal 75.00 – 75.00 652.50
Total 1,325.00 515.19 1,840.19 2,731.71
– = nil.
a Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and commercial sources;
94
to the growth area. At the countries’ second summit held Portfolio Management
in December 2005, a road map and action plan were en- Monitoring of portfolio performance and focus on the
dorsed for subregional cooperation. ADB helped implement quality of projects were intensified. Regular portfolio
the road map, in part by launching a trade and investment review meetings were held at the division, department,
database. The database is an important tool for decision and country levels, and the resident missions were further
makers to monitor and quantify developments in the empowered, including through greater delegation of loans
area, and to prioritize investment projects. Stakeholders for administration, for more intensive and on-the-ground
can now access the database through the website of the attention to portfolio management issues and quicker
Brunei Darussalam–Indonesia–Malaysia–Philippines East response time. The Southeast Asia Department’s Portfolio
ASEAN Growth Area Facilitation Center. Cooperation in Management Unit within the Office of the Director
easing trade also gained momentum. Senior customs, im- General, established in March 2005 to better coordinate
migration, quarantine, and security officials from the area portfolio management, undertakes rigorous monitoring to
attended the first task force meeting on customs, immigra- ensure that targets are met and issues are quickly resolved.
tion, quarantine, and security in August 2006, organized Portfolio performance in the region significantly improved
with technical assistance from ADB and the German Agency over the previous year. Disbursements amounted to $2.0
for Technical Cooperation (GTZ). They agreed to accelerate billion by the end of 2006, showing a 21% increase over
developing the area’s cooperation framework for customs, 2005 while contract awards increased by 26%, reaching
immigration, quarantine, and security to pilot-test the almost $2 billion (Table 22). The higher disbursements and
implementation of ASEAN agreements on easing cross- contract awards are largely attributable to a considerable
border movement of passengers and freight across land expansion of the Philippine portfolio (Figure 10). ADB
and maritime borders. disbursed $833.0 million in 2006, the highest annual
ADB helped prepare a draft action plan for develop- disbursement ever to the Philippines, including $750.0
ment of the transport and energy sectors. In 2007, ADB will million in program loan tranches and $83.0 million in
continue to support the area’s infrastructure development project loans (Table 22). This resulted in the first positive
(transport and energy sectors); trade facilitation (harmoni- net resource transfer of $268.5 million from ADB to the
zation of customs, immigration, quarantine, and security; Philippines since 1997. Performance indicators for the 21
and cross-border transport facilitation); and its efforts to active loans remained sound, making the Philippines port-
improve coordination and monitoring with technical assis- folio one of ADB’s best, and one of the lowest proportions
tance approved in 2006. ADB will also explore opportunities of projects at risk. The percentage of loans at risk in the
in cooperation with other donors in the areas of agro-in- region is much lower than the ADB-wide average.
dustrial development and environmental management.
COUNTRY HIGHLIGHTS
CAMBODIA
SOUTHEAST ASIA
With the country’s overall incidence of poverty at 34.7%
and rural areas’ at 39.2%, ADB’s overarching goal is poverty
reduction. The country strategy and program for 2005–2009
emphasizes support for broad-based economic growth, in-
clusive social development, and good governance. It focuses
Four crosscutting themes—

governance, private sector
development, gender, and the
environment—support the poverty
reduction objectives of Cambodia’s
ADB’s program in Cambodia for 2007–2009 includes a focus on
education country strategy and program
95
on the Tonle Sap basin, one of the poorest and most envi-
ronmentally sensitive areas of Cambodia, as well as on the
subregion so that the country can benefit from the broader
opportunities provided by the GMS program. Four crosscut-
ting themes—governance, private sector development,
gender, and the environment—are incorporated to support
the poverty reduction objectives of the country strategy and
program. ADB’s program in Cambodia for 2007–2009 will
focus on agriculture and natural resources, education, finance,
small and medium-sized enterprises, rural water supply and
sanitation, and interventions in the Tonle Sap basin.
The Government has continued to adopt laws and regu-
lations to increase private sector activity and fulfill its com-
mitments to the World Trade Organization. The Commercial
Arbitration Law, adopted in May 2006, is expected to pro- ADB supports a results-based program in Indonesia that encourages
mote confidence in financial transactions and commercial responsible environment and natural resources management
activities, and will help reduce lending costs. The law also
provides an alternative dispute resolution mechanism, and The outputs of the technical assistance have been presented
ADB is helping the Government set up a national arbitration at a national launch workshop with high-level government
center. ADB’s ongoing Financial Sector Cluster Program has participation. These will form part of a national poverty data
directly contributed to the passage of these laws. An online base for systematic monitoring of the Government’s National
secured-transaction filing system has been developed and is Poverty Reduction Strategy.
ready for launch in 2007. The National Bank of Cambodia The total assistance program reached $76.1 million
changed its regulations in the last quarter of 2006 to allow (including $42.0 million from the GMS program), with an
banks and microfinance institutions to have licenses for an emphasis on easing critical infrastructure transport and
unspecified duration. The Government has also adopted a energy bottlenecks and on supporting the Government’s de-
licensing review plan that would pave the way to remove centralization and deconcentration initiative. ADB approved
duplicate and unnecessary licenses for businesses. a $7.8 million grant for the Commune Council Development
A participatory poverty assessment of the Tonle Sap was Project Phase II, a $20.0 million loan for the Second Power
done in partnership with national research and statistics Transmission and Distribution Project, and a $42.0 million
institutes. It included long village stays by researchers in 24 loan to rehabilitate the railways in Cambodia. ADB also
sites in 6 provinces. The participatory nature of the research provided $6.3 million for three project preparatory techni-
enabled detailed interactions with the poorest and most cal assistance grants for agriculture and natural resources,
vulnerable sections. The output consists of a wealth of data education, and finance; and five advisory technical assistance
on the extent, nature, causes, and manifestations of poverty grants for education; energy; industry and trade; transport
SOUTHEAST ASIA
in the areas around the Tonle Sap. Serious issues regarding and communications; and law, economic management, and
obstacles to poverty reduction have been highlighted by public policy. ADB approved Cambodia’s first indicative roll-
the poor themselves. There are also remarkable suggestions ing country operations business plan for 2007–2009.
for empowering the poor to enable them to participate
effectively in decision making, and for allocating resources. INDONESIA
Particular attention is given to ADB prepared a results-based country strategy and program
for 2006–2009, which is fully aligned with the Government’s
supporting Indonesia’s reform medium-term development plan. The country strategy and
program, and to increased program addresses a selected number of constraints on
private sector participation in achieving higher pro-poor, sustainable economic growth,
and improved social development. The focus is on five areas
financing development needs, of engagement, including infrastructure development, finan-
especially in infrastructure cial sector deepening, decentralization, faster achievement
96
A Tentative New sea. Under this ADB-supported initiative, impoverished
families receive training and support so they can earn a
Beginning in Aceh dependable living raising livestock.
In Meunasah Tuah, 200 goats were divided among
On the tragic morning tsunami waves ripped through 25 of the community’s neediest families for them to
the village of Meunasah Tuah in Indonesia’s Aceh region, breed and sell. Goat curry is one of Aceh’s most popular
little more than devastation was left in their wake. dishes, and there is never a shortage of demand at local
“The water was as high as the coconut trees,” says markets, so families can depend on a steady source of
Mohamed Zein, who lost his wife and every member of income. The fact that Mohamed Zakir has been able to
his immediate family, save one brother, to the violent change his trade from fishing to goat breeding has also
torrents on 26 December 2004. helped allay the worries of his wife, who says she never
Only 170 of the village’s 3,000 families had any wants her husband or their newborn son to ever have
surviving members, and every last family suffered the to rely on the ocean for survival.
loss of a loved one. Not a single family survived intact. Although nothing can take away the pain Mohamed
“The greatest gift we can give to these families and Nurjanna continue to endure, the recent addition
who have already been through so much is simply an to the family is a source of new joy, and they take
opportunity to create a better and lasting future for comfort in the fact that they now have the resources
themselves,” says ADB Managing Director General Rajat they need to provide for their son.
Nag. To this end, a key component of ADB’s $382 million
assistance program for Aceh, of which $331 million is
in grant form, is helping tsunami-affected families earn
a living through farming and livestock rearing.
For Mohamed Zakir and his family, this has meant
a chance to start their lives anew. He was at sea in his
fishing boat when the tsunami struck. While his wife,
Nurjanna, miraculously survived by grabbing on to a
passing truck tire, the couple lost their only child to the
ferocious waters.
Like many men who once fished the rugged waters
off Aceh, Mohamed Zakir has lost his love for life at Wreckage after the tsunami
SOUTHEAST ASIA
of the Millennium Development Goals, and environment The investment climate policy package supports broad-
and natural resources management. Particular attention ranging reforms on tax, customs, investment law, and labor.
is given to supporting the Government’s reform program, The financial sector reform package aims to strengthen the
and to increased private sector participation in financing the banking and nonbanking sectors and diversify sources of
country’s development needs, especially in infrastructure. financial intermediation. A small and medium-sized enter-
ADB, in coordination with other development partners, prise reform package is being prepared.
helped the Government formulate policy reforms concern- ADB loan approvals reached $784.8 million, with em-
ing the investment climate, infrastructure development, and phasis on supporting the Government’s reform program to
financial sector deepening. The Government announced strengthen macroeconomic management, governance, and
three policy packages in these areas. The infrastructure the investment climate, and to accelerate infrastructure de-
policy package sets out reform goals in nine infrastructure velopment. This includes a $75.0 million nonsovereign public
sectors, supplemented by measures to boost investment. sector loan and $125.0 million in commercial loans under
97
ADB’s B-loan program for the South Sumatra to West Java
Phase II Gas Pipeline Project. ADB also provided $7.1 million
for seven technical assistance projects. In November 2006,
ADB approved an Infrastructure Reform Sector Development
Program worth $400.0 million, to improve the investment
climate and promote infrastructure development. As part
of this program, ADB provided an investment loan of $26.5
million—supplemented by a $7.6 million cofinancing grant
from the Government of the Netherlands—to establish the
Infrastructure Project Development Facility.
Under its medium-term development plan for 2005–2009,
Indonesia aims to boost sustainable economic growth to 7%.
ADB provided $200 million for the second Development Policy
Support Program in conjunction with World Bank assistance
of $600 million, and additional proposed assistance from the
Government of Japan. The assistance focuses on improving
the investment climate and strengthening public financial ADB supports basic education in the Lao PDR
management to improve the use of fiscal resources.
ADB also approved a $50 million loan for public and 2006, the Government approved its Sixth National Socio-
private madrasahs at the primary, junior, and secondary Economic Development Plan 2006–2010, which includes a
levels in 27 poor districts in 3 provinces. The project will strategy for poverty reduction and sustainable development.
enable the madrasahs to meet national education stan- In October 2006, ADB approved a new country
dards for personnel, facilities, and teaching–learning materi- strategy and program, which reflects lessons from ADB’s
als; and give 120,000 students access to education. experience in the country. It introduces greater sector
Another loan for $33.3 million supports a project to selectivity and focus, and proposes a move toward a
develop small-scale and low-cost aquaculture production programmatic approach. ADF lending and grants to
systems that are economically sound and environmentally the Lao PDR amounted to $62.2 million. Disbursement
friendly. The project will also increase the incomes and im- amounted to $76.1 million. ADB approved a $10.0 million
prove the health of 14,000 poor fish farmers by enhancing sovereign public sector loan for the Rural Finance Sector
aquaculture production, supply, and productivity. Development Program, a $9.3 million sovereign sector loan
In response to the earthquake that hit Yogyakarta and for the Northern Region Sustainable Livelihoods through
Central Java in May 2006, ADB, together with other devel- Livestock Development Project, a $7.0 million loan and
opment partners, took the lead in helping the Government $3.0 million grant for the Forest Plantations Development
prepare the damage and loss assessment. Project, and an $8.9 million loan and $12.7 million grant
for the Basic Education Sector Development Program. ADB
SOUTHEAST ASIA
LAO PEOPLE’S DEMOCRATIC also provided eight technical assistance grants amount-
REPUBLIC ing to $4.6 million for project preparation and capacity
development in priority areas.
The Lao PDR recorded robust GDP growth estimated at
7.3%, attributable to a broader base of economic activities. MALAYSIA
Increasingly resilient to external shocks, the country was able
to absorb the recent rise in global oil prices without resorting Malaysia is an important player in ADB’s regional activities,
to government subsidy or suffering serious inflation. In June including the Brunei Darussalam–Indonesia–Malaysia–
Philippines East ASEAN Growth Area and Indonesia–
ADB approved a new country Malaysia–Thailand Growth Triangle programs. ADB
strategy and program for the Lao provided advisory technical assistance worth $150,000 for
the Support of Improved Economic Modeling. This assist-
PDR, which reflects lessons from ance aims to help the Ministry of Finance carry out its core
ADB’s experience in the country functions more effectively by developing a macroeconomic
98
model that will allow for improved consistency and trans- projects (including one supplementary) for $4.7 million, and
parency in planning and policy making. ADB also conducted three investment grants, funded by the Government of Japan,
a policy dialogue with Malaysia. for $4.4 million. The latter included support for the Southern
Leyte landslide disaster under a $3 million investment grant
MYANMAR financed by the Japan Fund for Poverty Reduction. ADB also
reprogrammed $570,000 from approved but unused technical
ADB continued to monitor economic development and assistance grants for disaster-related assistance to finance the
will formulate an operational strategy when appropriate. rehabilitation work following the landslide in Southern Leyte
ADB approved the last loan projects in 1986 and the last in early 2006 and in the Mayon area after a typhoon, and for
technical assistance projects in 1987. country-wide long-term disaster preparedness.
PHILIPPINES THAILAND
The economy has grown steadily in the past 2 years. GDP The resident mission’s first full year of operations was marked
grew at 5.4% because of strong services performance and by significant strengthening of the collaboration between the
the sustained momentum of manufacturing. Record levels Government and ADB as reflected in an expanded knowl-
of remittances ($12.8 billion) from overseas workers have edge-sharing program and continued policy dialogue on
allowed higher household spending. Increased merchan- addressing the development challenges and opportunities
dise exports have also driven growth. that Thailand faces as a middle-income country.
Fiscal consolidation has been moving well with better tax Several major technical assistance projects were suc-
collection and tighter government spending. The aggressive cessfully completed in 2006, including the preparation of
tax reform program, begun in 2005, produced significant a long-term development plan for three tsunami-affected
results. Gains in fiscal consolidation keep the Government provinces, the design of a comprehensive pension system,
on track for achieving its target of a balanced budget by and the analysis of options for integrating Bangkok’s
2008. The significance of the success with fiscal consolida- urban mass transit system and maximizing private sector
tion extends well beyond contributing to macroeconomic participation in the construction and operation of an ex-
stability. It has the potential to be the tipping point that panded network. ADB approved four technical assistance
moves the Philippines onto a path of accelerated growth grants (including one supplementary), amounting to
performance in the medium term. Already, the improved $1.5 million. One of these will support the implementa-
fiscal situation has given space for new ADB program loans tion of a newly approved capital market development plan
in the power and finance sectors; it has also provided the while another will strengthen the capacity of Thailand’s
headroom for the Government to expand spending in infra- Neighbouring Countries Economic Development Cooperation
structure and social expenditure needed by the poor. Agency to become a lead government donor agency. ADB also
The country strategy and program (2005–2007) is maintained its prominent role in the domestic capital market
designed to support high-impact projects. Key features with the issuance of a second baht bond in the amount of
SOUTHEAST ASIA
include a strategic focus on the most urgent development B6.50 billion. No loans were provided, but discussions to de-
constraints, including fiscal consolidation, an improved velop a business pipeline for both sovereign and nonsovereign
investment climate, and achieving the Millennium lending progressed well during the year.
Development Goals; alignment of ADB’s program with In the context of joint efforts to prepare a new country
government strategy and priorities; reducing transaction partnership strategy, consultations with the Government
costs through harmonization with domestic systems and have reconfirmed that there is scope for an expanded,
activities of other development partners; and working yet tightly focused, role for ADB in Thailand. Policy dia-
within a results framework emphasizing development logue has centered on building a partnership with ADB
impacts and outcomes. Implementation of reforms, es- that helps strengthen Thailand’s competitiveness in the
pecially macroeconomic reforms, has improved, as recent global economy by removing key constraints on greater
ADB-supported policy-based operations have indicated. productivity and creating a more conducive environment
ADB approved two program loans for power and finance for private sector investment. At the national level, the
totaling $650.0 million, the highest annual lending since Government seeks ADB’s support in core strategic areas,
1998. In addition, ADB approved five technical assistance such as structuring private–public sector partnerships for
99
Thailand desires to increase its HIV/AIDS prevention. ADB also approved a loan of $51.0 mil-
lion for Emergency Rehabilitation of Calamity Damages for
role, capacity, and effectiveness Viet Nam. ADB approved 15 technical assistance projects
as a regional donor and global (including 2 supplementary) for $16.5 million. The HIV/AIDS
development partner Prevention among Youth Project aims to stop the spread
of the disease in 15 provinces through an integrated plan
complex, large-scale infrastructure projects; addressing involving mass media and community campaigns. It will be
key structural and regulatory reforms to further develop complemented by a comprehensive program of activities
the domestic capital market; and introducing innovative and services to bring about widespread behavior changes
approaches and technologies for improving environmental among young people.
management and promoting energy efficiency initiatives. ADB continued to support the Government by creating
As a middle-income country, Thailand desires to a favorable private sector environment through a program
increase its role, capacity, and effectiveness as a regional loan of $20.0 million supporting small and medium-sized
donor and global development partner. ADB brings con- enterprise development and a loan of $30.0 million
siderable added value to the partnership by sharing its ex- supporting the development of agriculture science and
tensive experience and expertise in supporting subregional technology. ADB supported social inclusiveness through
cooperation programs and regional economic integration. an ADF loan of $34.0 million to upper secondary and
At the regional level of partnership, Thailand and ADB professional teacher development, a loan of $45.0 mil-
will work together to cofinance development projects in lion for Forests for Livelihood Improvement in the Central
neighboring countries, facilitate increased subregional Highlands, and a loan of $53.2 million for Central Region
trade and investment, and contribute to the develop- Small and Medium Towns Development. The technical as-
ment of more efficient and liquid bond markets in Asia. sistance program to help develop a lending program and
Continued progress on these initiatives will also serve to build capacity is highlighted by a high degree of cofinanc-
strengthen the role of the resident mission as a hub for ing: every dollar under ADB technical assistance financing
ADB’s operations in the GMS and in the region. is matched by another dollar from cofinanciers.
ADB actively participated in initiatives of the five-bank
VIET NAM group of ADB, African Development Bank, Kreditanstalt
für Wiederaufbau (KfW), Japan Bank for International
The year was a period of transition with the approval of Cooperation, and the World Bank. The group helped imple-
the new Five-Year Socio-Economic Development Plan ment the Hanoi Core Statement by actively participating in the
2006–2010. Viet Nam was accepted as the 150th member of thematic groups, particularly those dealing with procurement
the World Trade Organization. ADB prepared its first results- and environmental and social safeguards. The banks also
based country strategy and program for 2007–2010 for Viet helped revise regulations to ensure efficiency in investments
Nam in full alignment with the development plan. To help financed by official development assistance, and contributed
achieve the development plan’s targets, the country strategy considerably to drafting the procurement law and its imple-
SOUTHEAST ASIA
and program focuses its operations on pro-poor, business-led mentation guidelines, and to improving project management
economic growth; social equity and balanced development; unit structures, their transparency, and accountability to
and proper environmental protection and management. support the Government’s anticorruption efforts.
The country strategy and program emphasizes promo- Under the technical assistance’s results-based monitor-
tion of good governance and anticorruption efforts in all ing of poverty and growth, ADB has worked closely with
operations, with appropriate multifaceted support for the Government and other donors to help develop the
regional cooperation. The country strategy and program monitoring and evaluation framework for the new Five-
also focuses more on creating an enabling environment for Year Socio-Economic Development Plan (2006–2010).
pro-poor private sector operations and on improving links
between private and public sector operations. ADB prepared its first results-based
ADB approved $308.2 million in loans and $32.5 million country strategy and program for
in grants, including a GMS loan of $60.0 million for improv-
ing railways linking Ha Noi with Lao Cai at the border with the 2007–2010 for Viet Nam in full
People’s Republic of China, and a grant of $20.0 million for alignment with the development plan
100
Strengthening The program aims to build a professional, effective, and
efficient public administration system.
Good Governance Viet Nam also endorsed the regional Anti-Corruption
in Viet Nam Action Plan that ADB and the Organisation for
Economic Co-operation and Development initiated.
The program comprises institutional reform,
Good governance is one of the strategic thrusts of
organizational reform, civil service reform, salary
ADB operations in Viet Nam. It is also a priority for the
reform, improvement of the quality of civil servants by
Government. The 10th Party Congress in April 2006
training and retraining, public financial management,
stressed the urgent need to strengthen governance to
and modernization of public administration, including
ensure that public resources are used more effectively
computerization of state administration.
and efficiently, and minimize their misuse; and to
ADB has supported the program mainly by training
control corruption. The conference emphasized that
and retraining public officials, by helping develop more
government officials must be more accountable.
effective training modules to meet skill needs, and by
Although new laws have considerably strengthened
supporting e-government initiatives.
regulatory and institutional frameworks to deal with
corruption, in July 2006 Viet Nam was ranked 102
out of 144 in Transparency International’s corruption
perception index. Clearly, much remains to be done and
ADB is helping Viet Nam in its anticorruption efforts.
Recognizing the importance of continued
administrative reform to achieve economic growth
and reduce poverty, Prime Minister Nguyen Tan
Dung indicated at the last Cabinet meeting of 2006
(26–27 December) that strengthening administrative
reforms, sustaining economic growth, and
continuing the fight against corruption will be the
Government’s key tasks for 2007.
ADB has helped the Government draft key
legislation and implementing regulations, including an
anticorruption law that the National Assembly passed in
SOUTHEAST ASIA
2006. With ADB support, a civil service bill is now being
drafted to go before the National Assembly in 2007.
ADB’s current assistance builds on the support it
has lent Viet Nam in this sector since January 2003,
when ADB approved a program loan supporting
the implementation of the Government’s Public
Administration Reform Master Program (2001–2010). The program includes computerization of state administration
101
Photo: Vicente Angeles
INTERNAL
INITIATIVES
ADB’s human resources management supported its reform agenda, particu-
larly the aim of making the institution more results-focused. A dual career
path was introduced to strengthen strategic leadership in key technical areas.
ADB completed an enhanced separation program that responds to a shift in
sector focus under the second medium-term strategy (2006–2008).
Knowledge management efforts were strengthened with an agreement
to increase coordination among the four knowledge-focused departments
and the mainstreaming of knowledge management into ADB’s operations.
Information technology (IT) systems were improved and IT security
strengthened. A new IT product was launched to enhance knowledge
sharing in ADB and with external partners: the C-Cube is designed to al-
low easier information sharing within communities of practice. Financial
control mechanisms were strengthened.
Through seminars and workshops, ADB raised awareness of, and com-
pliance with, its anticorruption policy and procedures.
More efficient procedures and processes increased workplace safety and
security, improved administrative services, and led to substantial savings.
HUMAN RESOURCES
The human resources strategy is a key element of ADB’s reform agenda.
INITIATIVES
The strategy aims to establish a merit-based human resources manage-

INTERNAL
ment system that supports ADB’s vision and objectives. It commits ADB
to improving the effectiveness of its human capital, to introducing a new
performance management and rewards system, and to improving leader-
ship throughout ADB.
ADB improved the quality and timeliness of recruitment and selection
by introducing several changes, including a two-panel structured interview
process for external candidates, results-based job descriptions, and interview
skills training. Further improvements to the recruitment and selection process
will be implemented.
103
To help its senior staff to take on more demanding roles, ADB provided learning and development support on managerial and leadership skills
The shift in sector focus under the second medium-term ADB’s highly valued technical talent. Initiatives to support
strategy requires an adjustment in the staff skills mix. ADB an inclusive environment were implemented.
completed an enhanced separation program, involving 32 During the first 2 years of the strategy’s implementation,
professional and 85 local staff members. Furthermore, 30 ADB has carried out a significant number of activities to
positions were sequestered and strategically reallocated improve the effectiveness of its human capital and introduce
to operations departments and other priority areas. ADB a new performance management and rewards system.
prepared to launch a strategic recruitment initiative to fill Strengthening of leadership and accountability throughout
the gaps in its talent and skills. ADB to initiate and sustain the culture change is an ongoing
The second cycle of the new performance manage- process and challenge that will require more time. The imple-
ment system was implemented to continue the effort to mentation of most of the strategy’s action plans or initiatives
promote a results-oriented work culture. Implementation will be completed or under progress by the end of 2007 as
proved to be managerially demanding. Revisions are under planned. ADB will continue to implement several ongoing
way to support a more merit-based culture. initiatives beyond 2007 to achieve the strategy’s objectives.
ADB reviewed its learning and development program
to identify better ways to meet its business needs. To en- Staffing
able its managerial leaders to take on more demanding At the end of 2006, ADB’s staff totaled 2,405 from 54
roles, ADB provided learning and development support on of its 66 member countries: 5 members of Management,
managerial and leadership skills.
INITIATIVES
INTERNAL
ADB has established a systematic talent management

process for identifying potential leadership and managing Thirty positions were sequestered
their development. An assessment and development center and strategically reallocated
will be established in 2007 to provide the foundation for to operations departments
the developmental growth of ADB’s potential managerial
leaders.
and other priority areas. ADB
A nonmanagerial dual career path was introduced
prepared to launch a strategic
to provide leadership in strategic technical areas and to recruitment initiative to fill the
respond to the need to professionally reward and retain gaps in its talent and skills
104
A modest real budget growth alumni portal was expanded from an e-mail forwarding
service for former ADB staff to an information portal for
in 2007 ensures adequate pensioners on their retirement and insurance benefits.
funding for high-priority work
programs and initiatives INTERNAL ADMINISTRATIVE
EXPENSES
and 856 professional and 1,544 local staff members,
of whom 465 or about 19.3% are in field offices. There Internal administrative expenses totaled $299.4 million,
were 2 appointments and 1 departure in Management, with savings amounting to $13.5 million against the original
70 appointments and 97 departures of professional staff budget of $312.9 million. Overall savings were primarily at-
members, while 122 local staff members joined ADB and tributed to lower-than-expected staff-related costs because
147 left. The share of women professional staff members of lower staff years resulting from the implementation of
has remained constant at 29%. enhanced separation program; and lower-than-anticipated
relocation costs, business travel, and administrative expenses.
COMPENSATION About $1.4 million was transferred from the general contin-
gency to the offices of the directors ($0.8 million) and the
Consistent with ADB’s market-based compensation Operations Evaluation Department ($0.6 million) to meet
system, the Board approved a 4.4% increase in the salary increase in staff related costs.
budget for 2007 for professional staff, 3.5% of which will For 2007, the net internal administrative expenses bud-
be used for performance-related salary increases and the get is $332.9 million. The increase over the 2006 budget
balance for performance and team bonuses. The Board reflects a price growth of 5.2% and a volume growth of
also approved a weighted average increase of 9.2% for 1.2%. An estimated $4.1 million is expected to be recover-
national officers and administrative staff at headquarters able from administrating trust funds of multilateral and
for 2007. An overall weighted average increase of 13.8% bilateral institutions.
for national officers and administrative staff in 25 field A modest real budget growth in 2007 ensures
offices will be implemented in 2007. adequate funding for high-priority work programs and
The Board approved a new pension plan effective initiatives, including aligning priorities with the second
1 October 2006 for staff hired from this date onward. medium-term strategy through country partnership and
The new plan is similar to the current one but provides regional cooperation strategies; strengthening support to
fewer ADB-guaranteed benefits and more staff-directed portfolio management, including continued delegation
contributions. The new scheme will have a lower pension ac- of projects and country portfolio management to resident
crual rate and will be noncontributory for staff participants, missions; ensuring quality at entry of new projects; sup-
with an option to contribute to the discretionary benefit porting the increasing demand for private sector opera-
scheme to top up their staff retirement plan benefits. tions in ADB’s developing member countries; strengthen-
Changes were made to the Group Medical Insurance ing risk management, especially credit risk management;
Plan for pensioners. The reimbursement rate was reduced and improving ADB’s catalytic role through financing
from 80% to 75%, and the stop-loss benefit was reintro- partnerships that mobilize resource commitments from
duced but at slightly higher limits with no ADB subsidy. cofinanciers to ADB’s developing member countries.
Cost-effective improvements to the plan were introduced, The 2007 budget also includes an annual capital
such as more advantageous reimbursement rates for ge- budget of $3.7 million, mainly to fund cyclical capital
INITIATIVES
INTERNAL
neric drugs and the inclusion of phytomedicines, additional expenditures for headquarters facilities and information
services for physiotherapy and ultrasound, and expansion technology equipment, and to meet the replacement and
of the vaccination program for staff and dependents at acquisition requirements of field offices.
the ADB Medical Center.
Benefits administration was streamlined by introduc-
ing more self-service facilities—the certification request The Board approved a new pension
system, benefits self-service, staff loan system, and home
country travel system—which allow easier online access plan effective 1 October 2006 for
by staff to their personal benefits information. The ADB staff hired from this date onward
105
ADMINISTRATIVE SERVICES
The strategic work program of the Office of Administrative
Services focused on improving workplace safety and secu-
rity and delivering responsive, high-quality administrative
services across ADB.
The office continued its programs to improve and
streamline business processes. A more efficient monitor-
ing and control mechanism for mailing documents gen-
erated annual savings of about $300,000. ADB reduced
the number of computer printers, standardized the use
of toner, and enhanced copiers’ capability, leading to an-
nual savings of $80,000. Outsourcing opportunities were
Staff discuss the challenges of improving access to ADB documents
identified, leading to further savings in staff resources.
The continued implementation of the International
information gathered or needed in project or working
Organization for Standardization (ISO) objectives and
groups. C-Cube can also be used for secure knowledge
programs contributed to savings in electricity, water, and
sharing with external stakeholders. The external commu-
paper consumption, amounting to $117,000.
nity of practice for managing for development results used
C-Cube technology to discuss with developing member
KNOWLEDGE MANAGEMENT country government officials issues related to managing
In the second year of the implementation of the knowl-

edge management framework, ADB continued to main- ADB continued to mainstream
stream knowledge management into its operations while knowledge management into its
strengthening the coordination of the four departments operations while strengthening
that focus specifically on this issue.
In November 2006, ADB launched a knowledge man- the coordination of the four
agement tool that enables staff to share and disseminate departments that focus on this issue
INITIATIVES
INTERNAL
Many staff members upgraded their technical skills through extensive training programs
106
for development results, good practices, and lessons four priority theme areas of poverty reduction, regional
learned. C-Cube allows users to chat and hold virtual con- cooperation, governance, and private sector development,
ferences or meetings. Users can access files or documents choosing infrastructure for regional cooperation as an area
from anywhere, anytime; hold online discussions; monitor of specialization. ADBI responds to stakeholders’ requests
the task performance of other group members; plan or for assistance in research, capacity building, and training.
schedule meetings; and search for information. Among the books the ADBI published were Poverty
The four knowledge departments—Asian Development Strategies in Asia and Policies and Institutions for Advancing
Bank Institute, Economics and Research Department, Regional Development: The Philippines in Comparative
Office of Regional Economic Integration, and Regional Asian Context. It also released studies on cross-border
and Sustainable Development Department—established infrastructure, contract farming, market facilitation for
arrangements to strengthen coordination among them- the poor, and renminbi revaluation. Work on the private
selves to avoid duplication and improve synergies in their sector and governance included a study on comparative
knowledge management work. The departments agreed corporate governance in the banking sector.
to examine existing quality control processes and to jointly ADBI actively collaborates with the World Bank, Inter-
and regularly prepare major publications, preferably one American Development Bank, UN agencies, and other
publication a year. The first one—Infrastructure for Regional international organizations and development partners on
Cooperation in Asia—slated for completion in 2008, will research and training (e.g., in conducting distance-blend-
be led by the Asian Development Bank Institute. ed learning courses). Its capacity-building and training
Four other ADB departments established knowledge program focused on strengthening policy implementation
management units, and all departments appointed knowl- and management capacity for development programs un-
edge management coordinators. These arrangements der the four priority themes. ADBI conducted 20 training
were designed to promote best practices and mainstream courses, trained more than 1,600 participants, produced
knowledge management into ADB’s operations. 8 workshop reports, 68 CD-ROMs, and, for the first time,
To disseminate knowledge in developing member offered 3 distance learning courses.
countries, ADB established five regional knowledge hubs ADBI was actively involved in strengthening the knowl-
in partnership with government and nongovernment edge management framework with ADB’s knowledge
development partners in key areas of operational relevance: departments. As part of knowledge management activities,
clean energy at The Energy and Resources Institute (India); about 90 independent expert reviews of development-
the 3Rs—reduce, reuse, recycle—at the Asian Institute of oriented CD-ROMs have been posted on ADBI’s website. The
Technology (Thailand), with support from the United Nations website received international recognition with an honorable
Environment Programme Regional Resource Centre for Asia mention in the inaugural Web for Development awards.
and the Pacific; public finance at the Center for Public Finance Economics and Research Department. The depart-
and Regional Economic Cooperation at the Asian Institute ment’s main role is to conduct policy research and dissemi-
of Management (Philippines); climate change at Tsinghua nate the outputs, both in ADB and in the Asia and Pacific
University (People’s Republic of China); and public–private region. The department launched the Portal for Statistics
partnership in infrastructure at the Emerging Markets Forum Resources, a one-stop service on statistics available to all
(Singapore). ADB staff. It also coordinated the international comparison
The e-Asia and Knowledge Partnership Fund, set up program for the Asia and Pacific region. The program is a
with a $20 million contribution from the Government system for comparing GDP and its components, converted
of the Republic of Korea, will also support knowledge into a single currency using purchasing power parities,
INITIATIVES
INTERNAL
management in the Asia and Pacific region. The fund,

administered by ADB, will, among other things, help ADBI’s capacity-building and
developing member countries reduce the digital gap and
share knowledge and experience. training program focused on
Asian Development Bank Institute (ADBI). The strengthening policy implementation
mission of the Tokyo-based ADBI is to identify effective and management capacity for
development strategies and improve the capacity of
development agencies and organizations in ADB’s devel- development programs under
oping member countries. ADBI retained its focus on its the four priority themes
107
eliminating the shortcomings of using market exchange it helped reach agreement on closer cooperation between
rates. Regular publications included the Asian Development these departments, mainly by coordinating work programs
Outlookk and its update, with assessments of the economic and holding regular meetings of department heads.
outlook for the region as well as discussions of topical issues
such as the impact on the region’s economies of rising oil INFORMATION SYSTEMS AND
and commodity prices, the effect of the end of quotas on TECHNOLOGY
Asia’s textile and clothing industries, and the challenges and
opportunities created by free trade agreements. The Office of Information Systems and Technology
Office of Regional Economic Integration. The continued to streamline operations, respond to technology
office is ADB’s focal point for knowledge management changes and user demands, and accelerate the implemen-
related to regional cooperation and integration, a key tation of the information systems and technology strategy
priority under the second medium-term strategy. The of- capital expenditure program. The new Technology Division
fice’s knowledge products helped promote regional policy within the office introduced an enterprise architecture road
dialogue on cooperation and integration. It published map to guide technology decisions for the organization.
six working papers on regional economic integration as The Information Technology (IT) Committee approved 12
well as two issues each of its regular publications, the principles to align ADB’s IT goals with its overall operations.
Asia Economic Monitorr and the Asia Bond Monitor. The Financial control mechanisms were strengthened in line with
office disseminated information and analyses through its the internationally recognized COBIT (control objectives for
two websites: the Asia Regional Integration Center and information and related technology) framework.
AsiaBondsOnline. It helped build capacity in developing The implementation of IT rules and regulations
member countries through a series of seminars. received Management approval and formed the basis for
Regional and Sustainable Development Depart- high-level data and information security. Security simula-
ment. The department is responsible for knowledge tions, penetration tests, and audit reviews performed
management across ADB and coordination of regional on business systems and equipment substantiate the
public goods. It supports quality and efficiency in all ADB progressive and comprehensive strengthening of infor-
operations. It focuses on sector and thematic issues and has mation and communications systems security. Intensified
a strong operational orientation. The department’s knowl- awareness of information security risks and password
edge management center coordinated the discussions of protection were communicated through road shows to
the four knowledge departments during 2006. As such, further improve IT security throughout ADB.
INITIATIVES
INTERNAL
Business processes were improved and streamlined
108
Staff skills in new technologies ness and compliance with the anticorruption policy and
procedures, and enhanced their capacity to detect and
were upgraded through prevent fraud and corruption.
extensive training programs The Financial, Administrative and Information Systems
Division completed 25 audits in 2006, including audits of
In the area of knowledge management, key projects internally managed investments, operations of a resident
completed under information systems and technol- mission, technical assistance trust or grant funds, and
ogy strategy include a collaborative software solution several consultant contracts. IT reviews covered data se-
for communities of practice and the initial release from curity of ADB’s network environment, selected databases
the document repository system. The document reposi- and operating systems, and disaster recovery testing of
tory is envisioned as the sole, common, easily accessible critical systems. The office also monitored the progress of
repository for key ADB documents. It features a search and outstanding recommendations and verified that corrective
retrieval facility as well as an enterprise-wide classification actions have been undertaken.
structure used to identify, track, and retrieve information. ADB barred 37 firms and 31 individuals in 2006 as a
Four departments have started using the repository. result of corruption investigations, making a total of 311
The office adopted a proactive relationship with its firms and individuals currently ineligible to participate
client departments to provide better and higher levels of in ADB-financed activities. The Integrity Division, which
service. A performance management system using the bal- enforces ADB’s anticorruption policy, received 171 com-
anced scorecard was initiated to improve internal perfor- plaints during the year.
mance and accountability. Under the e-mail server upgrade The Integrity Division also conducted five project
project, users benefited from increased e-mail capacity, procurement-related audits to reduce weaknesses that
additional firewall protection, and printer optimization. may allow fraud, corruption, or abuse in ADB-financed
To ensure better alignment between business and IT, projects. Supreme audit institutions of borrower countries
the office embarked on a business improvement program participated in some of these audits, reinforcing ADB’s
that is expected to eliminate redundancies in processes, ability to share this audit knowledge and support capacity
data entry, and reporting. The engagement model in- development.
troduced allows users to be directly involved with the The Integrity Division further contributed to a Joint
development and execution of their IT needs. International Financial Institutions Anticorruption Task
Staff skills in new technologies and specialized areas Force comprising seven multilateral development banks
such as COBIT, performance management scorecard, IT and international financial institutions. As a result, ADB
service, and project management were upgraded through approved harmonized definitions of fraud and corruption
extensive training programs. with those of the other international financial institutions
and agreed on common principles and guidelines for
AUDIT AND INTEGRITY investigation.
The Integrity Division’s 2006 Annual Report is at:
The Office of the Auditor General, through its Financial, www.adb.org/Documents/Reports/Anticorruption/OAGA-
Administrative and Information Systems Division, con- Annual-Report-2006.pdf.
ducted independent appraisals of ADB’s operations. These
appraisals have helped strengthen internal controls and
efficiencies in the financial, operational, and IT areas. ADB barred 37 firms and
INITIATIVES
INTERNAL
Through its Integrity Division, the office addressed al-
leged incidents of corruption and fraud in ADB activities, 31 individuals in 2006 as a result of
conducted staff workshops, initiated a series of regional corruption investigations, making
anticorruption seminars, and worked with national audit a total of 311 firms and individuals
institutions of developing member countries in carrying
out project procurement-related audits. These activities currently ineligible to participate
have helped increase staff’s as well as borrowers’ aware- in ADB-financed activities
109
APPENDIXES
APPENDIXES
112 Appendix 1: Members, Capital Stock, and Voting Power
113 Appendix 2: Resolutions of the Board of Governors
Adopted in 2006
113 Appendix 3: Selected Policy, Strategy, and Financial Papers
Discussed by the Board in 2006
114 Appendix 4: Board of Governors
116 Appendix 5: Board of Directors and Voting Groups
116 Appendix 6: Committees of the Board of Directors
117 Appendix 7: ADB Institute Advisory Council
118 Appendix 8: Organizational Structure
119 Appendix 9: Former ADB Presidents and Vice Presidents
120 Appendix 10: Summary of Budget for 2007
121 Appendix 11: Professional Staff Representation of ADB Members
APPENDIXES
111
Appendix 1
Members, Capital Stock, and Voting Power
(as of 31 December 2006)
Year Subscribed Voting Year Subscribed Voting

Member of Capitala Powerb Member of Capitala Powerb
Membership (% of total) (% of total) Membership (% of total) (% of total)
REGIONAL NONREGIONAL
Afghanistan 1966 0.034 0.330 Austria 1966 0.341 0.576
Armenia 2005 0.299 0.542 Belgium 1966 0.341 0.576
Australia 1966 5.793 4.937 Canada 1966 5.237 4.493
Azerbaijan 1999 0.445 0.659 Denmark 1966 0.341 0.576
Bangladesh 1973 1.022 1.121 Finland 1966 0.341 0.576
Bhutan 1982 0.006 0.308 France 1970 2.330 2.167
Brunei Darussalam 2006 0.353 0.585 Germany 1966 4.331 3.768
Cambodia 1966 0.050 0.343 Italy 1966 1.809 1.751
China, People’s Republic of 1986 6.451 5.464 Ireland 2006 0.341 0.576
Cook Islands 1976 0.003 0.305 Luxembourg 2003 0.341 0.576
Fiji Islands 1970 0.068 0.357 The Netherlands 1966 1.027 1.125
Hong Kong, China 1969 0.545 0.739 Norway 1966 0.341 0.576
India 1966 6.338 5.374 Portugal 2002 0.341 0.576
Indonesia 1966 5.452 4.665 Spain 1986 0.341 0.576
Japan 1966 15.625 12.803 Sweden 1966 0.341 0.576
Kazakhstan 1994 0.807 0.949 Switzerland 1967 0.584 0.770
Kiribati 1974 0.004 0.306 Turkey 1991 0.341 0.576
Korea, Republic of 1966 5.043 4.338 United Kingdom 1966 2.045 1.939
Kyrgyz Republic 1994 0.299 0.543 United States 1966 15.625 12.803
Lao People’s Subtotal Nonregional 36.735 35.146
Democratic Republic 1966 0.014 0.314
Total 100.000 100.000
Malaysia 1966 2.726 2.484
Maldives 1978 0.004 0.306
Note: Numbers may not add up because of rounding. For other details, see tables on
Marshall Islands 1990 0.003 0.305 pages 36 and 37, Volume 2.
Micronesia,
Federated States of 1990 0.004 0.306 a Subscribed capital refers to a member’s subscription to shares of the capital stock
of ADB.
Mongolia 1991 0.015 0.315
b The total voting power of each member consists of the sum of its basic votes and
Myanmar 1973 0.545 0.739 proportional votes. The basic votes of each member consist of such number of votes
Nauru 1991 0.004 0.306 as results from the equal distribution among all members of 20% of the aggregate
sum of the basic votes and proportional votes of all members. The number of
Nepal 1966 0.147 0.421 proportional votes of each member is equal to the number of shares of the capital
New Zealand 1966 1.538 1.533 stock of ADB held by that member.
Pakistan 1966 2.181 2.048
Palau 2003 0.003 0.306
Papua New Guinea 1971 0.094 0.378
Philippines 1966 2.385 2.211
Samoa 1966 0.003 0.306
Singapore 1966 0.341 0.576
Solomon Islands 1973 0.007 0.308
Sri Lanka 1966 0.581 0.768
Taipei,China 1966 1.090 1.175
Tajikistan 1998 0.287 0.532
Thailand 1966 1.363 1.393
Timor-Leste 2002 0.010 0.311
Tonga 1972 0.004 0.306
Turkmenistan 2000 0.253 0.506
Tuvalu 1993 0.001 0.304
APPENDIXES
Uzbekistan 1995 0.674 0.843

Vanuatu 1981 0.007 0.308
Viet Nam 1966 0.342 0.576
Subtotal Regional 63.265 64.854
112
Appendix 2
Resolutions of the Board of Governors Adopted in 2006
Resolution No. Subject Date Adopted
313 Amendment to Section 7(B)(a) of the By-Laws 17 January

314 Retirement Benefits for President 17 January
315 Membership of Ireland and Increase in Authorized Capital Stock 2 April
316 Membership of Brunei Darussalam and Increase in Authorized Capital Stock 16 April
317 Financial Statements and Independent Auditors’ Reports 6 May
318 Allocation of Net Income 6 May
319 Earmarking of Ordinary Capital Resources Surplus for Reconstruction of Yogyakarta
and Central Java Provinces 3 July
320 Membership of Georgia and Increase in Authorized Capital Stock 25 August
321 Election of President 22 September
322 Decisions Relating to Section 5 of the By-Laws 11 November
323 Amendment to Section 7(B)(a) of the By-Laws 11 November
Appendix 3
Selected Policy, Strategy, and Financial Papers Discussed by the Board in 2006
Title Board Discussion Date
Revising the Procurement Guidelines 6 February

Use of Consultants by ADB and its Borrowers 6 February
Medium-Term Strategy II (2006–2008) 31 March
Review of ADB’s Loan Charges and Allocation of 2005 Net Income 3 April
ADB’s Financing Partnership Strategy 18 July
Regional Cooperation and Integration 25 July
Enhancing ADB Support to Middle-Income Countries and Borrowers from OCR 22 August
Review of ADB’s Credit Enhancement Operations 29 August
Asset and Liability Management Policy of ADB 5 September
Work Program and Budget Framework 2007–2009 3 October
Enhancements for ADB’s Loan and Debt Management Products 16 November
Review of ADB’s Liquidity Policy 16 November
Review of ADB’s Investment Strategy and Authority 16 November
Borrowing Program for 2007 7 December
Budget of the Asian Development Bank for 2006 15 December
OCR = ordinary capital resources.
APPENDIXES
113
Appendix 4
Board of Governors
(as of 31 March 2007)
Koji Omi
(Japan)
Chair
Nickel Lee-Hang Pedro Solbes Mira
(Samoa) (Spain)
Vice Chair Vice Chair
Member Governor Alternate Governor
Afghanistan Anwar Ul-Haq Ahady Wahidullah Shahrani

Armenia Vardan Khachatryan David Avetissian
Australia Peter Costello Greg Hunt1
Austria Wilhelm Molterer2 Marcus Heinz
Azerbaijan Heydar Babayev Samir Sharifov3
Bangladesh A.B. Mirza Md. Azizul Islam4 Md. Aminul Islam Bhuiyan5
Belgium Didier Reynders Gino Alzetta
Bhutan Lyonpo Wangdi Norbu Sonam Wangchuk6
Brunei Darussalam Pehin Dato Abdul Rahman Ibrahim 7
Dato Ali Apong7
Cambodia Keat Chhon Aun Porn Moniroth
Canada Peter MacKay vacant
China, People’s Republic of Jin Renqing Li Yong
Cook Islands Terepai Maoate Sholan Ivaiti8
Denmark Ole E. Moesby Sus Ulbæk
Fiji Islands Jone Yavala Kubuabola Savenaca Narube
Finland Marjatta Rasi Anneli Vuorinen
France Thierry Breton Xavier Musca
Georgia Aleksi Aleksishvili9 George Arveladze10
Germany Karin Kortmann Rolf Wenzel
Hong Kong, China Henry Tang Joseph Yam
India P. Chidambaram A. K. Jha
Indonesia Sri Mulyani Indrawati Paska Suzetta11
Ireland Brian Cowen T.D.12 Robert Bradshaw
Italy Mario Draghi Ignazio Angeloni
Japan Koji Omi13 Toshihiko Fukui
Kazakhstan Natalya Artemovna Korzhova Marat Apsemetovich Kusainov
Kiribati Nabuti Mwemwenikarawa Taam Biribo14
Korea, Republic of O-Kyu Kwon 15
Seongtae Lee16
Kyrgyz Republic Akylbek Japarov Sabyrbek A. Moldokulov
Lao People’s Democratic Republic Chansy Phosikham Somphao Phaysith17
Luxembourg Jean-Louis Schiltz Arsene Jacoby
Malaysia Dato’ Seri Abdullah Haji Ahmad Badawi Dato’ Dr. Wan Abdul Aziz bin Wan
Abdullah18
1 Succeeded Teresa Gambaro in February 2007. 9 Appointed in February 2007.

2 Succeeded Grasser Karl-Heinz in February 2007. 10 Appointed in February 2007.
APPENDIXES
3 Succeeded Avaz Alekperov in August 2006. 11 Succeeded Burnahuddin Abdullah in September 2006.
4 Succeeded Shoaib Ahmed in January 2007. Shoaib Ahmed succeeded Akbar 12 Appointed in July 2006.
Ali Khan in December 2006. Akbar Ali Khan succeeded M. Saifur Rahman in 13 Succeeded Sadakazu Tanigaki in October 2006.
November 2006.
14 Succeeded Taneti Maamau in February 2007.
5 Succeeded Rafiqul Islam in February 2007. Rafiqul Islam succeeded Md. Ismail
15 Succeeded Duck-Soo Han in July 2006.
Zabihullah in November 2006.
16 Succeeded Seung Park in April 2006.
6 Succeeded Daw Tenzin in June 2006.
17 Succeeded Phouphet Khamphounvong in January 2007.
7 Appointed in April 2006.
18 Succeeded Dato’ Izzuddin bin Dali in February 2007.
8 Succeeded Kevin Carr in March 2007.
114
Member Governor Alternate Governor
Maldives Mohamed Jaleel19 Riluwan Shareef

Marshall Islands Brenson S. Wase Amon Tibon
Federated States of Micronesia Nick L. Andon Lorin Robert
Mongolia Nadmid Bayartsaikhan20 Ochirbat Chuluunbat
Myanmar Hla Tun Daw Myo Nwe
Nauru David Adeang Jonathon Kirkby
Nepal Ram Sharan Mahat21 Vidyadhar Mallik22
The Netherlands Wouter Bos 23
Bert Koenders24
New Zealand Michael Cullen John Whitehead
Norway Anne Margareth Fagertun Stenhammer Henrik Harboe25
Pakistan Omar Ayub Khan Akram Mallik26
Palau Elbuchel Sadang Marino Rechesengel
Papua New Guinea Rabbie Namaliu27 Simon Tosali
Philippines Margarito B. Teves Amando M. Tetangco, Jr.
Portugal Fernando Teixeira dos Santos Carlos Costa Pina
Samoa Nickel Lee-Hang28 Hinauri Petana
Singapore Tharman Shanmugaratnam29 Teo Ming Kian30
Solomon Islands Gordon Darcy Lilo 31
Luma Darcy32
Spain Pedro Solbes Mira David Vergara Figueras
Sri Lanka Mahinda Rajapaksa P. B. Jayasundara
Sweden Joakim Stymne33 Johanna Brismar Skoog34
Switzerland Jorg Al. Reding 35
Adrian Schlaepfer
Taipei,China Fai-nan Perng Teng-Cheng Liu36
Tajikistan Matlubkhon S. Davlatov Nagmatjon Kh. Buriev
Thailand Chalongphob Sussangkarn37 Suparut Kawatkul
Timor-Leste Maria Madalena Brites Boavida Aicha Bassarewan
Tonga Siosiua T.T. ‘Utoikamanu Aisake Eke
Turkey Ali Babacan İbrahim H. Çanakcı
Turkmenistan Geldymurat Abilov vacant
Tuvalu Lotoala Metia38 Aunese Makoi Simati
United Kingdom Hilary Benn Gareth Thomas
United States Henry M. Paulson, Jr.39 Josette S. Shiner
Uzbekistan Saidakhmat Rakhimov Ulugbek Rozukulov
Vanuatu Willie Jimmy Tapangararua Simeon Athy
Viet Nam Le Duc Thuy Phung Khac Ke
19 Succeeded Ismael Shafeeu in April 2006. 30 Succeeded Lim Siong Guan in October 2006.
20 Succeeded N. Altankhuyag in April 2006. 31 Succeeded Bartholomew Ulufa’alu in October 2006. Bartholomew Ulufa’alu
21 Succeeded Roop Jyoti in May 2006. succeeded Peter Boyers in July 2006.
22 Succeeded Bhoj Raj Ghimire in August 2006. Bhoj Raj Ghimire succeeded Bhanu 32 Appointed in December 2006.
APPENDIXES
Prasad Acharya in May 2006. 33 Succeeded Annika Soder in November 2006.

23 Succeeded Gerrit Zalm in February 2007. 34 Succeeded Anders Oljelund in April 2006.
24 Succeeded Agnes van Ardenne-van der Hoeven in February 2007. 35 Succeeded Oscar Knapp in August 2006.
25 Succeeded Nils Haugstveit in July 2006. 36 Succeeded Shuh Chen in October 2006.
26 Succeeded Khalid Saeed in October 2006. 37 Succeeded M.R. Pridiyathorn Devakula in March 2007. M.R. Pridiyathorn
27 Succeeded Bart Philemon in August 2006. Devakula succeeded Thanong Bidaya in November 2006.
28 Succeeded Misa Telefoni Retzlaff in April 2006. 38 Succeeded Bikenibeu Paeniu in August 2006.
29 Succeeded Raymond Lim Siang Keat in October 2006. 39 Succeeded John W. Snow in August 2006.
115
Appendix 5
Board of Directors and Voting Groups
(as of 31 January 2007)
Director Alternate Director Members Represented
Emile Gauvreau Pasi Hellman Canada, Denmark, Finland, Ireland, The Netherlands,
Norway, Sweden
Agus Haryanto Richard Stanley Cook Islands, Fiji Islands, Indonesia, Kyrgyz Republic,
New Zealand, Samoa, Tonga
Sibtain Fazal Halim Marita Magpili-Jimenez Kazakhstan, Maldives, Marshall Islands, Mongolia,
Pakistan, Philippines, Timor-Leste
Md. Saad Hashim 1 Siew Juan Aw 2 Brunei Darussalam, Malaysia, Myanmar, Nepal,
Singapore, Thailand
Chol-Hwi Lee Tsuen-Hua Shih 3 Republic of Korea; Papua New Guinea; Sri Lanka;
Taipei,China; Uzbekistan; Vanuatu; Viet Nam
Masaki Omura Atsushi Mizuno Japan
Patrick Pillon João Simões de Almeida 4 Belgium, France, Italy, Portugal, Spain, Switzerland
Ashok Saikia Nima Wangdi Afghanistan, Bangladesh, Bhutan, India, Lao People’s
Democratic Republic, Tajikistan, Turkmenistan
Stephen Sedgwick Richard Moore Australia; Azerbaijan; Cambodia;

Federated States of Micronesia; Hong Kong, China;
Kiribati; Nauru; Palau; Solomon Islands; Tuvalu
David Taylor 5 Sebastian Paust 6 Austria, Germany, Luxembourg, Turkey,

United Kingdom
Vacant7 Paul W. Curry 8 United States
Xiaosong Zheng Xiaolong Mo People’s Republic of China
1 Succeeded Chaiyuth Sudthitanakorn on 6 November 2006.

2 Succeeded Sein Tin on 16 July 2006.
3 Succeeded Batir Mirbabayev on 2 October 2006.
4 Succeeded Niklaus Zingg on 4 August 2006..
5 Succeeded Volker Ducklau on 1 July 2006 .
6 Succeeded David Taylor on 1 July 2006.
7 Paul W. Speltz resigned effective 29 September 2006.
8 Succeeded Troy Wray on 20 January 2006.
APPENDIXES
116
Appendix 6
Committees of the Board of Directors
Standing Committees
Audit Committee Budget Review Committee

Patrick Pillon (Chair) Ashok Saikia (Chair)
Md. Saad Hashim Sibtain Fazal Halim
Paul W. Curry Masaki Omura
Tsuen-Hua Shih Paul W. Curry
Atsushi Mizuno Pasi Hellman
Richard Stanley Xiaolong Mo
Board Compliance Review Committee Development Effectiveness Committee

Stephen Sedgwick (Chair) Agus Haryanto (Chair)
Chol-Hwi Lee Emile Gauvreau
Siew Juan Aw Xiaosong Zheng
Marita Magpili-Jimenez Richard Moore
Sebastian Paust David Taylor
Joao Simoes de Almeida Nima Wangdi
Ethics Committee
Agus Haryanto (Chair)
Emile Gauvreau
Ashok Saikia
Sibtain Fazal Halim
David Taylor
Working Group on the Annual Report for 2006

Pasi Hellman (Chair)
Paul W. Curry
Marita Magpili-Jimenez
Xiaolong Mo
Richard Moore
Nima Wangdi
Appendix 7
ADB Institute Advisory Council
Masahiko Aoki Stanford University

Victor H. Frank, Jr. JHS Associates, Washington D C
Eric Girardin University Aix-Marseille 2
Ajit K. Jain Secretary to Government of India1
Li Yong Vice Minister of Finance, People’s Republic of China
Andrew MacIntyre Australian National University
APPENDIXES
Ifzal Ali Asian Development Bank
ADB Institute Dean

Masahiro Kawai (16 January 2007–present)
Peter McCawley (2003–January 2007)
1 Retired from the Government of India.
117
Appendix 8
Organizational Structure 1
BOARD OF GOVERNORS
BOARD OF DIRECTORS
PRESIDENT
H. Kuroda
MANAGING OPERATIONS EVALUATION OFFICE OF THE COMPLIANCE

DIRECTOR GENERAL DEPARTMENT 2 REVIEW PANEL 3
R. Nag B. Murray, Director General (vacant), Secretary
VICE PRESIDENT VICE PRESIDENT

ASIAN DEVELOPMENT VICE PRESIDENT VICE PRESIDENT
(Knowledge Management and (Operations 1)
BANK INSTITUTE (Operations 2) (Finance and Administration)
Sustainable Development) L. Jin
M. Kawai, Dean C. Lawrence Greenwood, Jr. K. Pholsena
Ursula Schäfer-Preuss
REGIONAL AND SUSTAINABLE SOUTH ASIA DEPARTMENT EAST ASIA DEPARTMENT OFFICE OF
OFFICE OF
DEVELOPMENT DEPARTMENT K. Senga, Director General H. S. Rao, Director General THE SECRETARY
THE AUDITOR GENERAL
B. Lohani,4 Director General J. Hovland, The Secretary
P. Pedersen, Auditor General
BANGLADESH PRC RESIDENT MISSION
RESIDENT MISSION T. Shibuichi
ECONOMICS AND RESEARCH H. Du, Country Director Country Director OFFICE OF THE
STRATEGY AND POLICY
DEPARTMENT GENERAL COUNSEL
DEPARTMENT
I. Ali, Chief Economist INDIA RESIDENT MISSION MONGOLIA A. Mitchell, General Counsel
K. Sakai, Director General
T. Kondo RESIDENT MISSION
Country Director A. Ruthenberg, Country Director
OFFICE OF BUDGET, PERSONNEL AND
OFFICE OF REGIONAL MANAGEMENT SYSTEMS
ECONOMIC INTEGRATION COFINANCING OPERATIONS NEPAL
W. Liepach, Principal Director RESIDENT MISSION SOUTHEAST ASIA DEPARTMENT
J. Lee, Head K. Munenaga, Director General
(vacant), Country Director DEPARTMENT
A. Thapan, Director General
SRI LANKA
OFFICE OF THE SPECIAL RESIDENT MISSION CAMBODIA OFFICE OF
PROJECT FACILITATOR R. Vokes, Country Director RESIDENT MISSION ADMINISTRATIVE SERVICES
R. May, Special Project A. Goswami, Country Director A. Wasan, Principal Director
Facilitator
CENTRAL AND WEST ASIA INDONESIA
DEPARTMENT RESIDENT MISSION
J. Miranda,5 Director General CONTROLLER’S
RISK MANAGEMENT UNIT E. Cua, Country Director DEPARTMENT
Y. Shin, Head (vacant), Controller
AFGHANISTAN LAO PDR
RESIDENT MISSION RESIDENT MISSION
B. Fawcett, Country Director J. Nugent, Country Director
DEPARTMENT OF EXTERNAL TREASURY
AZERBAIJAN PHILIPPINES DEPARTMENT
RELATIONS
RESIDENT MISSION COUNTRY OFFICE M. Kashiwagi, Treasurer
(vacant), Director General
(vacant), Country Director T. Crouch, Country Director
KAZAKHSTAN THAILAND OFFICE OF

EUROPEAN RESIDENT MISSION RESIDENT MISSION INFORMATION SYSTEMS
REPRESENTATIVE OFFICE S. Wermert, Country Director J. Verbiest, Country Director AND TECHNOLOGY
P. Bénédic
R. Dawson, Principal Director
Resident Director General
KYRGYZ VIET NAM
RESIDENT MISSION RESIDENT MISSION
JAPANESE M.A. Malik, Country Director A. Konishi, Country Director
REPRESENTATIVE OFFICE
W. Chung PAKISTAN
Resident Director General RESIDENT MISSION PACIFIC DEPARTMENT
P. Fedon, Country Director P. Erquiaga, Director General
NORTH AMERICAN TAJIKISTAN

REPRESENTATIVE OFFICE RESIDENT MISSION PACIFIC LIAISON AND
T. Diaz N. Jain, Country Director COORDINATION OFFICE
Resident Director General N. Chakwin, Regional Director
UZBEKISTAN
RESIDENT MISSION PACIFIC
H. Wei, Country Director SUBREGIONAL OFFICE
S. Jarvenpaa, Regional Director
PRIVATE SECTOR
OPERATIONS DEPARTMENT PAPUA NEW GUINEA
R. Bestani, Director General RESIDENT MISSION
S. van der Tak, Country Director
APPENDIXES
SPECIAL LIAISON OFFICE

IN TIMOR-LESTE
C. Andrews, Resident Representative
1 For a list of management and senior staff, go to www.adb.org/About/management.asp.
2 The Operations Evaluations Department reports to the Board of Directors through the CENTRAL OPERATIONS
Development Effectiveness Committee. SERVICES OFFICE
P. Daltrop, Principal Director
3 The Compliance Review Panel reports to the Board of Directors.
4 Concurrent chief compliance officer and special advisor to the President on clean energy and
environment.
5 Concurrently in charge of the innovation and efficiency initiative.
118
Appendix 9
Former ADB Presidents and Vice Presidents
President
Takeshi Watanabe 24 November 1966–24 November 1972

Shiro Inoue 25 November 1972–23 November 1976
Taroichi Yoshida 24 November 1976–23 November 1981
Masao Fujioka 24 November 1981–23 November 1989
Kimimasa Tarumizu 24 November 1989–23 November 1993
Mitsuo Sato 24 November 1993–15 January 1999
Tadao Chino 16 January 1999–31 January 2005
Vice President
C. S. Krishna Moorthi 19 December 1966–31 March 1978

A. T. Bambawale 1 April 1978–28 October 1985
M. Narasimham 1 November 1985–31 July 1988
S. Stanley Katz 1 April 1978–28 September 1990
In Yong Chung 1 August 1988–31 July 1993
William R. Thomson 1 October 1990–30 June 1994
Günther G. Schulz 1 April 1983–30 June 1995
Bong-Suh Lee 1 August 1993–31 July 1998
Pierre Uhel 1 July 1995–24 November 1998
Peter H. Sullivan 6 July 1994–20 September 2000
Myoung-Ho Shin 1 August 1998–31 July 2003
John Lintjer 18 January 1999–16 January 2004
Joseph B. Eichenberger 15 December 2000–23 December 2005
Geert H.P.B van der Linden 1 September 2003–31 August 2006
APPENDIXES
119
Appendix 10
Summary of Budget for 2007
Internal Administrative Expenses
($ thousand)
2006
Budget After 2007
Budget Transfers a Actual Budget
I. BOARD OF GOVERNORS 1,350 1,350 969 1,400

II. BOARD OF DIRECTORS 19,540 20,892 20,614 21,499
Offices of the Directors 11,692 12,478 12,478 12,647
Accountability Mechanism 1,926 1,926 1,648 2,022
Operations Evaluations 5,922 6,488 6,488 6,830
III. OPERATIONAL EXPENSES :236,123 236,123 227,892 250,509
Salaries 123,606 123,606 119,739 129,796
Benefits 65,008 65,008 64,380 71,773
Staff Development 3,697 3,570 3,270 4,016
Relocation 4,848 4,848 3,834 5,242
Consultants 19,327 19,454 19,454 19,370
Business Travel 19,259 19,259 16,901 19,930
Representation 378 378 315 382
IV. ADMINISTRATIVE EXPENSES 56,566 56,566 53,808 60,196
Communications 6,540 6,540 6,227 6,549
Office Occupancy 11,945 12,451 12,451 13,690
Library 694 916 916 950
Office Supplies 1,771 1,771 1,767 1,840
Office Equipment 5,518 5,518 4,892 5,694
Contractual Services 10,941 10,941 9,555 11,831
Insurance 3,483 3,483 3,193 3,054
Depreciation 15,271 14,413 14,273 15,973
Miscellaneous 403 533 533 615
V. TOTAL BEFORE GENERAL CONTINGENCY 313,579 314,931 303,283 b 333,604
VI. GENERAL CONTINGENCY 3,136 1,784 – 3,336
VII. Less: Fee Reimbursement from Trust Funds (3,818) (3,818) (3,907) c
(4,076)
TOTAL 312,897 312,897 299,376 332,864
– = 0 or not applicable.
a
Transfers were made between budget items without exceeding the original amount of each category. An amount of $1,352,000 was transferred from the general contingency
to meet overruns in the budget category of Board of Directors: offices of the directors ($786,000) and operations evaluation ($566,000).
b
Excludes the following items reconciling with financial statements in compliance with generally accepted accounting principles: (i) provisions for future liabilities with respect
to severance pay (-$2,364,000); (ii) accumulated compensated absences ($640,000), and accrued resettlement or repatriation allowances (-$1,691,000); (iii) adjustments of
actuarially determined assessment of benefit obligations with respect to pension costs ($18,376,000) and postretirement medical benefits ($22,491,000); (iv) expenses related
to the enhanced separation program ($6,711,000); and (v) adjustments related to the Afghanistan Resident Mission Guest House ($68,000). Total administrative expenses,
as shown in the financial statements, amounted to $347,514,000. This amount, after deducting $1,178,000 directly charged to Japan Special Fund ($1,098,000) and Japan
Scholarship Program ($80,000), has been distributed as follows: OCR - $127,669,000 (Ref. OCR-2) net of $28,434,000 as front-end fee offset against loan origination costs and
recognized as a reduction in administrative expenses; ADF - $190,233,000 (Ref. ADF-2).
c
This amount ($3,907,000) reflects the estimated total expenses apportioned for administering the trust funds during the year.
APPENDIXES
120
Appendix 11
Professional Staff Representation of ADB Members
National National
Officers/ Officers/
Professional Administrative Professional Administrative
Member Management Staff Staff Total Member Management Staff Staff Total
A. Regional B. Nonregional 0 0 0 0
Afghanistan 0 0 10 10 Austria 0 7 0 7
Armenia 0 0 0 0 Belgium 0 10 0 10
Australia 0 43 6 49 Canada 0 46 0 46
Azerbaijan 0 1 6 7 Denmark 0 6 0 6
Bangladesh 0 9 44 53 Finland 0 4 0 4
Bhutan 0 3 0 3 France 0 23 0 23
Brunei Darussalam 0 0 0 0 Germany 1 36 3 40
Cambodia 0 0 16 16 Ireland 0 0 0 0
China, People’s Italy 0 17 0 17
Rep. of 1 52 34 87 Luxembourg 0 2 0 2
Cook Islands 0 0 0 0 Netherlands 0 13 0 13
Fiji Islands 0 3 9 12 Norway 0 5 0 5
Hong Kong, China 0 4 0 4 Portugal 0 4 0 4
India 0 58 37 95 Spain 0 9 0 9
Indonesia 0 32 36 68 Sweden 0 8 0 8
Japan 1 119 2 122 Switzerland 0 6 0 6
Kazakhstan 0 5 5 10 Turkey 0 6 0 6
Kiribati 0 0 0 0 United Kingdom 0 32 0 32
Korea, Rep. of 0 32 1 33 United States 1 107 3 111
Kyrgyz Republic 0 3 7 10 Subtotal 2 341 6 349
Lao PDR 1 0 12 13
Overall Total 5 856 1,544 2,405
Malaysia 0 20 0 20
Maldives 0 0 0 0
Marshall Islands 0 0 0 0
Micronesia,
Fed. States of 0 1 0 1
Mongolia 0 4 7 11
Myanmar 0 3 0 3
Nauru 0 0 0 0
Nepal 0 7 25 32
New Zealand 0 13 0 13
Pakistan 0 24 34 58
Palau 0 0 0 0
Papua New Guinea 0 1 5 6
Philippines 0 28 1,166 1,194
Samoa 0 1 1 2
Singapore 0 7 0 7
Solomon Islands 0 0 0 0
Sri Lanka 0 13 18 31
Taipei,China 0 6 0 6
Tajikistan 0 1 10 11
Thailand 0 10 9 19
Timor-Leste 0 0 3 3
Tonga 0 1 0 1
APPENDIXES
Turkmenistan 0 0 0 0
Tuvalu 0 0 0 0
Uzbekistan 0 5 13 18
Vanuatu 0 1 0 1
Viet Nam 0 5 22 27
Subtotal 3 515 1,538 2,056
121
GLOSSARY ABBREVIATIONS
B-loan. An ADB loan funded by third parties without re- ADB – Asian Development Bank
course to ADB. ADB’s complementary financing scheme ADF – Asian Development Fund
(CFS) involves the prearranged sale to commercial lend- ASEAN – Association of Southeast Asian Nations
ers of participation in a cofinanced or “complementary” GDP – gross domestic product
ADB loan without recourse to ADB for debt service. The GMS – Greater Mekong Subregion
CFS is used solely to facilitate commercial cofinancing of HIV/AIDS – human immunodeficiency virus/
ADB-assisted private sector projects. ADB is the “lender-of acquired immune deficiency syndrome
record,” since the complementary loan is made in ADB’s IT – information technology
name. Complementary loans are sometimes referred to km – kilometer
as “B” loans to distinguish them from the direct, or “A” Lao PDR – Lao People’s Democratic Republic
loans, provided by multilateral institutions. NGO – nongovernment organization
OCR – ordinary capital resources
Direct value-added cofinancing. Cofinancing with ac- PRC – People’s Republic of China
tive coordination and formal agreements among financ-
ing partners that bring about defined client benefits,
including contractual commitments by ADB (such as for
credit enhancement, syndication, or financial admin-
istration) to facilitate mobilization, administration, or
participation in cofinancing.
Loans at risk. Loans rated as unsatisfactory or partly

satisfactory for impact and outcomes or implementa-
tion progress as articulated in the design and moni-
toring framework or those that might slip into those
categories.
Multitranche financing facility. A debt-financing

facility to target discrete, sequential components of
large stand-alone projects; slices (or tranches) of sector
investment programs over a longer time frame than the
current norm; financial intermediary credit lines; and
guarantees.
Sovereign/nonsovereign. ADB lending is classified

as sovereign and nonsovereign. A sovereign loan
is guaranteed by the national government, while a
nonsovereign loan is not guaranteed by the national
government. Nonsovereign operations refer to an ADB-
financed transaction with a subsovereign, state-owned
enterprise, other public private entity, or private sector
entity as obligor or investee, normally without direct
APPENDIXES
sovereign indemnity. In 2006, ADB’s nonsovereign

operations supported the infrastructure, capital market,
and banking sectors, among others.
122
ADB CONTACT ADDRESSES
Afghanistan Resident Mission (AFRM) Indonesia Resident Mission (IRM) Nepal Resident Mission (NRM)
House No. 126, Street 2 Gedung BRI II, 7th Floor Srikunj, Kamaladi, Ward No. 31
Haji Yaqob Roundabout Jl. Jend Sudirman Kav. 44-46 P.O. Box 5017
Shar-e-now Jakarta 10210, Indonesia Kathmandu, Nepal
Next to District 10 Police Department P.O. Box 99 JKPSA Tel +977 1 422 7779
Kabul, Afghanistan Jakarta 10350A, Indonesia Fax +977 1 422 5063
Tel +93 020 210 3602 Tel +62 21 251 2721 [email protected]
Fax 5535 204 Fax +62 21 251 2749 www.adb.org/nrm
[email protected] [email protected] ADB local: 5515
www.adb.org/afrm www.adb.org/irm
ADB local: 5535 ADB local: 5511 Philippines Country Office (PhCO)
6 ADB Avenue, Mandaluyong City
Azerbaijan Resident Mission (AZRM) Extended Mission in Sumatera 1550 Metro Manila, Philippines
96 Nizami Street, The Landmark, 4th floor Jl. Cut Nyak Dhien 375 Tel +63 2 683 1000
Baku AZ1000, Azerbaijan Lamteumen Timur Fax +63 2 683 1030
Tel +994 12 496 5800 Banda Aceh E-mail: [email protected]
Fax +994 12 465 9990 Tel +62 651 41429 www.adb.org/phco
[email protected] Fax +62 651 45773 ADB local: 1000
www.adb.org/azrm
ADB local: 5588 Pacific Liaison and Coordination Office
Kazakhstan Resident Mission (KARM)
(PLCO)
Bangladesh Resident Mission (BRM) 12 Samal, Astana Tower Business Center
Level 18, 1 Margaret Street
10th Floor, Astana 010000, Kazakhstan
Plot E-31, Sher-e-Bangla Nagar (corner of Clarence and Margaret Streets)
Tel +7 3172 325053/325054
Dhaka-1207, Bangladesh Sydney, New South Wales 2000
Fax +7 3172 328343
GPO # 2100, Dhaka, Bangladesh Australia
Tel +880 2 815 6000 to 6016 20 A Kazybek bi Street Tel +61 2 8270 9444
Fax +880 2 815 6018 / 6019 Arai Building, 4th Floor Fax +61 2 8270 9445
[email protected] Almaty 050010, Kazakhstan [email protected]
www.adb.org/brm Tel +7 3272 582223 / 917344 www.adb.org/plco
ADB local: 5512 Fax +7 3272 918670 ADB local: 5589
[email protected]
Cambodia Resident Mission (CARM) Papua New Guinea Resident Mission
www.adb.org/karm
29 Suramarit Boulevard (PNRM)
ADB local: 5506
Sangkat Chatomuk Level 13, Deloitte Tower
Khan Daun Penh Kyrgyz Resident Mission (KYRM) P.O. Box 1992
Phnom Penh, Cambodia 52-54, Orozbekov Street Port Moresby, NCD, Papua New Guinea
P.O. Box 2436 Bishkek, Kyrgyz Republic Tel +675 321 0408
Tel +855 23 215805 / 215806 / 216417 Tel +996 312 627343 / 612 900445 Fax +675 321 0407
Fax +855 23 215807 Fax +996 312 627344 [email protected]
[email protected] [email protected] www.adb.org/pnrm
www.adb.org/carm www.adb.org/kyrm ADB local: 5565
ADB local: 5509 ADB local: 5542
People’s Republic of China Resident
India Resident Mission (INRM) Lao PDR Resident Mission (LRM) Mission (PRCM)
4 San Martin Marg Corner of Lanexang Avenue and 7th Floor, Block D, Beijing Merchants
Chanakyapuri Samsenthai Road International Financial Center
New Delhi 110 021 P.O. Box 9724, Vientiane 156 Fuxingmennei Avenue
P.O. Box 5331, Chanakyapuri HPO Lao People’s Democratic Republic Xicheng District
Tel +91 11 2410 7200 Tel +856 21 250444 Beijing 100031, PRC
Fax +91 11 2687 0955 Fax +856 21 250333 Tel +86 10 6642 6601
[email protected] [email protected] Fax +86 10 6642 6606
www.adb.org/inrm www.adb.org/lrm [email protected]
ADB local: 5514 ADB local: 5544 www.adb.org/prcm
ADB local: 5521
Extended Mission to Kerala Mongolia Resident Mission (MNRM)
URR 21, Uppalam Road MCS Plaza, 2nd Floor Pakistan Resident Mission (PRM)
Vanchiyoor Seoul Street-4 Overseas Pakistanis Foundation Building
General Post Office Ulaanbaatar, Mongolia Sharah-e-Jamhuriyat
Trivandrum 695 001 P.O. Box 1083, Central Post Office G-5/2, Islamabad
Ulaanbaatas-13, Mongolia GPOnBox 1863, Islamabad, Pakistan
APPENDIXES
Extended Mission to Tamilnadu Tel +976 11 313440 / 323507/ 329836 Tel +92 51 282 5011 to 5016 / 208 7300
Plot No. 69, Door No. 54 Fax +976 11 311795 Fax +92 51 282 3324 / 227 4718
Second Main Raod [email protected] [email protected]
Raja Annamalaipuram www.adb.org/mnrm www.adb.org/prm
Chennai 600 028 ADB local: 5505 ADB local: 5513
123
Special Office in Timor-Leste (SOTL) Thailand Resident Mission (TRM) European Representative Office (ERO)
ADB-World Bank-IMF Building 23rd Floor, The Offices at Central World Rahmhofstrasse 2
Avenida Dos Direitos Humanos 999/9 Rama I Road, Patumwan 60313 Frankfurt am Main, Germany
P.O. Box 62, Dili, Timor-Leste Bangkok 10330 Tel +49 69 2193 6400
Tel +670 332 4801 Thailand Fax +49 69 2193 6444
Fax +670 332 4132 Tel +66 2 263 5300 [email protected]
E-mail: Fax +66 2 263 5301 www.adb.org/ero
www.adb.org.tl [email protected] ADB local: 5517
ADB local: 5520 www.adb.org
Japan Representative Office (JRO)
South Pacific Subregional Office (SPSO) Uzbekistan Resident Mission (URM) Yamato Seimei Building 2
Level 5, Ra Marama Building 1, Khodjaeva Street 1-7-7 Uchisaiwaicho, Chiyoda-ku
91 Gordon Street Tashkent 700027 Tokyo, 100-0011, Japan
Suva, Fiji Islands Republic of Uzbekistan Tel +81 3 3504 3160
Tel +679 331 8101 Tel + 998 71 1401920-25 Fax +81 3 3504 3165
Fax +679 331 8074 Fax + 998 71 1401976 [email protected]
[email protected] [email protected] www.adb.org/jro
www.adb.org/spso www.adb.org/urm ADB local: 5518
ADB local: 5522 ADB local: 5508 North American Representative Office (NARO)
Sri Lanka Resident Mission (SLRM) 815 Connecticut Avenue
Viet Nam Resident Mission (VRM)
49/14 -15 Galle Road NW, Suite 325
Units 701-706,
Colombo 3, Sri Lanka Washington DC 20006, USA
Sun Red River Building
Tel +94 11 238 7055 / 533 1111 Tel +1 202 728 1500
23 Phan Chu Trinh Street
Fax +94 11 238 6527 Fax +1 202 728 1505
Hoan Kiem District
[email protected] [email protected]
Ha Noi, Viet Nam
www.adb.org/slrm www.adb.org/naro
Tel +84 4 933 1374
ADB local: 5507/5533 ADB local: 5517
Fax +84 4 933 1373
Tajikistan Resident Mission (TJRM) [email protected] Asian Developemnt Bank Institute
107 Nozim Khikmat Street www.adb.org/vrm or www.adb.org.vn 8th Floor, Kasumigaseki Bldg.
Dushanbe, 734001, Tajikistan ADB local: 5519 2-5 Kasumigaseki 3 Chome
Tel +992 372 235314 / 235315 / 210558 Chiyoda-ku, Tokyo 100, Japan
Fax +992 372 244900 Tel + 81 3 3593 5500
[email protected] Fax + 81 3 3593 55071
www.adb.org/tjrm [email protected]
ADB local: 5539 www.adbi.org
ADB WEBSITES
ADB Countries www.adb.org/Countries/ Involuntary Resettlement www.adb.org/Resettlement/
ADB's Reform Agenda www.adb.org/ReformAgenda/ Knowledge Management www.adb.org/Knowledge-Management/
t
Accountability Mechanism www.adb.org/Accountability-Mechanism/ Law and Policy Reform www.adb.org/Law/
w
Anticorruption www.adb.org/Integrity/
y Managing for Development
Clean Energy www.adb.org/Clean-Energy/ y Results www.adb.org/MfDR/
R
Cofinancing www.adb.org/Cofinancing/ Microfinance www.adb.org/Microfinance/
e
Consultation and Participation www.adb.org/Participation/ News and Events www.adb.org/News/
Consulting Services www.adb.org/Consulting/ Nongovernment Organizations www.adb.org/NGOs/
s
Debt Issuance www.adb.org/bond-investors/ s Poverty Reduction www.adb.org/Poverty/
y
Economics www.adb.org/Economics/ s Private Sector Development
Education www.adb.org/Education/ and Finance www.adb.org/PrivateSector/r
Environment www.adb.org/Environment/ t Procurement www.adb.org/Procurement/
Evaluation www.adb.org/Evaluation/ Projects www.adb.org/Projects/
Financial Resources www.adb.org/Finance/ Publications www.adb.org/Publications/
Gender and Development www.adb.org/Gender/r Safeguards www.adb.org/Safeguards/ s
APPENDIXES
Governance www.adb.org/Governance/ e Social Protection www.adb.org/SocialProtection/

Health Sector www.adb.org/Health/ Statistics www.adb.org/Statistics/
s
HIV/AIDS www.adb.org/HIV-AIDS/ Tsunami Response www.adb.org/Tsunami/
Indigenous Peoples www.adb.org/IndigenousPeoples/ s Urban Development www.adb.org/urbandev/ v
Information Sharing Water www.adb.org/Water/r
and Disclosure www.adb.org/Disclosure/
e
124
ANNUAL REPORT
These financial statements will be

2006
VOLUME 2 FINANCIAL REPORT
submitted to the Board of Governors

for approval at its annual meeting,
to be held 4-7 May 2007.
About the Asian Development Bank
ADB’s vision is an Asia and Pacific free of poverty. Its mission is to help its developing member countries
substantially reduce poverty and improve the quality of life of their people. Despite many success stories,
the region remains home to two-thirds of the world’s poor. Nearly 1.9 billion people in Asia and the
Pacific live on less than $2 a day. It is these people, above all, whom ADB aims to help. Through its
policies and operations, and in cooperation with governments and other development partners, ADB
promotes growth and development to help people out of poverty. It works to provide all the people
of the Asia-Pacific region with access to the essentials of life—safe water, education, and basic health
services.
ADB is a multilateral development bank owned by 67 members, 48 from the region and 19 from
other parts of the world. ADB’s main instruments for helping its developing member countries are policy
dialogue, loans, equity investments, guarantees, grants, and technical assistance. ADB’s annual lending
volume is typically about $6 billion, with technical assistance usually totaling about $180 million a year.
ADB is based in Manila, Philippines. It has 26 offices around the world and more than 2,000
employees from over 50 countries.
© 2007 Asian Development Bank
Every effort has been made to ensure the

accuracy of the data used in this publication.
Variations in data in ADB publications often
result from different publication dates, although
differences may also come from source
and interpretation of data. ADB accepts no
responsibility from any consequence of their use.
The term “country,” as used in the context of

ADB, refers to a member of ADB and does not
imply any view on the part of ADB as to the
member’s sovereignty or independent status.
In this publication, $ refers to US dollars.
Printed in the Philippines.
The ADB Annual Report 2006 comprises two separate volumes: Volume 1 is the main report and
Volume 2 contains the financial statements and statistical annexes.
2006
ANNUAL REPORT
VOLUME 2 FINANCIAL REPORT
CONTENTS
FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS

I. MANAGEMENT’S DISCUSSION AND ANALYSIS
Overview 3
Ordinary Capital Resources 3
Special Funds 19
Trust Funds Managed by ADB 22
II. ORDINARY CAPITAL RESOURCES (OCR)

Report of Independent Auditors
OCR-1 Balance Sheet, 31 December 2006 and 2005 26
OCR-2 Statement of Income and Expenses for the Years Ended 31 December 2006 and 2005 28
OCR-3 Statement of Cash Flows for the Years Ended 31 December 2006 and 2005 29
OCR-4 Statement of Changes in Capital and Reserves for the Years Ended 31 December 2006 and 2005 30
OCR-5 Summary Statement of Loans, 31 December 2006 and 2005 32
OCR-6 Summary Statement of Borrowings, 31 December 2006 and 2005 34
OCR-7 Statement of Subscriptions to Capital Stock and Voting Power, 31 December 2006 36
OCR-8 Notes to Financial Statements, 31 December 2006 and 2005 38
III. SPECIAL FUNDS RESOURCES

Asian Development Fund (ADF)
ADF-1 Special Purpose Statement of Assets, Liabilities and Fund Balances,
31 December 2006 and 2005 62
ADF-2 Special Purpose Statement of Revenue and Expenses for the Years Ended
31 December 2006 and 2005 63
ADF-3 Special Purpose Statement of Cash Flows for the Years Ended 31 December 2006 and 2005 64
ADF-4 Special Purpose Statement of Changes in Fund Balances for the Years Ended
31 December 2006 and 2005 65
ADF-5 Special Purpose Summary Statement of Loans, 31 December 2006 and 2005 66
ADF-6 Special Purpose Statement of Resources, 31 December 2006 68
ADF-7 Notes to Special Purpose Financial Statements, 31 December 2006 and 2005 69
Technical Assistance Special Fund (TASF)
TASF-1 Statement of Financial Position, 31 December 2006 and 2005 77
TASF-2 Statement of Activities and Changes in Net Assets for the
Years Ended 31 December 2006 and 2005 78
TASF-3 Statement of Cash Flows for the Years Ended 31 December 2006 and 2005 79
TASF-4 Statement of Resources, 31 December 2006 80
TASF-5 Summary Statement of Technical Assistance Approved and Effective
for the Year Ended 31 December 2006 81
TASF-6 Notes to Financial Statements, 31 December 2006 and 2005 82
Japan Special Fund (JSF)

JSF-1 Statement of Financial Position, 31 December 2006 and 2005 87
JSF-2 Statement of Activities and Changes in Net Assets for the
JSF-3 Statement of Cash Flows for the Years Ended 31 December 2006 and 2005 89
JSF-4 Notes to Financial Statements, 31 December 2006 and 2005 90
Asian Development Bank Institute Special Fund (ADBISF)

ADBISF-1 Statement of Financial Position, 31 December 2006 and 2005 95
ADBISF-2 Statement of Activities and Changes in Net Assets for the
ADBISF-3 Statement of Cash Flows for the Years Ended 31 December 2006 and 2005 97
ADBISF-4 Notes to Financial Statements, 31 December 2006 and 2005 98
Asian Tsunami Fund (ATF)

ATF-1 Statement of Financial Position, 31 December 2006 105
ATF-2 Statement of Activities and Changes in Net Assets for the Year Ended 31 December 2006
and for the Period 11 February to 31 December 2005 106
ATF-3 Statement of Cash Flows for the Year Ended 31 December 2006
and for the Period 11 February to 31 December 2005 107
ATF-4 Notes to Financial Statements, 31 December 2006 108
Pakistan Earthquake Fund (PEF)

PEF-1 Statement of Financial Position, 31 December 2006 112
PEF-2 Statement of Activities and Changes in Net Assets for the Year Ended
31 December 2006 and for the Period 14 November to 31 December 2005 113
PEF-3 Statement of Cash Flows for the Year Ended 31 December 2006
and for the Period 14 November to 31 December 2005 114
PEF-4 Notes to Financial Statements, 31 December 2006 115
STATISTICAL ANNEX
Statistical Annex 1: Sovereign and Nonsovereign Loan Approvals by Country, 2006 119
Statistical Annex 2: Special Funds Grant-Financed Projects, 2006 122
Statistical Annex 3: Loan Approvals by Sector: Three Year Moving Averages, 1968–1970—2004–2006 123
Statistical Annex 4: Loan Approvals by Sector, 2006 124
Statistical Annex 5: Sectoral Distribution of Loans, 2006, 1967–2006/Sectoral Distribution of Grants,
2006, 1967–2006 126
Statistical Annex 6: Loan and ADF Grant Approvals, by Country and Source of Funds, 2006 127
Statistical Annex 7: Projects Involving Cofinancing, 2006 128
Statistical Annex 8: Loan Disbursements, 2005 and 2006 131
Statistical Annex 9a: Program Loan Disbursements, 2006 132
Statistical Annex 9b: Trends in Program Lending, 1997–2006 132
Statistical Annex 10: Nonsovereign Approvals and Total Project Costs by Country, 2006 133
Statistical Annex 11: Nonsovereign Approvals and Total Project Costs by Sector, 2006 133
Statistical Annex 12: Nonsovereign Loan and Equity Investment Approvals by Year, 1983–2006 134
Statistical Annex 13: Nonsovereign Loan and Equity Investment Approvals by Country, 1983–2006 135
Statistical Annex 14: Number of Loans and Projects Approved and Under Administration,
Project Completion Reports Circulated, Projects Completed, Loans Closed, and
Project/Program Performance Evaluation Reports Circulated 136
Statistical Annex 15: Amount of Loans Approved, Contracts Awarded, and Disbursements 138
Statistical Annex 16: Technical Assistance Grants by Country and Regional Activities, 1967–2006, 2005, 2006 140
Statistical Annex 17: Technical Assistance Grants, 2006 142
Statistical Annex 18: Technical Assistance Grants by Sector, 1967–2006, 2005, 2006 150
Statistical Annex 19: Technical Assistance Loans and Grants by Sector, 2006 150
Statistical Annex 20: Regional Technical Assistance Activities, 2006 151
Statistical Annex 21: Net Transfer of Resources
(Ordinary Capital Resources and Asian Development Fund), 2004–2006 155
Statistical Annex 22: Net Transfer of Resources
(Ordinary Capital Resources and Asian Development Fund), 1997–2006 156
Statistical Annex 23: Asian Development Fund Resources and Commitment Authority 157
Statistical Annex 24: Technical Assistance Special Fund 158
Statistical Annex 25: Japan Special Fund—Regular and Supplementary Contributions 159
Statistical Annex 26: Japan Special Fund—Asian Currency Crisis Support Facility 159
Statistical Annex 27: Japan Fund for Poverty Reduction, 2006 160
Statistical Annex 28: Projects with ADB-Administered Grant Financing, 2006 Approvals 161
Statistical Annex 29: Contracts Awarded by Country of Origin, 2006, Project Loans—Ordinary Capital Resources 165
Statistical Annex 30: Contracts Awarded, by Country of Origin, 2006, Project Loans—Asian Development Fund 166
Statistical Annex 31: Contracts Awarded, by Country of Origin, 2006, Project Loans—
Ordinary Capital Resources and Asian Development Fund Combined 167
Statistical Annex 32: Estimates of Payment to Supplying Countries for Foreign Procurement
Under Program Lending, 2006 168
Statistical Annex 33: Cumulative Contracts Awarded, by Country of Origin—Technical Assistance Operations 169
Statistical Annex 34: Contracts Awarded by Country of Origin, 2004–2006—Technical Assistance Operations 170
2
MANAGEMENT’S
DISCUSSION AND ANALYSIS

MANAGEMENT’S
DISCUSSION
AND ANALYSIS
OVERVIEW
The Asian Development Bank (ADB) is an international development finance
institution whose vision is to make Asia and the Pacific free of poverty. ADB
was established in 1966 through the Agreement Establishing the Asian
Development Bank (the Charter), ratified by 31 countries to promote the
social and economic development of the region and reduce poverty. As of
31 December 2006, ADB had 66 members, 47 of which are in the region.
ADB provides various forms of financial assistance to its developing
member countries. The main instruments are loans, technical assistance,
grants, guarantees, and equity investments. These instruments are financed
through Ordinary Capital Resources (OCR), Special Funds, and various trust
funds. OCR and Special Funds are used to finance operations that are
solely under ADB administration. Trust funds are externally funded and are
administered by ADB on behalf of donors. The Charter requires that funds
from each resource be kept separate from the others.
ADB also provides policy dialogues and advisory services and mobilizes
financial resources through its cofinancing operations tapping official,
commercial, and export credit sources to maximize the development
impact of its assistance. Cofinancing for ADB projects can be in the form
of loans, technical assistance, grant components of loan projects, or credit
enhancement products such as guarantees.
ORDINARY CAPITAL RESOURCES

Funding for OCR operations comes from three distinct sources: funds
borrowed from private placements and capital markets, paid-in capital
provided by shareholders, and accumulated retained income (reserves). The
financial strength of OCR is largely based on the support of shareholders
and on financial policies and practices. Shareholder support is reflected in
the form of capital backing from members and in the record of borrowing
members in meeting their debt service obligations.
Borrowed funds, together with equity, are used to fund OCR lending
and investment activities as well as other general operations. Loans are
3
generally made to developing member countries that have ing book value. Applying FAS 133 does not fully reflect the
attained a higher level of economic development and to overall economic value of ADB’s financial positions.
private borrowers. Sovereign loans are priced on a cost ADB has a large portfolio of derivatives that are utilized
MANAGEMENT’S
pass-through basis in which the cost of funding the loans to convert long-dated fixed rate borrowings into floating
plus a lending spread is passed through to the borrowers. rate borrowings. These borrowing-related derivatives are
Nonsovereign loans are priced based on market practice. considered to be equivalent to fixed rate assets; in general,
In addition to direct lending, ADB also provides guar- the value of the derivatives decline (loss) when market in-
antees to assist the governments of developing member terest rate increases and vice versa. These derivatives would
countries and private borrowers in securing commercial generally economically offset the contractual obligations
funds for ADB-assisted projects. ADB experienced a strong resulting from the debt issuance. However, most of these
and growing demand for guarantees as credit enhance- bonds are accounted for at their carrying book value, so
ment products. that the reported values are not affected by interest rate
movements. Because of the different methods used to
BASIS OF FINANCIAL REPORTING account for the bonds and their associated derivatives, the
application of FAS 133 creates volatility in the reported
Statutory Reporting. Table 1 presents selected financial
earnings.
data for 2006. ADB prepares its financial statements in
The adoption of FAS 155 on 1 January 2006 somewhat
accordance with accounting principles generally accepted
alleviates the volatility in the reported earnings as only
in the United States (US). ADB complies with Financial
certain financial instruments can be accounted for under
Accounting Standards (FAS) 133, “Accounting for
this statement. FAS 155 allows fair value measurement
Derivative Instruments and Hedging Activities,” and its
for hybrid financial instruments that contain embedded
related amendments (collectively referred to as FAS 133),
features that would otherwise be required to be treated
including FAS 155 (Accounting for Certain Hybrid Financial
as separate derivative instruments (bifurcated) in the
Instruments, an amendment to FAS 133 and 140). FAS
reported financial statements under FAS 133. ADB holds
133 allows hedge accounting only if certain qualifying
a small portion of hybrid financial instruments in its bor-
criteria are met. An assessment of those criteria indicated
rowing portfolio.
that most of ADB’s derivative transactions are highly ef-
Because of the continued inconsistent accounting
fective in hedging the underlying transactions and are
treatment as described above, ADB has decided to con-
appropriate for reducing funding costs. However, applying
tinue issuing two supplemental financial statements to
FAS 133 hedge criteria will not entirely reflect ADB’s risk
better reflect its financial positions and risk management:
management and hedging strategies. Compliance with
current value and pre-FAS 133. Applications of consistent
hedge accounting will impose undue constraints on future
approaches on these statements allow better analysis for
borrowings, loans, and hedge programs and will likely
management information and decision making.
detract ADB’s efforts to effectively and efficiently minimize
the funding costs for its borrowing member countries.
DISCUSSION AND ANALYSIS ON
Accordingly, ADB elects not to adopt hedge accounting
CURRENT VALUE
and reports all derivative instruments on the balance sheet
at fair value while recognizing changes in the fair value of Table 2 presents estimates of the economic value of OCR’s
derivative instruments for the year as part of net income. financial assets and liabilities taking into consideration
Supplemental Reporting. ADB manages its bal- changes in interest rates, exchange rates, and credit risks.
ance sheet by selectively using derivatives to minimize Current value reflects the exit price for financial instruments
the interest rate and currency risks associated with its with liquid markets and is the estimated fair value. For
financial assets and liabilities. Derivative instruments are financial instruments with no market quotations, current
used to enhance asset/liability management of individual value is estimated by discounting the expected cash flows
positions and overall portfolios, and to reduce borrowing by applying the appropriate market data. The current value
costs. Certain financial instruments (including all deriva- results may differ from the actual net realizable value in the
tives, structured borrowings, and certain investments) are event of liquidation. The reversal of the FAS 133 effects
recorded at their fair value while loans, the majority of removes its impact, as these effects are part of current
borrowings, and certain investments are recorded at carry- value adjustments (Tables 3 and 4).
4
TABLE 1 Selected Financial Data

(31 December 2006, amounts in $ million)
Statutory Basis
MANAGEMENT’S
2006 2005 2004 2003 2002
Revenue
From Loans 1,210.1 1,036.3 1,038.3 1,383.0 1,710.0
From Investments 564.5 377.4 265.6 251.2 256.6
From Guarantees 4.1 4.1 3.5 2.3 0.9
From Other Sources-Net 60.2 14.6 5.7 20.6 11.6
Total Revenues 1,838.9 1,432.4 1,313.1 1,657.1 1,979.1
Expenses
Borrowings and Related Expenses 1,116.3 893.2 861.7 993.2 1,154.7
a
Administrative Expenses 127.7 135.7 118.3 118.5 90.6
Technical Assistance to Member
Countries (1.2) (3.4) (2.4) (0.4) 56.0
Provision for Losses (32.5) (3.5) 2.2 12.9 3.9
Other Expenses 3.7 4.2 3.1 3.7 2.3
Total Expenses 1,214.0 1,026.2 982.9 1,127.9 1,307.5
Net Realized Gains 80.6 16.9 59.4 87.4 82.3

b
Net Unrealized (Losses) Gains (135.4) (309.2) 41.0 (178.4) 224.8
Cumulative Effect of Change in
Accounting Principle – (4.60) – – –
Net Income 570.1 109.3 430.6 438.2 978.7

c
Average Earning Assets 37,904 36,092 36,364 37,540 38,244
Annual Return on Average Earning Assets 1.50% 0.30% 1.18% 1.17% 2.56%
Return on Loans 4.98% 4.35% 4.16% 4.56% 5.93%
Return on Investments 4.18% 2.96% 2.21% 3.74% 4.26%
Cost of Borrowings 4.81% 5.04% 3.37% 4.65% 4.10%
e
Equity-to-Loan Ratio 47.51% 49.36% 51.64%
Pre-FAS 133 Basis
Net Income 705.5 415.6 389.6 616.6 753.9

Annual Return on Average Earning Assets d 1.86% 1.15% 1.07% 1.64% 1.97%
Return on Loans 4.94% 4.35% 4.16% 4.56% 5.93%
Return on Investments 4.27% 2.99% 2.34% 3.13% 4.26%
Cost of Borrowings 4.31% 3.75% 3.58% 3.70% 4.32%
e
Current Value Basis
Net Income 544.1 93.7 562.8 1,363.3 1,182.9

Annual Return on Average Earning Assets 1.31% 0.23% 1.47% 3.39% 2.91%
Return on Loans 2.58% (1.18%) 4.25% 4.97% 10.53%
Return on Investments 5.48% (1.11%) 3.51% 5.88% 9.80%
Cost of Borrowings 3.51% (1.34%) 3.56% 2.55% 9.85%
e
a Net of administration charge allocated to the Asian Development Fund and loan origination costs that are deferred.
b Includes the effect of FAS 133 adjustments and translation adjustments of financial instruments denominated in non-functional currencies.
c Composed of investments and related swaps, outstanding loans excluding unamortized front-end fees and related swaps and equity investments.
d Represents net income before net unrealized (losses) gains on derivatives, as required by FAS 133 over average earning assets.
e Approved and established in February 2004 to measure ADB’s risk bearing capacity.
5
TABLE 2 Condensed Current Value Balance Sheets as at 31 December 2006 and 2005
($ thousand)
MANAGEMENT’S
31 December 2006 31 December 2005

Statutory Reversal of Pre-FAS 133 Current Value Current Value Current Value
Basis FAS 133 Basis Adjustments Basis Basis
Due from banks 205,418 – 205,418 – 205,418 81,662

Investments and accrued income 12,891,140 – 12,891,140 – 12,891,140 11,212,091
Securities transferred under
securities lending arrangement 1,922,901 – 1,922,901 – 1,922,901 2,770,965
Securities purchased under
resale arrangement 432,963 – 432,963 – 432,963 1,118,748
Loans outstanding and accrued
interest 26,459,382 (643) 26,458,739 717,370 27,176,109 25,037,712
Less: Provision for loan losses
and unamortized loan origination
costs/ front-end fees (14,324) – (14,324) – (14,324) (90,541)
Equity investment 655,819 – 655,819 – 655,819 404,975
Receivable from members 173,667 – 173,667 (64,845) 108,822 101,012
Receivable from swaps
Borrowings 12,986,831 434,720 13,421,551 (434,720) 12,986,831 9,733,074
Others 655,151 (894) 654,257 894 655,151 1,582,337
Other assets 480,870 – 480,870 – 480,870 576,212
TOTAL 56,849,818 433,183 57,283,001 218,699 57,501,700 52,528,247
Borrowings and accrued

interest 27,910,832 180,867 28,091,699 (119,226) 27,972,473 24,960,951
Payable for swaps
Borrowings 12,502,403 167,784 12,670,187 (167,784) 12,502,403 9,354,776
Others 655,461 26,581 682,042 (26,581) 655,461 1,586,604
Payable under securities
lending arrangement 1,954,409 – 1,954,409 – 1,954,409 2,795,081
Accounts payable and
other liabilities 683,814 – 683,814 – 683,814 677,147
Total Liabilities 43,706,919 375,232 44,082,151 (313,591) 43,768,560 39,374,559
Paid-in capital 3,652,800 – 3,652,800 – 3,652,800 3,449,154

Net notional maintenance of value
receivable (672,899) – (672,899) – (672,899) (586,105)
Ordinary reserve 8,993,737 499 8,994,236 561,024 9,555,260 9,840,250
Special reserve 197,799 – 197,799 – 197,799 193,629
Loan loss reserve 130,100 – 130,100 – 130,100 167,000
Surplus 330,117 – 330,117 – 330,117 117
Cumulative revaluation adjustments
account 27,519 (27,519) – – – –
Net income 1 — 31 December 2006 565,886 135,479 701,365 (161,402) 539,963 –
Net income 1 — 31 December 2005 – – – – – 89,643
Accumulated other comprehensive
income (82,160) (50,508) (132,668) 132,668 – –
Total Equity 13,142,899 57,951 13,200,850 532,290 13,733,140 13,153,688

TOTAL 56,849,818 433,183 57,283,001 218,699 57,501,700 52,528,247
1 Net income after appropriation of guarantee fees to Special Reserve.
6
Table 3 Condensed Current Value Income Statements for the Years Ended 31 December 2006 and 2005

($ thousand)
MANAGEMENT’S
31 December 2006 31 December 2005
Statutory Reversal of Pre-FAS Current Value Current Value Current Value
Basis FAS-133 Effects 133 Basis Adjustments Basis Basis
REVENUE
From loans 1,210,071 – 1,210,071 – 1,210,071 1,036,329
From investments 564,495 – 564,495 – 564,495 377,379
From guarantees 4,169 – 4,169 – 4,169 4,090
From other sources–net 60,204 – 60,204 – 60,204 14,620
Total Revenue 1,838,939 – 1,838,939 – 1,838,939 1,432,418
EXPENSES
Borrowings and related expenses 1,116,326 – 1,116,326 – 1,116,326 896,185
Administrative expenses 127,669 – 127,669 – 127,669 135,689
Technical assistance to member countries (1,220) – (1,220) – (1,220) (3,446)
Provision for losses (32,515) – (32,515) 32,515 – –
Other expenses 3,767 – 3,767 – 3,767 4,248
Total Expenses 1,214,027 – 1,214,027 32,515 1,246,542 1,032,676
Net realized gains 80,614 – 80,614 – 80,614 16,857

Net unrealized (losses) gains (135,471) 135,479 a 8 – 8 (1)
Cumulative Effect of Change in
Accounting Principle – – – – – (8,243)
Current value adjustments b – – – (161,402) (161,402) (321,834)
Provision for losses – – – 32,515 32,515 7,212
NET INCOME 570,055 135,479 705,534 (161,402) 544,132 93,733
a FAS 133 adjustments are reversed as the current value adjustments incorporate the effect of net unrealized losses on derivatives, as required by FAS 133.
b Current value adjustments include the effect of FAS 133 adjustments.
Table 4 Summary of Current Value Adjustments

($ thousand)
Income Statement Effects
Balance Sheet Effects as of 31 December 2006 Year to Date
Loans After Borrowings Other Less Prior 31 December 31 December
Swaps Investments After Swaps Assets Year Effects a 2006 2005
Total Current Value Adjustments
on Balance Sheet 720,999 23,846 (147,710) (64,845) (827,857) (295,567) (115,549)
Unrealized Gains on
Investments b 170,487 c 15,825
Accumulated Translation
Adjustments 40,298 d (227,605)
Pension and Postretirement
Benefit Liability Adjustments (76,620) c 5,495
Total Current Value Adjustments (161,402) (321,834)
a Prior Year Effects include cumulative current value adjustments on all financial instruments made in the prior years.
b Relates to unrealized gain/losses on investments and equity investments classified as available for sale.
c These have been moved from the other comprehensive income under the statutory basis and included as part of current value adjustments for current value reporting.
d Relates to the accumulated translation adjustments for the period and net current translation effects from FAS 133 reversals.
7
CURRENT VALUE BALANCE SHEET The $147.7 million unfavorable current value adjust-
ment is due to the fact that the average cost of the bor-
Loans and Related Swaps. Most loans are made to or rowings on an after-swap basis is higher than the market
MANAGEMENT’S
guaranteed by ADB members. ADB does not sell its loans rate at which ADB can currently obtain new funding.
believing that there is no comparable market for them.
The current value of loans incorporates management’s
CURRENT VALUE INCOME
best estimate of expected cash flows including interest.
STATEMENT
Estimated cash flows from principal repayments and inter-
est are discounted by the applicable market yield curves for The total current value adjustment of $161.4 million
ADB’s funding cost plus lending spread. ($321.8 million in 2005) in Table 4 represents the change
The current value also includes an appropriate credit in the current value of all ADB financial instruments during
risk assessment. To recognize the risk inherent in these the year. The adjustment reflects changes in both interest
and other potential overdue payments, the value of the rates and in currency exchange rates.
loan is adjusted through loan loss provisioning. ADB has Current Value Adjustments. All unrealized gains
never suffered a loss on sovereign loans except opportunity and losses are presented as current value adjustments.
losses resulting from the difference between payments for Thus, the change in net unrealized gains on investments
interest and charges not in accordance with the loan’s and equity investments of $170.5 million as well as the
contractual terms. $32.5 million write-back of provision for loan losses are
The positive adjustment of $0.7 billion indicates that presented as part of the adjustment.
the average interest rates on loans on an after-swap basis For 2006, current value net income is $544.1 million
are higher than ADB would currently originate on similar compared with pre-FAS 133 net income of $705.5 mil-
loans. lion and statutory reported net income of $570.1 million
Investments and Related Swaps. Under both the (Table 3). The $161.4 million decrease from the pre-FAS
statutory and current value bases, investment securities 133 basis to current value basis (i.e., current value adjust-
and related derivatives are reported at fair values based on ment) comprises a net unfavorable adjustment of $295.6
market quotations when available. Otherwise, the current million from the change in the valuation of all outstanding
value is calculated using market-based valuation models financial instruments, and $76.6 million from pension
incorporating observable market data. The net positive and postretirement benefit liability adjustments, offset
adjustment of $23.8 million resulted from unrealized by $40.3 million from favorable translation adjustments,
gains on asset swaps due to increasing interest rates in $158.6 million and $11.9 million from unrealized gains on
certain markets. equity investments, and investments, respectively (Table 4).
Equity Investments. Under both statutory and cur- Impact of Changes in Interest Rates. The net
rent value bases, equity investments are reported (i) at decrease in the current value adjustments on the balance
fair value when market values are readily determinable, sheet during 2006 was $295.6 million. It was a result of
(ii) by applying equity method for investments in limited a decrease in unrealized losses in the borrowing portfolio
partnership and certain limited liability companies, or for and other assets of $211.7 million and $7.1 million, re-
investments where ADB has the ability to exercise signifi- spectively; offset by a decrease in unrealized gains in the
cant influence, or (iii) at cost less impairment, if any, which loan and investment swap portfolios of $503.3 million
represents a fair approximation of the current value. and $11.1 million, respectively. The current value changes
Receivable from Members. These consist of un- reflect the effects of changes in the market environment
restricted and maybe restricted promissory notes. The for the year.
current value is based on the cash flow of the projected Impact of Changes in Exchange Rates. Translation
encashment of the promissory notes discounted using adjustments, reflected as part of “accumulated other
appropriate interest rates. comprehensive income” under the statutory basis, are pre-
Borrowings after Swaps. The current value of these sented as current value adjustments. The general weaken-
liabilities includes the fair value of the borrowings and ing of the US dollar against most of the major currencies
associated financial derivative instruments. The current in 2006 resulted in a positive translation adjustment of
value of these liabilities is calculated using market-based $40.3 million. This is in contrast to the unfavorable trans-
valuation models incorporating observable market data. lation adjustment of $227.6 million in 2005.
8
OPERATING ACTIVITIES public sector borrowers but are structurally separate from
the sovereign or central government. Such entities include

In pursuing its objectives, ADB provides financial assist- state-owned enterprises, government agencies, munici-
MANAGEMENT’S
ance through loans, technical assistance, guarantees, and palities, and local government units. In 2006, two loans
equity investments to its developing member countries to to state-owned enterprises without sovereign guarantee
help them meet their development needs. amounting to $150.0 million were approved (nil in 2005).
Loans. Until 30 June 2001, ADB’s three windows for Status of Loans. Two sovereign OCR loans and six
loans from OCR were the pool-based multicurrency loan, nonsovereign loans were in non-accrual status at the end
the pool-based single-currency loan in US dollars, and the of 2006; the total outstanding balance was $6.1 million
market-based loan. With the introduction of LIBOR-based ($2.3 million in 2005) and $29.7 million ($49.2 million
loan on 1 July 2001, the pool-based multicurrency loan in 2005), respectively. Nonsovereign loans in non-accrual
and market-based loan are no longer offered, and on 1 status decreased due to the foreclosure of three Philippine
July 2002, the pool-based single-currency loan in US dol- loans. The total loans in non-accrual status of $35.8 million
lars was retired. The LIBOR-based loan is a timely response represented 0.1% of the total outstanding OCR loans.
to borrowers demand for loan products that suit project Lending Rates. The lending rates for pool-based single-
needs and effectively manage their external debt. LIBOR- currency loans are based on the previous semester’s average
based loan products give borrowers a high degree of cost of borrowings. Interest rates for market-based loans are
flexibility in managing interest rate and exchange rate risks either fixed or floating. The lending rates for market-based
and at the same time provide low intermediation risk to loans are determined on the basis of 6-month LIBOR with
ADB. Since November 2002, ADB has been offering local reset dates of either 15 March and 15 September or 15 June
currency loans to nonsovereign borrowers and expanded and 15 December. LIBOR-based loans carry a floating lending
this to the sovereign borrowers in August 2005. rate that consists of 6-month LIBOR and a lending spread
OCR Loan Approvals, Disbursements, Repayments, fixed over the life of the loan. The lending rate is reset every
and Prepayments. In 2006, 35 OCR sovereign and 6 months on each interest reset date of LIBOR-based loan.
nonsovereign loans totaling $6.1 billion were approved The floating lending rate of LIBOR-based loans can be fixed at
compared with 32 OCR sovereign and nonsovereign loans borrower’s request. Effective 2001, all sovereign loans with-
totaling $4.4 billion in 2005. Disbursements in 2006 out specific provisions in the loan agreements were charged
totaled $4.4 billion representing an increase of 26% from with a lending spread of 60 basis points over the base lending
the $3.5 billion disbursements in 2005. Regular principal rate. In 2004, 20 basis points of the lending spread were
repayments for the year were $1.3 billion ($2.9 billion in waived on sovereign loans outstanding from 1 July 2004 to
2005) while prepayments amounted to $0.5 billion ($0.6 30 June 2005 for borrowers that do not have loans in arrears.
billion in 2005). In 2006, 22 loans were fully prepaid and Subsequently, the policy was extended to cover the period
2 were partially prepaid. As of 31 December 2006, the total up to June 2007. ADB’s variable lending rates for pool-based
loans outstanding after provision for losses and unamortized single-currency loans in US dollars and in Japanese yen are
front-end fees amounted to $26.2 billion. shown in Table 5.
In 2005, ADB established the multitranche financing For nonsovereign loans, the lending spread is deter-
facility, a debt financing facility that allows ADB to deliver mined on a case-by-case basis to cover ADB’s risk exposure
financial resources for a specific program or investment in a to specific borrowers and projects.
series of separate financing tranches over a fixed period of
time. Financing tranches may be provided as loans, guaran-
tees, equity or any combination of these instruments based TABLE 5 PSCL Lending Rates a
on periodic financing requests submitted by the borrower. (% per annum)
In 2006, eight multitranche financing facilities of $3.8 2006 2005 Currency
billion (2 multitranche financing facilities of $1.5 billion 1 January 1.49 1.73 Japanese yen
in 2005), were approved under OCR. Periodic financing 5.94 6.06 US dollar
requests under multitranche financing facilities amounting 1 July 1.46 1.71 Japanese yen
to $931.0 million were approved in 2006 (nil in 2005). 5.86 6.14 US dollar
a Lending rates are set on 1 January and 1 July every year and are valid for six
Starting September 2005, ADB provided lending with- months and are represented net of 20 basis points lending spread waiver.
out sovereign guarantee to entities that can be considered
9
ADB also normally charges a front-end fee of 1% to and of financing technical assistance activities through it
cover the administrative costs incurred in loan origination. and other various funding resources.
In 2004, the Board of Governors approved the waiver of the Guarantees. ADB provides guarantees as credit
MANAGEMENT’S
entire front-end fee on all new sovereign loans approved enhancements for eligible projects to cover risks that the
from 1 January 2004 to 30 June 2005. Subsequently, the private sector cannot easily absorb or manage on its own.
policy was extended to cover the period up to June 2007. Reducing these risks can make a significant difference in
Prior to that, 50 basis points waiver was applied to all mobilizing debt funding for projects. ADB has used its guar-
sovereign loans approved on or after 1 January 2003. antee instruments successfully for infrastructure projects,
ADB currently applies a progressive commitment fee of financial institutions, capital markets, and trade finance.
75 basis points on undisbursed loan balances for sovereign These instruments generally are not recognized in the bal-
project loans and a flat commitment fee of 75 basis points ance sheet and have off-balance sheet risks. For guarantees
for sovereign program loans. As part of the enhancement issued and modified after 31 December 2002 in accordance
of ADB’s loan and debt management products, all sover- with Financial Accounting Standards Board Interpretation
eign loans negotiated after 1 January 2007 will carry a flat No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure
commitment fee of 35 basis points on the full amount of Requirements for Guarantees, Including Indirect Guarantees
all undisbursed loan balances. of Indebtedness to Others,” ADB recognized at the inception
Rebates and surcharges are standard features of sover- of a guarantee the non-contingent aspect of its obligations.
eign LIBOR-based loans. To maintain the principle of cost ADB’s total exposure on signed and effective loan guarantees
pass-through pricing, ADB returns the actual sub-LIBOR is disclosed in Note F of OCR Financial Statements.
funding cost margin to its LIBOR-based loans sovereign ADB offers two guarantee products—political risk
borrowers through rebates. A surcharge could arise if and partial credit—designed to mitigate risk exposure of
ADB’s funding cost exceeds the 6-month LIBOR, but that is commercial lenders and capital market investors. These
a remote possibility unless ADB experiences serious credit guarantees are not issued on a stand-alone basis but are
deterioration. Rebate or surcharge rates are set on 1 January provided for projects in which ADB participates. ADB co-
and 1 July every year and are based on the actual average operates with other multilateral, official, and nonsovereign
funding cost margin for the preceding 6-month period. lenders and insurers to provide guarantee products.
Based on rebate rates, ADB returned an actual sub-LIBOR Political Risk Guarantees. A political risk guarantee is
funding cost margin of $25.2 million to its LIBOR-based designed to facilitate cofinancing by providing lenders/
loan sovereign borrowers during 2006 (Table 6). capital market investors of ADB-assisted projects with cov-
Technical Assistance. From 1967 to 1991, technical erage against specifically defined political risks. Coverage
assistance expenses were charged to OCR and other techni- is available against any combination of the risks of expro-
cal assistance funding resources—the Technical Assistance priation, currency inconvertibility or nontransferability,
Special Fund, the Japan Special Fund, and trust/grant funds. political violence, and breach of contract, and is available
From 1992 to 2000, no technical assistance expenses were for loans and other forms of debt instruments. Tenors are
charged to OCR. In 2001, the Board of Directors approved based on the merits of the underlying project. All or part
the financing of high-priority technical assistance programs of outstanding debt service obligations to a lender may
out of OCR current income within a rolling 4-year financ- be covered. The cover may be for principal and/or interest
ing framework. The amount of financing required varies payment obligations. For nonsovereign projects, ADB can
between years and is subject to the approval of the Board. issue a political risk guarantee without a counterguarantee
In 2003, the Board reverted to the practice of allocating
OCR net income to the Technical Assistance Special Fund
TABLE 7 Outstanding Guarantee Exposure a

($ million)
2006 2005
TABLE 6 Rebate Rates
(% per annum) Partial credit guarantees 1,086.6 1,011.3
Political risk guarantees 149.6 179.3
US dollar Japanese yen
Others 1.0 1.0
1 January 2006 0.31 0.39
Total 1,237.2 1,191.6
1 July 2006 0.31 0.34
a None of these amounts were subject to call as of 31 December 2006 and 2005.
10
from the host government; however, political risk guar- 3 guarantee operations, $530.0 million for 5 syndication
antee exposure to such a project is currently subject to a operations (of which one project in India generated 42%

maximum of $150.0 million or 50% of the project cost, of the total), $166.1 million for 12 grant operations, and
MANAGEMENT’S
whichever is lower. Fees are market-based composed of $569.2 million for 11 official loan cofinancing operations.
guarantee fees, front-end fees, and standby fees. A politi- Total direct value-added cofinancing in 2006 is about
cal risk guarantee is callable when a guaranteed event has 370% higher than in 2005. On a 3-year average basis, this
occurred and such an event has resulted in debt service represents 47% increase over the previous period.
default to the lender. Non-direct value-added cofinancing amounted to
Partial Credit Guarantees. A partial credit guarantee about $4.5 billion in the form of parallel grants and loans
provides comprehensive cover (of commercial and political from bilateral and multilateral institutions, and domestic
risks) for a specific portion of the debt service provided by and international financial institutions for 20 ADB-financed
cofinanciers. It is particularly useful for projects in develop- projects and programs.
ing member countries with restricted access to financial Nonsovereign Operations. ADB’s Charter mandates
markets but which ADB considers creditworthy and finan- that its nonsovereign operations promote the investment of
cially sound. Since the 1997 Asian financial crisis, borrow- private capital in the region for development and empowers
ers, project sponsors, cofinanciers, and host governments it to provide assistance in the form of equity investments,
have increasingly sought to hedge currency mismatch loans without government guarantees, and other financing
risks by borrowing in the same currency as the revenues schemes. The Charter allows the use of OCR for equity in-
generated by the project. A partial credit guarantee can vestments in private enterprises up to 10% of its unimpaired
cover local currency debt including domestic bond issues paid-in capital together with reserves and surplus, exclusive
or long-term loans from local financial institutions. For of special reserves. In 2006, the total equity investment
private sector transactions not supported by a counter- portfolio for the OCR for both outstanding and undisbursed
guarantee from the host government, the exposure limit approved facilities amounted to $1,047.4 million. This rep-
currently stands at $75.0 million or 25% of the project resented about 77% of the ceiling defined by the Charter.
cost, whichever is less. Guarantee fees for private sector As of 31 December 2006, the overall nonsovereign
transactions are market-based. Fees for transactions portfolio (equity investments, loans, and guarantees) was
backed by the host government guarantee comprise a about $2.6 billion. As an interim arrangement, pending the
standard guarantee fee of 40 basis points per annum on implementation of an objective capital allocation mechanism,
the present value of the outstanding guarantee obligation the Board allowed approvals of nonsovereign operations in
plus a front-end fee to cover processing costs. Fees can be excess of $1.5 billion since September 2001.
charged to the borrower or to the lender. During 2006, nine nonsovereign loans totaling $575
Cofinancing. In line with the approval of the million were approved compared with seven loans totaling
financing partnership strategy and the review of credit $536 million in 2005.2 Loan disbursements in 2006 to-
enhancement operations in 2006, ADB is now focusing on taled $358.8 million, which represented a 75.5% increase
direct value-added cofinancing1 for resource mobilization from the $204.4 million disbursed in 2005. Principal
and/or administration based on contractual or coopera- payments for the year totaled $98.6 million ($54.7 mil-
tion arrangements. In 2006, ADB’s cofinancing activities lion–2005) while prepayments amounted to $39.0 million
and reports will focus on two major areas: (i) grants and ($4.6 million–2005). In 2006, three nonsovereign loans,
concessional partnerships, and (ii) commercial resource all of which were prepayments, were fully repaid. On 31
mobilization including guarantees and syndications. December 2006, the total loans outstanding amounted
In 2006, total direct value-added cofinancing to $881.9 million. The lending spread for nonsovereign
amounted to $1.5 billion for 103 projects, of which $1.4 loans is determined on a case-by-case basis to cover ADB’s
billion was for 29 loan projects and $92.7 million was risk exposure to specific borrowers and projects. ADB also
for 74 technical assistance projects. Direct value-added charges front-end fees of 0.50–1.0% to cover the admin-
cofinancing for loan projects comprised $124.8 million for istrative costs incurred in loan origination.
1 Cofinancing with active coordination and formal agreements among financing partners that bring about defined client benefits, including contractual
commitments by ADB (such as for credit enhancement, syndication, or financial administration) to facilitate mobilization, administration, or participation
in cofinancing. Excludes parallel cofinancing without administration/cooperation arrangements.
2 Loans approved in 2006 include loans to state-owned enterprises under ADB’s Innovation and Efficiency Initiative amounting to $150 million.
11
In 2006, 14 equity investments totaling $260.5 million This brought the total authorized and subscribed capital to
were approved compared with 8 equity investments total- 3,534,230 shares amounting to $53,169.0 million as of 31
ing $196.53 million in 2005. In 2006, ADB disbursed a total December 2006. Of the subscribed capital, $3,739.6 million
MANAGEMENT’S
of $129.9 million in equity investments that represented a was paid-in and $49,429.4 million was callable. Callable capi-
1.4% decrease from $131.8 million disbursed in 2005. ADB tal can be called only if required to meet ADB’s obligations
divested its equity shareholdings in 25 projects, whether in incurred on borrowings or guarantees under OCR. No call has
full or in part, for a total amount of $134.6 million. These ever been made on ADB’s callable capital.
divestments are carried out in a manner consistent with To ensure it has adequate risk-bearing capacity, ADB
good business practices, after ADB’s development role in reviews its income outlook annually. Based on that review,
its investments have been fulfilled, and without destabiliz- the Board of Directors allocates a portion of the previous
ing the companies concerned. In so doing, ADB is able to year’s net income to reserves to ensure that the level is
use the funds made available for other new projects. commensurate with the income planning framework. In
In 2006, ADB approved two partial credit guarantee addition, to the extent feasible, it allocates part of the net
facilities without government counterguarantee totaling income to support development activities in its developing
$109.8 million. One facility is to provide a credit guarantee member countries. In May 2006, the Board of Governors
for principal of $100.0 million and accrued interest in con- approved that 2005 net income of $105.2 million together
nection with diversified payment rights securitization by a with $308.7 million transferred from cumulative revalua-
bank in Kazakhstan, and the other is for the acquisition tion adjustments account and $36.9 million from loan loss
and securitization of motor loan portfolio by Deutsche reserve be allocated as follows: $320.0 million to surplus,
Bank AG in Indonesia for $9.8 million. ADB also approved $70.8 million to ordinary reserve, $40.0 million to ADF and
a political risk guarantee cover to mobilize commercial $20.0 million to Technical Assistance Special Fund.
debt of $15.0 million to finance the second phase of In February 2004, the Board of Directors reviewed
expansion of services by the largest provider of mobile ADB’s lending and borrowing limitations and approved
telecommunications services in Afghanistan. the following policies: (i) gross outstanding borrowings
are limited to no more than the sum of callable capital
CAPITAL AND RESOURCES from non-borrowing members, paid-in capital, and re-
serves (including surplus), subject to the Charter limit of
Capital. Total shareholders’ equity on a statutory basis in- 100% of callable capital; (ii) outstanding loan commit-
creased from $12.3 billion as of 31 December 2005 to $13.1 ments measured by the sum of outstanding disbursed and
billion as of 31 December 2006. This was primarily due to (i) undisbursed loans, equity investments, and guarantees4,
net income for the period of $570.1 million; (ii) net increase are limited to no more than the sum of the total callable
in other comprehensive income of $121.8 million (unreal- paid-in capital and reserves (including surplus but exclud-
ized gain on investments and equity investments of $170.5 ing special reserve).
million, favorable translation adjustments of $26.5 million, In April 2006, the Board of Directors reviewed the
amortization of FAS 133 adjustment of $1.4 million, offset by OCR resource position. The review followed a medium-
unfavorable adjustment to pension/postretirement benefit of term capital management approach within the approved
$76.6 million); (iii) the net effect of change in special drawing financial framework, for assessing the adequacy of current
rights value on capital and reserves of $67.4 million; (iv) addi- and prospective lending and borrowing headroom. The
tional subscription received of $17.9 million; (v) transfer of an review concluded that ADB’s capital position is sufficient
unutilized amount of $10.0 million from the Asian Tsunami to support projected lending operations through 2008
Fund, and (vi) the cumulative effect of FAS 155 adjustment and to maintain a prudent buffer against exchange rate
of $118.6 million; offset by (vii) allocations to the Asian fluctuations and a margin for unutilized lending capacity.
Development Fund (ADF) and the Technical Assistance Special As of 31 December 2006, headrooms for lending and bor-
Fund, of $40.0 million and $20.0 million, respectively. rowings were $18.2 billion and $15.8 billion, respectively
In June and July 2006, Brunei Darussalam and Ireland (compared with $18.8 billion and $16.2 billion, respec-
subscribed to 12,462 shares and 12,040 shares, respectively. tively, in 2005).
3 Net of subsequent cancellations.

4 ADB’s financial policies require that political risk guarantee be charged against lending limitations at the nominal value of the guaranteed obligation, plus
the interest that will be accrued for the succeeding interest period and partial credit guarantee at the present value of the guaranteed obligation.
12
Borrowings. ADB’s primary borrowing objective is to $2.5 billion. In addition, ADB raised $1.6 billion in short-
ensure availability of funds at the lowest possible cost for its term funds under its Euro commercial paper program to

operations. Subject to this objective, ADB seeks to diversify enhance its presence in the market and to meet temporary
MANAGEMENT’S
its funding sources across markets, instruments, and maturi- cash deficiencies. Table 8 shows details of 2006 borrow-
ties. To achieve that objective, ADB continued in 2006 a ings as compared to borrowings in 2005.
strategy of (i) issuing liquid benchmark bonds to maintain its Local Currency Bond Issues. ADB’s local currency
strong presence in key currency bond markets, and (ii) rais- bond issuances in 2006 are shown in Table 9. In April,
ing funds through cost efficient opportunistic and private ADB returned to the bond market of Malaysia and estab-
placement transactions to minimize borrowing costs. Also, lished a 15-year Malaysian ringgit 3.8 billion medium-term
in 2006 ADB continued to pursue its objective of contribut- note program and launched the first note issue under this
ing to the development of regional bond markets and of program. This is the first Asian currency medium-term
providing local currency financing for ADB’s projects through note program by ADB and the first by a supranational in
local currency bond issues. All proceeds from new funding Malaysia. In September, ADB issued its second Thai baht
transactions are invested until they are required for ADB’s or- bond in two tranches with a total principal amount of Thai
dinary operations. Funding raised in any given year is utilized baht 6.5 billion in the domestic capital market of Thailand.
for ADB’s ordinary operations, including loan disbursements Also in September, ADB established its $10-billion Asian
and refinancing of maturing funding obligations. currency note program and launched the inaugural notes
2006 Funding Operations. In 2006, ADB completed under the Asian currency note program in the domestic capi-
51 borrowing transactions raising about $5.4 billion in tal markets of Hong Kong and Singapore. The Asian currency
long- and medium-term funds compared with $4.0 billion note program is Asia’s first multicurrency bond platform since
in 2005. The new borrowings were raised in 13 currencies, the Asian financial crisis that links the domestic capital mar-
namely, Australian dollar, Canadian dollar, Euro, Hong kets in the region under a single unified framework with a
Kong dollar, Japanese yen, Malaysian ringgit, Mexican common set of documents under English law.
peso, New Zealand dollar, Singapore dollar, South African Use of Derivatives. ADB undertakes currency and in-
rand, Thai baht, Turkish lira, and US dollar. After swaps, terest rate swaps to raise, on a fully hedged basis, currencies
$5.2 billion or 95.9% of the 2006 borrowings were in US needed for operations in a cost efficient way while maintain-
dollar and the remaining 4.1% were in Japanese yen. The ing its borrowing presence in major capital markets. Figures
average maturity of 2006 borrowings was 5.9 years com- 1 and 2 show the effects of swaps on the interest rate
pared with 4.3 years in 2005. Of the total 2006 borrow- structure and currency composition of ADB’s outstanding
ings, $2.9 billion was raised through 8 public offerings, borrowings as of 31 December 2006. Interest rate swaps are
and the rest through 43 private placements amounting to also used for asset/liability management purposes to match
the liabilities to the interest rate characteristics of loans.
Table 8 Borrowings
LIQUIDITY PORTFOLIO
($ million)
The liquidity portfolio helps ensure the uninterrupted avail-
2006 2005
ability of funds to meet loan disbursements, debt servicing,
Long Term
and other cash requirements. It also contributes to ADB’s
Total Principal Amount 5,397.2 3,965.6
Average Maturity to First Call (years) 5.9 4.3
Average Final Maturity (years) 6.7 8.0
Number of Transactions
Public Offerings 8 5 Table 9 Local Currency Bond Issues
Private Placements 43 59
Principal Coupon
Number of Currencies (before swaps)
Amount Rate Maturity
Public Offerings 5 4 Market (million) (%) (years)
Private Placements 10 4
Short Terma Malaysia MYR 500 4.265 5
Total Principal Amountb 1,642.8 761.0 Thailand THB 5,500 5.340 5
Number of Transactions 23 13 THB 1,000 5.540 10
Number of Currencies 3 2 Singapore S$ 300 3.335 5
Hong Kong HK$ 1,000 4.280 3
a All euro-commercial papers.
b At year-end, the outstanding principal amount was $179 million in 2006 and HK$ = Hong Kong dollar, MYR = Malaysian ringgit, S$ = Singapore dollar,
$268 million in 2005. THB = Thai baht
13
earning base. ADB’s Investment Authority governs liquid inflows and outflows are minimized to maximize the total
asset investments. Its primary objective is to maintain the return relative to a defined level of risk. The portfolio is
security and liquidity of funds invested. Subject to these funded largely by equity, and performance is measured
MANAGEMENT’S
two parameters, ADB seeks to maximize the total return on against external benchmarks with an average duration of
its investments. In compliance with its Charter, ADB does about 2 years. ADB revised the liquidity policy in October
not convert currencies for investment; investments are
made in the same currencies in which they are received. At
present, liquid investments are held in 21 currencies.
TABLE 10 Year-End Balance of Liquidity Portfolio
Liquid assets are held in government and govern-
($ million)
ment-related debt instruments, time deposits, and
2006 2005
other unconditional obligations of banks and financial
Prudential Liquidity Portfolio 7,763.9 7,353.1
institutions, and, to a limited extent, in corporate bonds, Operational Cash Portfolio 587.2 933.4
mortgage-backed securities, asset-backed securities of Cash Cushion Portfolio 953.9 450.1
Discretionary Liquidity Portfolio 3,830.6 3,401.4
high credit quality, and derivatives. They are held in four
TOTAL 13,135.6 12,138.0
subportfolios—prudential liquidity, operational cash, cash
cushion, and discretionary liquidity—all of which have
different risk profiles and performance benchmarks. The TABLE 11 Return on Liquidity Portfolio
(%)
year-end balance of the portfolios in 2006 and 2005, in-
Annualized
cluding receivables for securities repurchased under resale
Financial Return
arrangements, and excluding securities transferred under 2006 2005
securities lending arrangements and pending sales and Prudential Liquidity Portfolio 4.25 2.09
purchases, is presented in Table 10. Operational Cash Portfolio 3.82 2.64
Cash Cushion Portfolio 4.21 1.76
The prudential liquidity portfolio is invested to ensure Discretionary Liquidity Portfolio a 0.30 0.40
that the primary objective of a liquidity buffer is met. Cash a Spread over funding cost at 31 December.
Figure 1 Effect on Currency Composition

Japanese Yen Other Currenciesb
12.2% Japanese Yen 3.7%
17.4%
Currency Composition of Currency Composition of

Outstanding Borrowings Outstanding Borrowings
(Before Swaps) (After Swaps)
a
Other Currencies
34.1%
U.S. Dollar
53.7%
U.S. Dollar
78.9%
a Other currencies include Australian dollar, Canadian dollar, Euro, Hong Kong dollar, Indian rupee, Malaysian ringgit, Mexican peso, New Taiwan dollar, New Zealand dollar,
Philippine peso, Pound Sterling, renmimbi, Singapore dollar, South African rand, Swiss franc, Thai baht and Turkish lira.
b Other currencies include Australian dollar, Indian rupee, Philippine peso, Pound Sterling, renminbi, and Swiss franc.
Figure 2: Effect on Interest Rate Structures
Variable
6.7%
Fixed
26.9%
Interest Rate Structure of Interest Rate Structure of
Outstanding Borrowings Outstanding Borrowings
(Before Swaps) (After Swaps)
Fixed
93.3% Variable
73.1%
14
2006 to bring up to date its financial and risk management 2005, ADB established the Risk Management Unit, which is
policies and practices in line with ADB’s business activities independent of the business units and mandated to man-

and initiatives and to harmonize its liquidity policy with age credit risk of the sovereign and nonsovereign loan and
other multilateral development banks. Under the new guarantee portfolios and ADB’s market- and treasury-related
MANAGEMENT’S
policy, the duration for the prudential liquidity portfolio risks. The unit has been implementing risk management tools
can be extended up to 4 years for the portfolio funded and methodologies under the said framework.
by equity. The remaining part of the prudential liquidity Asset and Liability Management. The primary objec-
portfolio is funded by debt and is invested to maximize the tive of asset and liability management for ADB is to safe-
spread earned between borrowing cost and investment guard ADB’s net worth and overall capital adequacy while
income on high-quality investments. promoting steady growth in ADB’s risk bearing capacity.
The operational cash portfolio is designed to meet net The asset and liability management safeguards net worth
cash requirements over a 1-month horizon. It is funded from foreign exchange rate risks, protects net interest mar-
by equity and invested in short-term, highly liquid money gin from fluctuation in interest rates, and provides sufficient
market instruments. The portfolio performance is meas- liquidity to meet ADB’s operations. ADB also adheres to cost
ured against short-term external benchmarks. pass-through pricing policy for the loans to sovereign bor-
The cash cushion portfolio holds the proceeds of rowers, and allocates the most cost efficient borrowings to
ADB’s borrowing transactions pending disbursement. It is fund the loans. The asset and liability management objec-
invested in short-term instruments, and the performance tives and practices were clarified and formalized in 2006
is measured against short-term external benchmarks. through the Board approved comprehensive asset and
The discretionary liquidity portfolio is used to support liability management policy framework. The framework has
medium-term funding needs and is funded by debt to formalized the guiding principles for managing the financial
provide flexibility in executing the funding program over the assets and liabilities of the OCR and provided the governing
medium-term to permit borrowing ahead of cash flow needs framework to guide all asset and liability management-
and bolster ADB’s access to short-term funding through related financial policies, including liquidity, investments,
continuous presence in the market. For 2006, the target size equity management, and capital adequacy.
of the discretionary liquidity portfolio was set at $3.8 billion. Risk Bearing Capacity. ADB’s income planning
framework establishes the equity-to-loan ratio as the key
CONTRACTUAL OBLIGATIONS measure of ADB’s risk bearing capacity. The equity-to-loan
ratio measures the adequacy of equity capital to absorb any
In the normal course of business, ADB enters into various con- unexpected losses from its loan and guarantee portfolios
tractual obligations that may require future cash payments. as well as the ability to generate adequate net income to
Table 12 summarizes ADB’s significant contractual cash absorb loss of loan income while matching growth in the
obligations at 31 December 2006 and 2005. Long-term debt portfolios. Because ADB’s loan and guarantee portfolios are
includes direct medium- and long-term borrowings excluding unavoidably highly concentrated, an adverse credit event of
swaps but does not include any adjustment for unamortized one borrower could have a significant cumulative impact
premiums, discounts, or effects of applying FAS 133. Other due to high correlations. ADB has established a target
long-term liabilities correspond to accrued liabilities including equity-to-loan ratio of 35% to accommodate this volatility.
those for pension and postretirement medical benefits.
FINANCIAL RISK MANAGEMENT TABLE 12 Contractual Cash Obligations

($ million)
In its development banking operations, ADB assumes various
2006 2005
credit, market (interest rate and foreign exchange), liquidity,
Long-Term Debt 27,602.5 24,189.6
and operational risks. Of these, credit risks in the loan and Undisbursed Loan
guarantee portfolios are the most significant. Sovereign loans Commitments 16,768.2 15,501.8
and guarantees to its developing member countries consti- Undisbursed Equity
Investment Commitments 391.6 309.5
tute the large majority of ADB’s portfolio. ADB has adopted Guarantee Commitments 1,293.7 1,276.9
an integrated risk management framework designed to Other Long-Term Liabilities 373.4 458.6
ensure that credit and other risks are appropriately identi- TOTAL 46,429.4 41,736.4
fied, measured, monitored, and managed. In November
15
The recently approved asset and liability management those risks are important aspects in the project cycle. ADB
policy expanded the measurement of equity-to-loan ratio evaluates not only the development impact of a project
to incorporate risks other than credit risks in the loan but also analyzes its credit strength, financial, commercial,
MANAGEMENT’S
portfolio to ensure ADB is adequately capitalized for other and technical viability, and good corporate governance.
financial risks. New methodologies will be developed and Each nonsovereign project undergoes an in-depth credit
applied in 2007 based on the revised framework. analysis and appraisal prior to approval with emphasis
In determining equity-to-loan ratio, ADB’s equity being given to the project’s financial sustainability and
capital is defined as the sum of useable paid-in capital, ability to pay its debt. The Risk Management Unit reviews
the ordinary reserve, the special reserve, and surplus. At the risk of new proposals for loans and equity investments
31 December 2006, equity-to-loan ratio was 47.7% under and ensures that they are in line with ADB’s credit risk
the pre-FAS 133 basis (49.5% on 31 December 2005). The policy, and that ADB is compensated properly for the risk
higher-than-target equity-to-loan ratio represents a very undertaken on an overall portfolio basis.
strong equity capital position relative to the credit risk The current private sector strategy focuses on the infra-
assumed in its loan and guarantee portfolios indicating structure and financial market sectors. Nevertheless, ADB
that both net income and equity capital are adequate remains responsive to the changing needs of developing
to sustain any major credit event. ADB also protects the member countries and private investment opportunities
equity-to-loan ratio from exchange rate fluctuations by in other sectors. The objective is to build a diversified
periodically aligning the currency composition of its equity nonsovereign portfolio in terms of both countries and
to that of its loans. sectors while managing concentration risks by establishing
Under the income planning framework, ADB utilizes the appropriate limits for countries, industries, and groups of
loan loss reserve to absorb expected losses from its loan and related companies. The total amount of ADB assistance
guarantee portfolios. Hence both expected and unexpected to a single project, including equity investments, loans,
losses for its loans and guarantees are addressed through and guarantees, must not exceed 25% of the total project
adequate loan loss reserve and equity-to-loan ratio. On the cost or $75.0 million, whichever is lower. ADB uses an
other hand, loan loss provisions are made against impaired internal rating system to classify its exposure based on
loans and recognized in the net income. international credit standards that reflect the risk of timely
Country Credit Risks. The income planning frame- and full recovery of investments. The rating system is used
work also links the adequacy of net income and equity to monitor risk exposure to individual projects.
capital to the country credit risk of the loan and guarantee ADB streamlined approval of private sector investment
portfolios. A credit risk model is used to estimate expected recovery operations. They generally involve negotiations
and unexpected losses in these portfolios, incorporating for financial restructuring, foreclosure, or other remedies,
borrower’s default probability, loss given default, projected including liquidation. Restructuring is undertaken only
exposure, and default correlations. In addition, ADB stress when it is expected to improve ADB’s prospects for recov-
tests net income projections to ensure that net income ery. If the financial condition of the entity has deteriorated
is adequate to absorb the loss of loan income due to beyond recovery, ADB may have to proceed with liquida-
credit shocks and to support sufficient growth. To assess tion or other legally permissible forms of recovery.
the creditworthiness of its developing member countries Counterparty Credit Risks. Counterparty credit risk
independently, ADB adopted an internal country credit risk is the risk of loss when a derivative counterparty does not
rating system. honor its obligations measured by the aggregate positive
Credit Risk of Nonsovereign Operations. Aside replacement cost or the net positive marked-to-market
from providing loans and guarantees to its developing value of the derivatives. To mitigate counterparty credit risk,
member countries, ADB provides loans and guarantees ADB has strict counterparty eligibility criteria. In general,
to firms or projects owned by nonsovereign entities. The ADB will undertake swap transactions with counterparts
entities include purely private sector firms, state-owned that have a minimum credit rating of A3 and/or A- with
enterprises, and local government units. It can also make Moody’s and/or Standard and Poor’s and have executed
equity investments in private sector firms and state-owned an International Swaps and Derivatives Association Master
enterprises. ADB’s nonsovereign investments are usually Agreement and a credit support annex with ADB.
not backed by government guarantees and are exposed to ADB utilizes a sophisticated computerized system that
commercial and political risks. Managing and monitoring allows for daily monitoring and managing of counterparty
16
credit risk exposure. Under the credit support annex ar- externally managed investment portfolios, thereby allow-
rangements, derivatives’ positions are marked-to-market ing ADB to significantly bolster risk-metrics, stress testing,

daily, and collateral calls, transfers, and adjustments with and scenario analyses for its investments in mortgage and
MANAGEMENT’S
counterparties are made in coordination with an external asset-backed securities and corporate bonds.
collateral manager. ADB also sets exposure limits on indi- Liquidity Risks. The objective of ADB’s liquidity policy
vidual counterparties based on their credit ratings and eq- is to ensure the availability of sufficient cash flows to meet
uity and daily monitors current and potential counterparty all financial and operational commitments despite uncer-
exposure against the limits. tain conditions in the capital markets. The policy establishes
Market Risks. ADB manages the market risk of its minimum levels of liquidity to maintain expected operations.
liquid asset investments by adopting investment policy ADB’s liquidity requirements are primarily determined by ex-
guidelines which only allow for investments in government pected lending volumes and disbursements, redemption of
and government-related debt instruments, time deposits, current borrowings, repayments and prepayments of loans,
and other unconditional obligations of banks and financial and cash from net income. The policy defines ADB’s annual
institutions, and to a limited extent, in corporate bonds, net cash requirement to meet large contractual obligations
mortgage-backed securities, and asset-backed securities for loan disbursements and debt redemption. ADB relies on
of high credit quality. The principal source of investment borrowings to meet most of these obligations. The proxy
risk arises from income volatility due to interest rate move- net cash requirement is the sum of loan disbursements net
ments. ADB monitors and manages interest rate risks by of repayments and debt redemption for the year.
employing various quantitative methods. All positions are The recently approved liquidity policy redefined the
marked-to-market, and risk-sensitive measures, including prudential minimum liquidity as the 50% of the next 3
potential exposure, are calculated and compared to inter- years’ proxy net cash requirement (40% of the next 3
nally established risk limits. years’ proxy net cash requirement under the previous
ADB manages its currency risk to ensure that the equity- policy). This represents the minimum amount of liquidity
to-loan ratio as the measure of equity capital adequacy necessary for ADB to continue operations even if its access
and risk-bearing capacity is immune from fluctuations in to capital markets is temporarily denied. Maintaining the
exchange rates. ADB can achieve this by periodically align- prudential minimum liquidity level enables ADB to cover
ing the currency composition of its equity to that of its normal net cash requirement for 18 months under the
loans, thus, ensuring that fluctuations in exchange rates normal and stressed situations without borrowing. In
would have similar effects on both. ADB mitigates the addition, ADB can raise discretionary liquidity, funded
market risks associated with the loan portfolio by employ- entirely by borrowings, to provide flexibility in the funding
ing derivatives to closely match the characteristics of loans and debt redemption schedule over time. The transition
with those of borrowings. to the new liquidity policy, which may result in a higher
ADB has an infrastructure designed to ensure that the level of prudential minimum liquidity level, will be man-
market risks associated with its activities are fully identi- aged carefully to avoid an unnecessary surge in borrowing
fied, measured, monitored, and managed. Specifically, needs or negative implications on the financial ratios.
ADB manages its market risks by employing (i) market Levels of liquidity, net cash requirement, and proxy net
standard risk metrics and assumptions in the valuation and cash requirement are monitored on an ongoing basis and
risk analysis of its treasury activities, (ii) enhanced perform- reviewed by the Board of Directors quarterly.
ance measurements and attribution methodologies and Operational Risks. Operational risk represents the
systems for its investment portfolios, (iii) supplementary potential for loss resulting from inadequate or failed
risk management tools such as stress testing and scenario internal processes or systems, human factors, or external
analysis, and (iv) a computer system that values both events including business disruptions and system failure,
vanilla as well as highly structured borrowings and their transaction processing failures, and failure in execution of
related swap transactions. legal, fiduciary, and agency responsibilities. ADB is exposed
ADB utilizes a daily risk, performance, and attribu- to many types of operational risks and attempts to mitigate
tion system to measure and monitor treasury investment them by maintaining a system of internal controls and proc-
portfolios, thus providing regular and timely risk and esses, and system upgrades. In addition, ADB has a rigorous
performance feedback to treasury management. In addi- process for approving transactions that requires reviews and
tion, ADB has outsourced much of the risk analyses of its authorization by all relevant parties to ensure that all trans-
17
actions are properly approved, documented, monitored, in termination benefits for staff who accepted the
and controlled. ADB has adopted risk and control measures enhanced separation program which was offered in
for financial reporting under the Committee of Sponsoring 2005; (ii) $8.9 million increase in benefits expenses for
MANAGEMENT’S
Organizations framework. ADB has put in place a strategy 2006, offset by (iii) $6.2 million decrease in relocation
to strengthen the business continuity plan to reduce the expense mainly due to the change in the methodology
impact of disruption affecting business processes. of provisioning for resettlement allowance and repa-
triation cost; (iv) $14.5 million increase in the amount
SUMMARY OF FINANCIAL of administrative charges allocated to ADF based on
PERFORMANCE the proportion of the relative volume of operational
activities for each fund; and (v) $3.9 million increase
Net Income. Net income before net unrealized losses and in the deferral of loan origination costs on loans and
cumulative effect of change in accounting principle was guarantees which became effective during the year;
$705.5 million, compared with $423.2 million in 2005. offset by
The increase of $282.3 million (66.7%) was predominantly • $215.2 million increase in borrowings and related
due to the following: expenses, net of $7.9 million increase in realized gains
• $197.8 million increase in investment income, including on purchase/redemption of bonds, due to the increase
$10.7 million increase in realized gains on sales, which in the borrowing portfolio and higher interest rates.
reflects improved realized returns on the investment port- Net unrealized gains and losses on derivatives,
folio due to higher interest rates in some capital markets; as required by FAS 133 and 155. Net unrealized losses
• $173.7 million increase in net loan income after on derivatives of $138.5 million, a decline over net unreal-
expenses on asset swaps hedging loan products, as- ized losses of $308.7 million in 2005, were due primarily
sociated with $171.6 million increase in loan income to a general increase in interest rates on the back of the
and $2.1 million decrease in expenses on swaps. The strengthening of certain major currencies against the US
increase in loan income is primarily associated with dollar. The net effect of the movements in the interest rates
higher loan balances and increase in interest rates; and currency appreciation against the US dollar during the
• $80.4 million increase in income from equity invest- period increased (decreased) the value of the liability (asset)
ments resulting mainly from (i) $45.7 million increase in portion of the borrowing related derivatives, i.e. swaps.
net realized gains on disposal of equity investments; (ii) The impact was largely felt on the non-structured debts
$28.6 million increase in proportionate gains on equity and their related derivatives, as these swaps are designed
investments accounted for under equity method; (iii) to behave as long-term fixed assets denominated in US
$5.5 million increase in dividend income for the year; dollars. Because of the asymmetrical accounting treatment
and (iv) $0.5 million net increase in other income; between the non-structured debts and their swaps, the
• $8.3 million increase in income as executing agency net unrealized losses on the swaps were not offset by the
brought about by (i) $5.4 million additional fees decline in the value of the non-structured debts, which are
received from special funds ($0.7 million from Asian not fair valued but recorded at their carrying book value.
Tsunami Fund; $1.3 million from Pakistan Earthquake A fair valuation of the non-structured debts would have
Fund), agency trust funds, and loan related grants; led to an unrealized gain offsetting the unrealized losses
(ii) additional $0.9 million fees received for administer- on the swaps. In addition, the increase in the interest
ing complementary loans; and (iii) $2.0 million fees rates had also reduced the value of the debts, mainly fixed
received on account of guarantees; rate US dollar bonds, which did not have any derivatives
• $29.0 million net decrease in provision for loan losses, transactions attached to them.
mainly because of the release of loan loss provisions The higher interest rates and appreciation of certain
due to a revision in the provisioning methodology for currencies against the US dollar in 2006 also affected the
nonsovereign loans; structured debt (hybrid instruments) portfolios to a cer-
• $8.0 million decrease in net administrative expenses tain extent. The increase in value of the underlying debts
after allocation of charges to Asian Development outweighed the increase in the value of the embedded
Fund and direct loan origination costs for loans and derivatives, which are highly sensitive to the expected
guarantees. This is primarily due to (i) $7.9 million in- foreign exchange rates movements. Thus, the change in
crease in salaries, which includes $2.0 million increase fair value of the structured debts led to an unrealized loss
18
of $8.9 million for the year ended 31 December 2006, as and estimate of the present value of expected future cash
required by FAS 155. However, as ADB generally takes a flows discounted at the loan’s effective interest rate. ADB

fully hedged position on its debts, exercising prudent risk considers a loan as impaired when, based on current
MANAGEMENT’S
management, the related derivatives transactions would information and events, it is probable that ADB will be
normally move in the opposite directions of the hybrid unable to collect all the amounts due according to the
instruments, relatively offsetting the unrealized loss (Note loan’s contractual terms.
M of OCR Financial Statements). In 2006, the Board approved the revision of the loan
Cumulative Effect of Change in Accounting loss provisioning methodology for ADB’s nonsovereign
Principle. The cumulative effect arising from the adoption operations to a risk-based model. The assessment applies
of the equity method for certain limited liability companies the concept of expected loss to establish loss provision
that have characteristics of partnership (EITF 03-16) in and loss reserve, similar to the concept applied to ADB’s
2005 resulted to a reversal of prior years’ income of $8.2 sovereign operations approved in 2004. The provisioning
million, net of a release of provisions of $3.6 million. estimate is performed by the Risk Management Unit on a
quarterly basis.
CRITICAL ACCOUNTING POLICIES In the revised methodology, ADB utilizes an internal
AND ESTIMATES risk rating system to estimate the probability of default
based on its past loan loss experience and a variety of tools
Significant accounting policies are contained in Note B of available in the market. Loans that are considered impaired
OCR’s financial statements. As disclosed in the financial based on the probability of default are provisioned through
statements, Management makes estimates in determining the income statement. Those that are not impaired will be
the fair value of financial instruments. Estimates by their provisioned through the establishment of a loss reserve in
nature are based on judgment and available information; the equity section as an allocation of net income subject
therefore, actual results could differ and could have a to the approval of the Board of Governors.
material impact on the financial statements. At 31 December 2006, ADB had 8 impaired loans
Fair Value of Financial Instruments. Under statu- (11–2005) with principal outstanding of $35.8 million
tory reporting, ADB carries its investments and derivatives, ($51.5 million–2005) in non-accrual status. Of this re-
as defined by FAS 133 and its related amendments, duction, $19.4 million was the result of write-off due to
including FAS 155, on a fair value basis. These derivatives foreclosure of three nonsovereign loans. Total provision
include embedded derivatives in the structured borrowings for loan losses at 31 December 2006 was $28.3 million
portfolio that are valued and accounted for in the balance ($79.5 million–2005). The decrease in provision for loan
sheet as a whole. Fair values are usually based on quoted losses was mainly a result of the revised provisioning esti-
market prices. If market prices are not readily available, fair mate for the nonsovereign loans ($28.2 million) and the
values are usually determined using market-based pricing foreclosure of three nonsovereign loans ($18.5 million).
models incorporating readily observable market data and At 31 December 2006, based on the revised provision-
require judgment and estimates. ing methodology, management’s estimate of the loan loss
The pricing models used for determining fair values of reserve for nonsovereign operations is $30.5 million. This
ADB’s financial instruments are based on discounted expected will be established as an allocation of net income subject
cash flows using observable market data. ADB reviews the to the approval of the Board of Governors.
pricing models to assess the appropriateness of assumptions
to reasonably reflect the valuation of the financial instru-
ments. In addition, the fair values derived from the models SPECIAL FUNDS
are subject to ongoing internal and external verification and
review. The models use market-sourced inputs such as inter- ADB is authorized by its Charter to establish and administer
est rates, exchange rates, and option volatilities. Selection of special funds. These are the Asian Development Fund;
these inputs may involve some judgment and may impact Technical Assistance Special Fund; Japan Special Fund, includ-
net income. ADB believes that the estimates of fair values are ing the Asian Currency Crisis Support Facility; ADB Institute
reasonable given existing controls and processes. Special Fund; the Asian Tsunami Fund; and the Pakistan
Provision for Loan Losses. Provision against loan Earthquake Fund. Financial statements for each fund are
losses for impaired loans reflects management’s judgment prepared in accordance with generally accepted accounting
19
principles except for ADF’s which are special purpose financial $1,462.5 5 million that include $1,292.9 million for
statements prepared in accordance with ADF Regulations. ADF operations, $97.8 million for Technical Assistance
Special Fund, and $71.8 million for financing forgone
MANAGEMENT’S
ASIAN DEVELOPMENT FUND interest of grants. The remaining unpaid contributions

The ADF is ADB’s concessional financing window for under ADF VIII amounted to $164.85 million as of 31
developing member countries with low per capita gross December 2006. (For details of amounts released for
national product and limited debt repayment capacity. It operational commitment in 2006, see the column la-
is the only multilateral source of concessional assistance beled “Addition” in Statistical Annex 23.)
dedicated exclusively to reducing poverty and to improv- In May 2006, the Board of Governors approved the
ing the quality of life in Asia and the Pacific. Thirty donor transfer of $40 million to ADF as part of OCR’s net in-
members (regional and nonregional) have contributed to come allocation ($40 million–2005). In addition, a total
the Fund. of $316.5 million from loan savings and cancellations
Contributed Resources. During the eighth have been included in the commitment authority for
replenishment of the ADF (ADF IX), donors recom- 2006, resulting from management’s continuous assess-
mended a replenishment of $7.0 billion, consisting ment of opportunities for freeing committed resources
of $3.3 billion in new contributions from donors through cancellations of unused loan balances. During
and $3.7 billion from internal resources based on 2006, promissory notes totaling $980.0 million5 have
the exchange rate specified in the Resolution of the been encashed, $57.0 million of which was transferred
Board of Governors. ADF IX, which covers the 4-year to the Technical Assistance Special Fund.
period from 2005 to 2008, became effective in April Currency Management. Effective 1 January 2006,
2005 after instruments of contribution deposited with the new currency management framework for ADF,
ADB for unqualified contribution exceeded 50% of all which was approved by the Board of Directors in October
pledged contributions. As of 31 December 2006, 27 2005, was implemented. Under this new framework,
donors submitted their Instruments of Contribution to the practice of managing ADF resources in as many as
ADF IX totaling $3.2 billion5. In addition, two new ADB 15 currencies was discontinued, and an approach based
members, Brunei Darussalam and Ireland, have pledged on special drawing rights basket of currencies was
to contribute to ADF IX, with an advance payment of introduced. While ADF donor contributions continue
Euro 11.55 million from Ireland prior to depositing the to be made in national currencies, US dollar or special
instrument of contribution. As of 31 December 2006, drawing rights, conversion of these contributions, along
donors have deposited installment payments totaling with ADF loan reflows and liquidity portfolio, into the
currencies that constitute the special drawing rights is
currently ongoing. In addition, the borrower’s obliga-
tions for new ADF loans are now determined in special
TABLE 13 ADF Commitment Authority a
($ million) drawing rights.
2006 2005 ADF Loan Approvals, Disbursements, and
Carryover from ADF VIII b
120.9 114.9 Repayments. In 2006, 45 ADF loans totaling $1.3
ADF IX Contributionsc 1,292.9 497.6 billion were approved compared with 40 loans total-
ADF VIII Contributions 157.8 151.8
ing $1.4 billion in 2005. Disbursements during 2006
OCR Net Income Transfer 80.0 40.0
Loans Savings and Cancellation 316.5 − totaled $1.3 billion, an increase of 7.3% from $1.2
Expanded Advance Commitment Authority 1,893.2 899.3 billion in 2005. At the end of the year, cumulative
Provision for Disbursement Risk (120.1) ( 44.8)
disbursements from ADF resources were $23.5 billion.
Total ADF IX Commitment Authority 3,741.4 1,658.8
Loans and Grants Committed (3,240.3) (1,619.0) Loan repayments during the year amounted to $468.4
ADF Commitment Authority million. At year-end, outstanding ADF loans amounted
Available for Future Commitments 501.1 39.8 to $21.5 billion.
a The schedule reflects cumulative commitment authority for the ADF IX.
b The US dollar equivalent of SDR 80.39 million at each year-end exchange Status of Loans. At the end of the year, 28 sover-
rates.
c Contributions received to finance forgone interest of grants are excluded as eign loans to Myanmar ($462.8 million) and 5 sovereign
they have been incorporated as cash inflows in the computation of Expanded
Advance Commitment Authority.
loans to the Republic of Marshall Islands ($25.1 million)
Note: Total may not add due to rounding.
5 US dollar equivalent at 31 December 2006 exchange rates.
20
were in non-accrual status representing about 2.3% of At the end of 2006, total Technical Assistance Special Fund
the total outstanding ADF loans. resources amounted to $1,346.9 million, of which $1,126.4

Investment Portfolio Position. The ADF invest- million was committed (Statistical Annex 24).
MANAGEMENT’S
ment portfolio6 amounted to $6.4 billion at 31 December Operations and Resource Position. Technical as-
2006 compared with $5.7 billion in 2005. About 86% sistance commitments (approved and effective) increased
of the portfolio was invested in bank deposits, and 14% from $77.0 million in 2005 to $91.8 million in 2006 for
was invested in fixed income securities. The annualized 163 technical assistance projects that were made effective
rate of return on ADF investments in 2006 and 2005 during the year. In 2006, $9.4 million ($11.3 million in
was 4.0% and 3.4%, respectively. At the start of 2006, 2005) representing completed and canceled technical
ADF investments were denominated in 11 currencies assistance projects were written back as a reduction in
with 44% of the portfolio invested in fixed income se- technical assistance, and the corresponding undisbursed
curities. As part of the implementation of the new ADF commitment was eliminated. Revenue from investments
currency management framework, substantially all of increased from $7.2 million in 2005 to $11.8 million in
these securities were liquidated and the underlying cur- 2006 because of higher yields in some capital markets.
rencies were converted into the special drawing rights As a result, the uncommitted balance available for future
basket of currencies. commitments increased from $215.5 million in 2005 to
ADF Grants. With the introduction of grant financ- $220.5 million in 2006. Technical Assistance Special Fund
ing in ADF IX, 16 grants (19–2005) were approved in financed 38.2% of all technical assistance activities ap-
2006 totaling $274.9 million ($246.6 million–2005), proved in 2006.
while 22 grants (2–2005) totaling $346.5 million ($24 At the end of the year, Technical Assistance Special Fund
million –2005) became effective. investments stood at $275.6 million, up by 8.4% from 2005.
Other assets—due from banks and contributors, advances to
TECHNICAL ASSISTANCE consultants, and others—totaled $129.1 million.
SPECIAL FUND
JAPAN SPECIAL FUND
Review of Activities. In 2006, the Board of Governors
approved an allocation of $20 million from 2005 OCR net Review of Activities. The technical assistance grants
income to the Technical Assistance Special Fund. With the financed by Japan Special Fund continued to support ADB
effectivity of the eighth replenishment of ADF (ADF IX) and operations aimed at reducing poverty. In March 2006,
the third regularized replenishment of Technical Assistance Japan contributed ¥2.9 billion ($24.5 million equivalent) as
Special Fund, contributions of $212.6 million from 27 donors a regular contribution. As of 31 December 2006, Japan’s
have been committed and $98.8 million have been received. cumulative contribution to the fund since its inception in
In addition, India made a wholly untied, direct, voluntary con- 1988 amounted to ¥107.6 billion (about $928.7 million
tribution amounting to Rs2.25 million ($50,000 equivalent). equivalent) comprising regular contributions of ¥89.5
TABLE 14 Technical Assistance Special Fund TABLE 15 Japan Special Fund

Cumulative Resources Technical Assistance by Sector, 2006
($ million)
$ Million %
2006 2005
Health, Nutrition, and Social Protection 11.3 20
Regularized Replenishment Law, Economic Management, and Public Policy 8.6 15
Contributions 425.7 368.4 Transport and Communications 7.5 13
Allocations from OCR Net Income 683.0 663.0 Finance 7.4 13
Direct Voluntary Contributions 88.8 88.8 Energy 6.5 11
Income from Investment and Multisector 4.9 9
Other Sources 152.9 140.8 Water Supply, Sanitation, and
Transfers from the TASF to the ADF (3.5) (3.5) Waste Management 4.4 8
Agriculture and Natural Resources 2.7 5
TOTAL 1,346.9 1,257.5
Education 2.2 4
ADF = Asian Development Fund, OCR = Ordinary Capital Resources,
TASF = Technical Assistance Special Fund. Industry and Trade 1.1 2
TOTAL 56.6 100
Note: Totals may not add because of rounding.
6 Includes securities purchased under resale arrangement.
21
billion ($777.9 million equivalent) and supplementary PAKISTAN EARTHQUAKE FUND
contributions of ¥18.1 billion ($150.8 million equivalent).

In 2006, ADB approved 64 technical assistance projects for The Pakistan Earthquake Fund was established in November
MANAGEMENT’S
the Japan Special Fund totaling $56.6 million inclusive of 2005 in response to the special needs of Pakistan subsequent
those that were approved but not yet effective (Table 15). to the earthquake on 8 October 2005. The fund is to serve
The uncommitted balance including approved technical as a dedicated fund to deliver emergency grant financing
assistance not yet effective as of 31 December 2006 was for investment projects and technical assistance to support
$103.1 million (Statistical Annexes 25 and 26). immediate reconstruction, rehabilitation, and associated
Sector Activities. In 2006, the Japan Special Fund development activities. ADB contributed $80 million to the
financed 23% of the total amount of technical assistance fund. In addition, Australia, Finland, and Norway committed
that ADB approved, including 36% of the total amount of $15.0 million, $12.3 million, and $5.0 million, respectively.
project preparation technical assistance during the year. Norway’s contribution of $5.0 million was part of
The breakdown of Japan Special Fund approvals by sector the debt-for-development swap between Norway and
is shown in Table 15. Pakistan, which involves the conversion of the latter’s
outstanding loan repayment obligations of up to $20.0
ADB INSTITUTE SPECIAL FUND million equivalent into Norway’s contributions to the
Pakistan Earthquake Fund. This will be undertaken in four
The costs for operating the ADB Institute are met from the equal installments of $5.0 million in 2006–2008.
ADB Institute Special Fund which is administered by ADB in Review of Activities. In 2006, one grant amounting
accordance with the Statute of ADB Institute. Japan com- to $107.5 million became effective. The uncommitted
mitted its 11th contribution in the amount of ¥1.34 billion resources of the fund at the end of the year amounted to
($11.3 million equivalent) in 2006. As of 31 December $6.0 million.
2006, this had not been received and was reported as
“Due from Contributors.”
As of 31 December 2006, cumulative commitments TRUST FUNDS MANAGED BY ADB
amounted to ¥14.4 billion (about $121.4 million equivalent)
excluding translation adjustments. Of the total contributions In addition to OCR and the Special Funds, ADB also man-
received, $104.2 million had been used by the end of the year ages and administers the Japan Scholarship Program, Japan
mainly for research and capacity-building activities including Fund for Poverty Reduction, Japan Fund for Information and
organizing symposia, forums, and trainings; preparing re- Communication Technology, and channel financing arrange-
search reports, publications, and websites; and for associated ments of a number of trust funds provided by bilateral donors
administrative expenses. The balance of net current assets to support technical assistance and soft components of loans.
excluding property, furniture, and equipment available for These funds do not form part of ADB’s own resources.
future projects and programs was about $17.1 million.
JAPAN SCHOLARSHIP PROGRAM
ASIAN TSUNAMI FUND
The Japan Scholarship Program was established in 1988 to
The Asian Tsunami Fund was established on 11 February provide an opportunity for well-qualified citizens of devel-
2005 in response to the special circumstances surrounding oping member countries to undertake postgraduate studies
the developing member countries that were stricken by in economics, management, science and technology, and
the effects of the tsunami on 26 December 2004. ADB other development-related fields at selected educational
contributed $600.0 million to the fund, of which, $50.0 institutions in Asia and the Pacific. The Japan Scholarship
million unutilized funds were transferred back to OCR, Program is funded by Japan and administered by ADB.
$40.0 million in November 2005 and $10.0 million in June Currently, 20 institutions in 10 countries participate.
2006. In addition, Australia and Luxembourg contributed Between 1988 and 2006, Japan contributed $84.5
$3.8 million and $1.0 million, respectively. million. A total of 2,104 scholarships have been awarded
Review of Activities. In 2006, one supplementary to recipients from 35 members. Recently, an average of
grant amounting to $1.0 million was made effective. The about 150 scholarships has been awarded each year. Of the
uncommitted resources of the Fund at the end of the year total, 1,739 have already completed their courses. Women
amounted to $19.5 million. have received 686 scholarships. (www.adb.org/JSP)
22
GRANT COFINANCING ACTIVITIES entered into its first channel financing arrangements with
Ireland, Korea, and Luxembourg, while a second channel

Official grant cofinancing plays a vital role in ADB opera- financing arrangement was entered into with Australia
MANAGEMENT’S
tions, particularly in view of the continuing constraints on for the ADB-Australia Development Partnership for South
Technical Assistance Special Fund and ADF resources. Asia, where Australia provided a contribution of $8.5
These grant funds support technical assistance and finance million. ADB also entered into another channel financ-
mostly soft components of loan projects. Most grants are ing arrangement with Denmark for the Second Danish
provided by bilateral donors under channel financing ar- Cooperation Fund for Renewable Energy and Efficiency
rangements (CFAs). ADB acts as administrator of the funds in Rural Areas.
and applies its own guidelines and procedures in recruit- In addition to the traditional type of channel financ-
ing consultants, making disbursements, and supervising ing arrangement which may be used for several sectors,
projects. thematic channel financing arrangements with bilateral
Efforts continued to mobilize grant funds not only agencies have increased sharply in recent years in such
from official sources but also from private sector enti- areas as renewable energy, climate change, poverty
ties. Funds mobilized from private sector entities mostly reduction, governance, water, gender and development,
cofinanced regional technical assistance projects in the and poverty and environment. Several thematic channel
environment sector. financing arrangements have been packaged as umbrella
facilities to allow more than one donor to contribute.
CHANNEL FINANCING ARRANGEMENTS In 2006, ADB established the E-Asia and Knowledge
Under a channel financing arrangement, the donor enters Partnership Fund (with Korea’s initial contribution of $20
into a comprehensive agreement with ADB whereby the million); Financial Sector Development Partnership Fund
donor provides an untied grant fund to be administered (with Luxembourg’s initial contribution of $1.8 million);
by ADB, but the fund does not become part of ADB’s Second Danish Cooperation Fund for Renewable Energy
own resources. The donor indicates its preferred sectors and Efficiency in Rural Areas (with Denmark’s contribu-
and recipient countries. ADB regularly provides a list and tions of about $3.6 million). In addition, replenishments
description of proposed technical assistance projects that were made to various existing funds: Ireland (in the
satisfy the donor’s preferences, and they agree on the same year) provided $1.0 million each for the existing
specific activities to be financed. Funds provided under Governance and Gender and Development Cooperation
a channel financing arrangement are usually transferred Funds; Norway provided $4.0 million additional contribu-
to an interest-bearing account and may also be invested tions to the Gender and Development Cooperation Fund,
by ADB pending disbursement. Donors are provided with and another $2.4 million to the Poverty and Environment
regular financial statements and progress reports on the Fund; the Netherlands provided an additional $1.0
use of the funds. ADB is responsible for project prepara- million to the Cooperation Fund for the Water Sector;
tion, processing, and administration. Channel financing Canada provided about $0.2 million for its Trust Fund for
arrangements may be replenished with additional funds Climate Change.
at the donor’s discretion.
The primary advantage of channel financing arrange- NEW COFINANCING FACILITIES/
ments is that funding for several individual technical assist- ARRANGEMENTS
ance projects may be provided under a single agreement.
Accordingly, they minimize the need for detailed nego- New arrangements and development facilities are being
tiations on a case-by-case basis and foster administrative explored to expand the scope of partnership between
efficiency. The first channel financing arrangement was ADB and its financial partners. In 2006, ADB approved
negotiated in 1980. Since then, ADB has entered into an innovative Water Financing Partnership Facility aiming
channel financing arrangements with the following bilat- to raise $100.0 million by 2008, in support of its water
eral development partners: Australia, Belgium, Canada, financing program. Resources from the facility may be
Denmark, Finland, France, Italy, the Netherlands, New provided for water projects through grants, concessional
Zealand, Norway, the People’s Republic of China, Spain, loans, guarantees, or other forms of assistance under
Sweden, Switzerland, and United Kingdom. In 2006, ADB framework agreements.
23
The Asia Pacific Carbon Fund which was also established JAPAN FUND FOR POVERTY
in 2006 will be managed by ADB to acquire future flows of REDUCTION

certified emission reduction (CER) credits on behalf of par-
MANAGEMENT’S
ticipants, in return for upfront cofinancing payments. So far, The Japan Fund for Poverty Reduction was established in
Spain has remitted $30.0 million to this fund. Contributions May 2000 as a trust fund to support poverty reduction
under this fund are expected to be covered by Instruments and social development activities that can add substantial
of Contributions but the use of channel financing arrange- value to ADB projects. Since 2000, Japan has contributed
ment, if preferred by a specific donor, may be allowed. $360.4 million in total. To date, $244.3 million for 90
Another cofinancing collaboration arrangement con- projects has been approved, of which 18 projects valued
cluded in 2006 was with the Cities Alliance. The Cities at $69.9 million were approved in 2006. This includes two
Alliance will approve grants based on funding applica- projects amounting to $3.5 million that were cancelled in
tions by ADB. Under the Memorandum of Understanding 2006 (www.adb.org/JFPR; Statistical Annex 27). A number
concluded with International Bank for Reconstruction of projects have been completed, and these have been
and Development and IDA, as administrator for the Cities the subject of knowledge-sharing sessions organized by
Alliance coalition, projects to be funded by grants from the Office of Cofinancing Operations. The Operations
the Cities Alliance may already be processed and admin- Evaluation Department will evaluate the Japan Fund for
istered following standard ADB procedures. Poverty Reduction in 2007.
EXTERNAL CONTRIBUTIONS TO JAPAN FUND FOR INFORMATION

EMERGENCY SPECIAL FUNDS AND COMMUNICATION
TECHNOLOGY
In response to the earthquake that struck Pakistan in
October 2005, the Pakistan Earthquake Fund was estab- The Japan Fund for Information and Communication
lished in late 2005 to mobilize funds to support immediate Technology was established in July 2001 to assist devel-
reconstruction, urgent rehabilitation, and associated developing member countries bridge the digital divide to help
opment activities in Pakistan. Australia and Finland made reduce poverty. The fund had an initial contribution of
contributions to the fund in 2005. In 2006, Finland made ¥1.3 billion (about $10.7 million) for a 3-year period.
an additional 5.5 million contributions while Norway While the fund has been fully committed, most of the
provided an equivalent of $20.0 million contributions projects are still under implementation and the Office of
through an innovative swap-for-development modality Cofinancing Operations continues to provide administra-
whereby outstanding loan repayment obligations from tive support. Two projects totaling $0.97 million were
Pakistan to Norway will be converted into a grant. approved in 2006, bringing total commitments to $10.4
million.
ARRANGEMENTS TO SIMPLIFY
DOCUMENTATION AND JAPAN FUND FOR PUBLIC POLICY
NEGOTIATIONS FOR COFINANCING TRAINING
COLLABORATIONS
The Japan Fund for Public Policy Training was established
In 2002, a General Operational Arrangement on Cofinancing in March 2004 as a trust fund to enhance developing
was entered into with the Netherlands to simplify the nego- member countries’ capacity building for public policy
tiation and finalization of cofinancing documentation and management focusing on regional economies in transi-
requirements. In 2006, ADB entered into a similar arrangement tion. Since its inception, Japan has contributed about
with Sweden whereby a Framework Agreement on Operational $22.0 million in total, out of which, $2.4 million had been
Arrangement was signed between Sweden and ADB. spent on program support.
24
PricewaterhouseCoopers
8 Cross Street #17-00
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
FINANCIAL STATEMENTS
GST No: 52-871777-D
Co. Reg. No.: 52871777D
Report of Independent Auditors to the Asian Development Bank
In our opinion, the accompanying balance sheets and the related statements of income and ex-
penses, cash flows, and changes in capital and reserves present fairly, in all material respects, the
financial position of the Asian Development Bank—Ordinary Capital Resources at 31 December
2006 and 2005, and the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the management of the Asian Development Bank.
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial state-
ments taken as a whole. The accompanying summary statements of loans and of borrowings as at
31 December 2006 and 2005, and of statement of subscriptions to capital stock and voting power
as at 31 December 2006 are presented for purposes of additional analyses and are not required
parts of the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements and in our opinion, is fairly
stated in all material respects in relation to the basic financial statements taken as a whole.
Certified Public Accountants
Singapore
7 March 2007
25
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
BALANCE SHEET
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)
ASSETS
2006 2005

DUE FROM BANKS (Notes B and C) $ 205,418 $ 81,662
INVESTMENTS (Notes B, C, D, and L)

Government and government-guaranteed obligations $ 2,994,321 $ 4,034,905
Time deposits 6,137,931 3,707,813
Other securities 3,632,180 12,764,432 3,370,039 11,112,757
SECURITIES TRANSFERRED UNDER SECURITIES

LENDING ARRANGEMENT (Note B) 1,922,901 2,770,965
SECURITIES PURCHASED UNDER

RESALE ARRANGEMENT (Note B) 432,963 1,118,748
LOANS OUTSTANDING (OCR-5) (Notes A, B, E, and Q)

(Including FAS 133 adjustment of $643 – 2006 and
$757 – 2005, unamortized loan origination costs of
$14,015 – 2006 and unamortized front end fees of
$11,077 – 2005)
Sovereign 25,326,875 22,923,271
Nonsovereign 878,870 634,982
26,205,745 23,558,253
Less—provision for loan losses 28,339 26,177,406 79,464 23,478,789
EQUITY INVESTMENTS (Notes A, B, and G) 655,819 404,975
ACCRUED REVENUE
On investments 126,708 99,334
On loans 267,652 394,360 239,528 338,862
RECEIVABLE FROM MEMBERS (Note K)

Nonnegotiable, noninterest-bearing demand
obligations (Note C) 173,667 172,966
Subscription installments – 173,667 38 173,004
RECEIVABLE FROM SWAPS (Notes B, H, and Q)

Borrowings 12,986,831 9,733,074
Others 655,151 13,641,982 1,582,337 11,315,411
OTHER ASSETS
Property, furniture, and equipment (Notes B and I) 158,699 163,586
Investment related receivables 188,335 244,718
Unamortized issuance cost of borrowings 43,747 39,257
Miscellaneous (Note N) 90,089 480,870 128,651 576,212

TOTAL $56,849,818 $51,371,385
The accompanying notes are an integral part of these financial statements (OCR-8).
26
OCR-1
BALANCE SHEET
LIABILITIES, CAPITAL, AND RESERVES
2006 2005

BORROWINGS (OCR-6) (Notes B and J)
(Including FAS 133 adjustment of $2,519 – 2005)
At amortized cost $25,495,393 $24,398,499
At fair value 2,112,378 $27,607,771 – $24,398,499
ACCRUED INTEREST ON BORROWINGS 303,061 262,138
PAYABLE FOR SWAPS (Notes B, H, J, and Q)

Borrowings 12,502,403 9,354,776
Others 655,461 13,157,864 1,586,604 10,941,380
PAYABLE UNDER SECURITIES LENDING ARRANGEMENT

(Note B) 1,954,409 2,795,081
ACCOUNTS PAYABLE AND OTHER LIABILITIES

Investment related payables 270,550 345,535
Undisbursed technical assistance commitments (Note M) 4,727 9,731
Accrued pension and postretirement medical benefit
costs (Note O) 288,517 195,124
Miscellaneous (Notes B, F, I, and N) 120,020 683,814 126,757 677,147
TOTAL LIABILITIES 43,706,919 39,074,245
CAPITAL AND RESERVES (OCR-4)

Capital stock (OCR-7) (Notes B and K)
Authorized and subscribed
(SDR35,342,300,000 – 2006,
SDR35,097,280,000 – 2005) 53,168,956 50,163,489
Less—”callable” shares subscribed 49,429,394 46,635,308
“Paid-in” shares subscribed 3,739,562 3,528,181

Less—subscription installments not due 15,138 10,980
Subscription installments matured 3,724,424 3,517,201

Less—capital transferred to the
Asian Development Fund 71,624 68,047
3,652,800 3,449,154
Net notional amounts required to maintain value of

currency holdings (Notes B and K) (672,899) (586,105)
Ordinary reserve (Note L) 8,993,737 8,957,392
Special reserve (Note L) 197,799 193,629
Loan loss reserve (Note L) 130,100 167,000
Surplus (Note L) 330,117 117
Cumulative revaluation adjustments account (Note L) 27,519 234,833
Net income after appropriation (OCR-2) (Note L) 565,886 105,202
Accumulated other comprehensive
income (OCR-4) (Notes B and L) (82,160) 13,142,899 (224,082) 12,297,140

TOTAL $56,849,818 $51,371,385
27
OCR-2
STATEMENT OF INCOME AND EXPENSES
For the Years Ended 31 December 2006 and 2005
2006 2005


REVENUE (Note M)
From loans (Notes B and E)
Interest $1,148,306 $967,387
Commitment charge 52,709 50,898
Other 9,056 $1,210,071 18,044 $1,036,329
From investments (Notes B and D)

Interest 564,495 377,379
From guarantees (Notes B and F) 4,169 4,090
From other sources—net (Notes E and R) 60,204 14,620
TOTAL REVENUE $1,838,939 $1,432,418
EXPENSES (Note M)
Borrowings and related expenses (Note J) 1,116,326 893,218
Administrative expenses (Note M) 127,669 135,689
Technical assistance to member countries (1,220) (3,446)
Provision for losses (Notes B and E) (32,515) (3,477)
Other expenses 3,767 4,248
TOTAL EXPENSES 1,214,027 1,026,232
NET REALIZED GAINS (LOSSES)

From investments (Note M) 8,612 (2,097)
From equity investments 63,476 17,736
From borrowings 8,888 1,023
Others (362) 306
NET REALIZED GAINS 80,614 16,968
NET UNREALIZED LOSSES (Note M) (135,471) (309,243)
NET INCOME BEFORE CUMULATIVE EFFECT OF

CHANGE IN ACCOUNTING PRINCIPLE 570,055 113,911
CUMULATIVE EFFECT OF CHANGE

IN ACCOUNTING PRINCIPLE (Note G) – (4,619)
NET INCOME $ 570,055 $ 109,292

28
OCR-3
STATEMENT OF CASH FLOWS
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Interest and other charges on loans received $ 1,035,357 $ 918,237
Interest on investments received 538,145 378,032
Interest received for securities purchased under resale arrangement 13,118 4,898
Interest and other financial expenses paid (971,038) (768,295)
Administrative expenses paid (66,237) (80,164)
Technical assistance disbursed (3,427) (6,962)
Others—net 26,136 7,714
Net Cash Provided by Operating Activities 572,054 453,460
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of investments 3,082,284 11,265,412
Maturities of investments 124,323,543 91,142,586
Purchases of investments (128,860,072) (103,542,060)
Net receipts from securities purchased under resale arrangement 696,945 107,904
Principal collected on loans 1,735,521 3,491,031
Loans disbursed (4,299,176) (3,401,301)
Net currency and interest rate swaps (55,969) 4
Property, furniture, and equipment acquired (8,365) (11,473)
Purchases of equity investments (129,836) (131,757)
Sales of equity investments 134,704 82,798
Net Cash Used in Investing Activities (3,380,421) (996,856)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of new borrowings 6,995,869 4,681,615
Borrowings redeemed (4,155,679) (3,580,596)
Matured capital subscriptions collected1 16,338 3,190
Borrowing issuance expenses paid (19,773) (6,286)
Demand obligations of members encashed 9,881 36,442
Net currency and interest rate swaps 140,715 127,655
Resources transferred to ADF (40,000) (40,000)
Resources transferred to TASF (20,000) (32,000)
Resources transferred from (to) ATF 10,000 (560,000)
Resources transferred to PEF – (80,000)
Net Cash Provided by Financing Activities 2,937,351 550,020
Effect of Exchange Rate Changes on Due from Banks (5,228) (1,367)
Net Increase in Due from Banks 123,756 5,257
Due from Banks at Beginning of Year 81,662 76,405
Due from Banks at End of Year $ 205,418 $ 81,662
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income (OCR-2) $ 570,055 $ 109,292
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 75,471 98,633
Provision for losses written back (32,515) (7,212)
Net realized gain from investments and other borrowings (80,977) (11,821)
Proportionate share of earnings on equity investments (32,338) (951)
Net unrealized losses 135,471 309,243
Change in accrued revenue from loans, investments and other swaps (193,627) (136,808)
Change in receivable from ADF allocation of administrative expenses 6,095 (7,070)
Change in accrued interest on borrowings and swaps, and other expenses 204,060 106,956
Change in undisbursed technical assistance commitments (5,004) (11,075)
Change in pension and postretirement benefit liability (76,620) 5,495
Others—net 1,983 (1,222)
Net Cash Provided by Operating Activities $ 572,054 $ 453,460
1 Supplementary disclosure of noncash financing activities:

Nonnegotiable, noninterest-bearing demand promissory notes amounting to $2,731 ($4,225 – 2005) were received from members.
29
STATEMENT OF CHANGES IN CAPITAL AND RESERVES
Expressed in Thousands of United States Dollars (Notes B and K)

Cumulative Accumulated
Net Notional Revaluation Net Income Other

Capital Maintenance Ordinary Special Loan Loss Adjustments After Comprehensive
Stock of Value Reserve Reserve Reserve Surplus Account Appropriations Income Total
Balance-
1 January 2005 $3,725,823 $(642,944) $8,865,414 $189,539 $218,800 $312,117 $193,870 $ 427,080 $ (22,922) $13,266,777
Comprehensive income
for the year 2005 (Note L) 109,292 (201,160) (91,868)
Appropriation of guarantee
fees to Special Reserve
(Note L) 4,090 (4,090) –
Change in SDR value of
paid-in shares subscribed (289,693) (289,693)
Change in subscription
installments not due (1,572) (1,572)
Additional paid-in shares
subscribed during the year 8,951 8,951
capital transferred to
Asian Development Fund 5,645 5,645
Change in notional
maintenance of value 56,839 56,839
Allocation of 2004 net income
to ordinary reserve, surplus
and cumulative revaluation
account and transfer from
loan loss reserve (Note L) 37,917 (51,800) 40,000 40,963 (67,080) –
to ATF, TASF, and ADF (Note L) (360,000) (360,000)
Allocation of Surplus to ATF
and PEF (Note L) (352,000) (352,000)
Credit to ordinary reserve for
change in SDR value of capital
stock (Note L) 54,061 54,061
Balance-
31 December 2005 $3,449,154 $(586,105) $8,957,392 $193,629 $167,000 $ 117 $234,833 $105,202 $(224,082) $12,297,140
(Forward)
30
OCR-4
Net Cumulative Accumulated
Notional Revaluation Net Income Other
Capital Maintenance Ordinary Special Loan Loss Adjustments After Comprehensive
Stock of Value Reserve Reserve Reserve Surplus Account Appropriations Income Total
Balance-
31 December 2005 $3,449,154 $(586,105) $8,957,392 $193,629 $167,000 $ 117 $234,833 $105,202 $(224,082) $12,297,140

Cumulative effect of
FAS 155 adjustments (2,967) 101,430 20,108 118,571
for the year 2006 (Note L) 570,055 121,814 691,869
Appropriation of guarantee
fees to Special Reserve (Note L) 4,169 (4,169) –
paid-in shares subscribed 189,309 189,309
Change in subscription
installments not due (2,871) (2,871)
Additional paid-in shares
subscribed during the year 20,785 20,785
capital transferred to
Asian Development Fund (3,577) (3,577)
Change in notional maintenance
of value (Note K) (86,794) (86,794)
to ordinary reserve and surplus
and transfer from cumulative
revaluation account and loan
loss reserve (Note L) 70,845 (36,900) 320,000 (308,743) (45,202) –
Allocation of 2005 net income to
ADF and TASF (Note L) (60,000) (60,000)
Transfer of unutilized contributions
from ATF to Surplus (Note L) 10,000 10,000
Charge to ordinary reserve for
change in SDR value of capital
stock (Note L) (31,533) (31,533)
Balance-
31 December 2006 $3,652,800 $(672,899) $8,993,737 $197,799 $130,100 $330,117 $ 27,519 $565,886 $ (82,160) $13,142,899
Note: Figures may not add due to rounding.
Accumulated Other Comprehensive Income (Note L)

Expressed in Thousands of United States Dollar (Note B)
Pension/
FAS 133 Accumulated Unrealized Postretirement Accumulated Other
Adjustments and Translation Investment Liability Adjustment- Comprehensive
Amortization Adjustments Holding Gains FAS 158 Income
2006 2005 2006 2005 2006 2005 2006 2005 2006 2005
Balance, 1 January $(2,566) $(6,442) $(246,682) $ (20,326) $ 30,097 $14,272 $ (4,931) $(10,426) $(224,082) $ (22,922)
Cumulative effect of
FAS 155 adjustments – – 20,108 – – – – – 20,108 –
Adjusted balance,
1 January (2,566) (6,442) (226,574) (20,326) 30,097 14,272 (4,931) (10,426) (203,974) (22,922)
Amortization 1,412 3,876 – – – – – – 1,412 3,876
Other comprehensive
income for the year – – 26,535 (226,356) 170,487 15,825 (76,620) 5,495 120,402 (205,036)
Balance, 31 December $(1,154) $(2,566) $(200,039) $(246,682) $200,584 $30,097 $(81,551) $ (4,931) $ (82,160) $(224,082)
31
SUMMARY STATEMENT OF LOANS
Undisbursed Loans
Loans Balances of Not Yet Total Percent of
Borrowers/Guarantors Outstanding1 Effective Loans2 Effective Loans Total Loans
Afghanistan $ 48,461 $ 21,539 $ – $ 70,000 0.16

Azerbaijan 4,030 58,970 6,000 69,000 0.16
Bangladesh 360,579 544,831 – 905,410 2.11
China, People’s Rep. of 6,341,338 3,783,608 1,730,000 11,854,946 27.61
Fiji Islands 78,440 72,028 – 150,468 0.35
India 3,611,756 3,578,656 1,553,708 8,744,120 20.35
Indonesia 8,748,836 1,112,435 75,000 9,936,271 23.13
Kazakhstan 196,280 38,343 – 234,623 0.55
Korea, Rep. of 121,119 – – 121,119 0.28
Lao People’s Dem. Rep. 39,823 30,177 – 70,000 0.16
Malaysia 259,215 – – 259,215 0.60
Marshall Islands 3,816 – – 3,816 0.01
Micronesia, Fed. States of 5 4,795 – 4,800 0.01
Mongolia 4,500 – – 4,500 0.01
Nauru 2,300 – – 2,300 0.01
Nepal 27,975 – – 27,975 0.07
Pakistan 2,260,667 1,659,090 883,684 4,803,441 11.18
Papua New Guinea 140,775 92,526 – 233,301 0.54
Philippines 3,094,419 410,715 – 3,505,134 8.16
Sri Lanka 225,467 126,925 163,500 515,892 1.20
Thailand 100,587 3,000 – 103,587 0.24
Uzbekistan 376,313 275,348 32,600 684,261 1.59
Viet Nam 139,529 471,185 – 610,714 1.42
26,186,230 12,284,171 4,444,492 42,914,893 99.90
Regional 5,500 20,000 19,500 45,000 0.10
TOTAL – 31 December 2006 26,191,730 12,304,171 4,463,992 42,959,893 100.00
Provision for loan losses (28,339) – – (28,339)
Unamortized loan origination cost – net 14,015 – – 14,015
NET BALANCE – 31 December 2006 $26,177,406 $12,304,171 $4,463,992 $42,945,569
Made up of :
Sovereign Loans $25,320,759 $11,915,734 $4,073,684 $41,310,177
Nonsovereign Loans:
Private Sector 855,647 314,437 315,308 1,485,392
Public Sector 1,000 74,000 75,000 150,000
Net balance – 31 December 2006 $26,177,406 $12,304,171 $4,463,992 $42,945,569
TOTAL – 31 December 2005 $23,569,330 $11,025,463 $4,476,370 $39,071,163

Provision for loan losses (79,464) – – (79,464)
Unamortized front-end fee – net (11,077) – – (11,077)
NET BALANCE – 31 December 2005 $23,478,789 $11,025,463 $4,476,370 $38,980,622
Made up of :
Sovereign Loans $22,920,971 $10,934,499 $3,788,345 $37,643,815
Nonsovereign Loans:
Private Sector 557,818 90,964 688,025 1,336,807
Public Sector – – – –
Net balance – 31 December 2005 $23,478,789 $11,025,463 $4,476,370 $38,980,622
1 Amounts outstanding on the multicurrency fixed lending rate loans totaled $49,647 ($200,030 – 2005), on pool-based loans totaled $11,589,503
($12,828,090 – 2005) and on LIBOR-based loans and market-based loans totaled $14,552,580 ($10,541,209 – 2005). The average yield on loans was
4.98% (4.35% – 2005).
2 Of the undisbursed balances, ADB has made irrevocable commitments to disburse various amounts totaling $237,230 ($205,674 – 2005).
32
OCR-5
MATURITY OF EFFECTIVE LOANS

Twelve Months Five Years
Ending Ending
31 December Amount 31 December Amount

2007 $ 1,434,352 2016 $11,465,242
2008 1,623,191 2021 9,129,695
2009 1,837,022 2026 5,897,516
2010 2,098,336 2031 2,712,912
2011 2,233,905 over 2031 63,730
Total $38,495,901 3
SUMMARY OF CURRENCIES RECEIVABLE ON LOANS OUTSTANDING
Currency 2006 2005 Currency 2006 2005
Euro $ 2,475 $ 2,436 Philippine peso $ 35,844 $ 34,856

Japanese yen 4,481,354 4,961,336 Swiss franc 4,153 23,262
Indian rupee 87,042 75,977 United States dollar 21,580,862 18,471,463
Total $26,191,730 $23,569,330
3 Includes undisbursed commitment relating to Revolving Credit Facility of Trade Financing Facilitation Program amounting to $20,000.
The accompanying notes are an integral part of these financial statements (OCR-8)

33

SUMMARY STATEMENT OF BORROWINGS
Borrowings Swap Arrangements2

Principal Outstanding1 Payable (Receivable)3
2006 2005 2006 2005

Australian dollar $ 3,582,906 $ 1,781,100 $(3,462,298) $(1,765,589)
Canadian dollar 749,339 516,840 (758,086) (527,379)
Chinese yuan 128,121 123,913 (207) –
Euro 1,041,315 1,300,396 (1,061,792) (1,382,359)
Hong Kong dollar 295,713 167,632 (295,850) (164,330)
Indian rupee 112,969 111,123 18,384 7,160
Japanese yen 3,370,259 3,779,260 3,251,006 2,894,589
(1,895,947) (1,721,168)
Malaysian ringgit 255,102 105,834 (258,811) (105,675)
Mexican peso 157,135 – (157,708) –
New Taiwan dollar 144,056 213,242 (144,056) (204,263)
New Zealand dollar 750,304 319,153 (754,639) (308,832)
Philippine peso 36,723 31,168 (5,966) (129)
Pound sterling 241,923 5 316,125 (1,982) 3,548
Singapore dollar 325,119 120,301 (325,726) (117,923)
South African rand 799,400 677,131 (757,546) (662,065)
Swiss franc 333,137 525,343 – (234,229)
Thai baht 296,192 97,501 (296,803) (91,116)
Turkish lira 163,292 – (161,084) –
United States dollar 14,817,561 6 14,267,934 9,233,012 6,449,479
(2,648,329) (2,448,017)
Subtotal 27,600,566 24,453,996 (484,428) (378,298)
Unamortized discounts/ premiums
and transition adjustments 7,205 99,680
Embedded derivatives – (155,177)
FAS 133 Adjustments – –
Total $27,607,771 $24,398,499
MATURITY STRUCTURE OF BORROWINGS OUTSTANDING7

Ending Ending
31 December Amount 31 December Amount
2007 $6,556,015 2016 7,092,897
2008 3,127,711 2021 1,061,523
2009 4,028,209 2026 257,104
2010 1,976,918 2031 1,758,861
2011 1,591,479 over 2031 149,849
Total $27,600,566
1 Includes zero coupon and deep discount borrowings which have been recorded at their discounted values. The aggregate face amounts and discounted
values of these borrowings (in United States dollar equivalents) are:

Aggregate Face Amount Discounted Value
Currency 2006 2005 2006 2005
Australian dollar $1,040,886 $ 966,174 $ 802,084 $ 730,752
Canadian dollar 686,165 689,388 534,913 516,840
Philippine peso 51,010 47,143 36,722 31,168
South African rand 14,273 15,760 11,523 12,056
Swiss franc 401,149 371,891 251,636 221,632
Turkish lira 69,148 57,453
United States dollar 1,804,588 1,772,903 1,154,161 1,084,934
2 Include currency and interest rate swaps. At 31 December 2006, the remaining maturity of swap agreements ranged from less than one year to 30 years.
Approximately 75.89% of the swap receivables and 76.70% of the payables are due before 1 January 2012.
3 Adjusted by the cumulative effect of the adoption of FAS 133 effective 1 January 2001.
34
OCR-6
Net Currency Obligation

3
Weighted Average
2006 2005 Cost (%) After Swaps4
$ 120,608 $ 15,511 (15.99)
(8,747) (10,539) 4.32
127,914 123,913 2.47
(20,477) (81,963) 4.75
(137) 3,302 0.00
131,353 118,283 6.28
4,725,318 4,952,681 0.79
(3,709) 159 3.74

(573) – 0.40
– 8,979 (87.82)
(4,335) 10,321 0.55
30,757 31,039 6.58
239,941 319,673 9.94
(607) 2,378 0.93
41,854 15,066 (0.67)
333,137 291,114 5.39
(611) 6,385 0.49
2,208 – 1.14
21,402,244 18,269,396 5.17
$27,116,138 $24,075,698 4.28
0.53
4.81
INTEREST RATE SWAP ARRANGEMENTS

Average Rate (%)

Receive Pay
Notional Amount Fixed Floating8 Maturing Through9
Receive Fixed Swaps:
Australian dollar10 $ 41,994 2.64 0.12 2027-2032
Chinese yuan 128,121 3.34 2.91 2015
Euro11 83,988 4.40 3.62 2010
Indian rupee 112,969 5.40 7.22 2014
Philippine peso 33,314 6.72 2010
United States dollar 8,807,967 3.03 4.23 2007-2018
United States dollar12 41,994 2.14 0.10 2016-2027
Receive Floating Swaps:
Japanese yen 563,138 0.51 0.62 0.09 2009-2032
Total $9,813,485
4 Calculation is based on average carry book value of borrowings net of fair value of swaps. Thus, the weighted average cost may be negative if the related
swaps payable exposure is in a different currency and the fair value of swaps receivable exceeds the carry book value of borrowings.
5 Consists of long-term borrowings of $192,951 and short-term borrowings of $48,972.
6 Consists of long-term borrowings of $14,687,561 and short-term borrowings of $130,000.
7 Bonds with put and call options were considered maturing on the first put or call date.
8 Represent average current floating rates, net of spread.
9 Swaps with early termination date were considered maturing on the first termination date.
10 Consists of dual currency swaps with interest receivable in Australian dollar and interest payable in Japanese yen.
11 Consists of a dual currency swap with interest receivable in Euro and interest payable in Japanese yen.
12 Consists of dual currency swaps with interest receivable in United States dollar and interest payable in Japanese yen.
The accompanying notes are an integral part of these financial statements (OCR–8).
35

STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER
31 December 2006
SUBSCRIBED CAPITAL VOTING POWER
Number of Percent Par Value of Shares Number of Percent
MEMBER Shares of Total Total Callable Paid-in Votes of Total

REGIONAL
Afghanistan 1,195 0.034 $ 17,978 $ 12,231 $ 5,747 14,582 0.330
Armenia 10,557 0.299 158,820 147,657 11,163 23,944 0.542
Australia 204,740 5.793 3,080,109 2,864,408 215,701 218,127 4.937
Azerbaijan 15,736 0.445 236,732 220,079 16,654 29,123 0.659
Bangladesh 36,128 1.022 543,510 505,448 38,061 49,515 1.121
Bhutan 220 0.006 3,310 2,964 346 13,607 0.308
Brunei Darussalam 12,462 0.353 187,478 174,300 13,179 25,849 0.585
Cambodia 1,750 0.050 26,327 21,844 4,483 15,137 0.343
China, People’s Rep. of 228,000 6.451 3,430,032 3,189,764 240,268 241,387 5.464
Cook Islands 94 0.003 1,414 1,324 90 13,481 0.305
Fiji Islands 2,406 0.068 36,196 33,653 2,542 15,793 0.357
Hong Kong, China 19,270 0.545 289,898 269,588 20,309 32,657 0.739
India 224,010 6.338 3,370,006 3,134,011 235,995 237,397 5.374
Indonesia 192,700 5.452 2,898,979 2,695,975 203,004 206,087 4.665
Japan 552,210 15.625 8,307,447 7,725,666 581,782 565,597 12.803
Kazakhstan 28,536 0.807 429,296 399,223 30,073 41,923 0.949
Kiribati 142 0.004 2,136 1,986 150 13,529 0.306
Korea, Rep. of 178,246 5.043 2,681,533 2,493,769 187,764 191,633 4.338
Kyrgyz Republic 10,582 0.299 159,196 148,048 11,148 23,969 0.543
Lao PDR 492 0.014 7,402 6,604 797 13,879 0.314
Malaysia 96,350 2.726 1,449,489 1,347,972 101,517 109,737 2.484
Maldives 142 0.004 2,136 1,986 150 13,529 0.306
Marshall Islands 94 0.003 1,414 1,324 90 13,481 0.305
Micronesia, Fed. States of 142 0.004 2,136 1,986 150 13,529 0.306
Mongolia 532 0.015 8,003 7,447 557 13,919 0.315
Myanmar 19,270 0.545 289,898 269,588 20,309 32,657 0.739
Nauru 142 0.004 2,136 1,986 150 13,529 0.306
Nepal 5,202 0.147 78,259 72,768 5,491 18,589 0.421
New Zealand 54,340 1.538 817,491 760,249 57,242 67,727 1.533
Pakistan 77,080 2.181 1,159,592 1,078,384 81,208 90,467 2.048
Palau 114 0.003 1,715 1,595 120 13,501 0.306
Papua New Guinea 3,320 0.094 49,946 46,471 3,475 16,707 0.378
Philippines 84,304 2.385 1,268,269 1,179,465 88,805 97,691 2.211
Samoa 116 0.003 1,745 1,565 181 13,503 0.306
Singapore 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Solomon Islands 236 0.007 3,550 3,310 241 13,623 0.308
Sri Lanka 20,520 0.581 308,703 287,085 21,618 33,907 0.768
Taipei,China 38,540 1.090 579,796 539,207 40,589 51,927 1.175
Tajikistan 10,134 0.287 152,456 141,730 10,726 23,521 0.532
Thailand 48,174 1.363 724,730 673,971 50,758 61,561 1.393
Timor-Leste 350 0.010 5,265 4,889 376 13,737 0.311
Tonga 142 0.004 2,136 1,986 150 13,529 0.306
Turkmenistan 8,958 0.253 134,764 125,286 9,478 22,345 0.506
Tuvalu 50 0.001 752 692 60 13,437 0.304
Uzbekistan 23,834 0.674 358,559 333,450 25,108 37,221 0.843
Vanuatu 236 0.007 3,550 3,310 241 13,623 0.308
Viet Nam 12,076 0.342 181,671 160,835 20,836 25,463 0.576
Total Regional (Forward) 2,235,914 63.265 $33,637,090 $31,265,524 $2,371,566 2,865,103 64.854

36
OCR-7
SUBSCRIBED CAPITAL VOTING POWER

Number of
Percent Par Value of Shares Number of Percent
MEMBER Shares
of Total Total Callable Paid-in Votes of Total

Total Regional (Forward) 2,235,914 63.265 $33,637,090 $31,265,524 $2,371,566 2,865,103 64.854
NONREGIONAL
Austria 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Belgium 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Canada 185,086 5.237 2,784,434 2,589,449 194,985 198,473 4.493
Denmark 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Finland 12,040 0.341 181,130 168,448 12,682 25,427 0.576
France 82,356 2.330 1,238,964 1,152,190 86,774 95,743 2.167
Germany 153,068 4.331 2,302,755 2,141,483 161,272 166,455 3.768
Ireland 12,040 0.341 181,130 168,387 12,742 25,427 0.576
Italy 63,950 1.809 962,064 894,682 67,382 77,337 1.751
Luxembourg 12,040 0.341 181,130 168,387 12,742 25,427 0.576
The Netherlands 36,294 1.027 546,007 507,780 38,227 49,681 1.125
Norway 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Portugal 12,040 0.341 181,130 168,387 12,742 25,427 0.576
Spain 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Sweden 12,040 0.341 181,130 168,448 12,682 25,427 0.576
Switzerland 20,650 0.584 310,659 288,890 21,769 34,037 0.770
Turkey 12,040 0.341 181,130 168,448 12,682 25,427 0.576
United Kingdom 72,262 2.045 1,087,110 1,010,987 76,123 85,649 1.939
United States 552,210 15.625 8,307,447 7,725,666 581,782 565,597 12.803
Total Nonregional 1,298,316 36.735 19,531,866 18,163,870 1,367,996 1,552,669 35.146

TOTALS 3,534,230 100.000 $53,168,956 $49,429,394 $3,739,562 4,417,772 100.000
Note: Figures may not add due to rounding.
37
OCR-8
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
NOTE A—NATURE OF OPERATIONS AND LIMITATIONS Article 12, paragraph 3 of the Charter provides
ON LOANS, GUARANTEES AND EQUITY that equity investments shall not exceed 10% of the
INVESTMENTS unimpaired paid-in capital together with reserves and

surplus, exclusive of the special reserve. At 31 December
Nature of Operations 2006, such equity investments represented approximately
7.7% (5.6% – 2005) of the paid-in capital, reserves, and
The Asian Development Bank (ADB), a multilateral develop- surplus, as defined.
ment finance institution, was established in 1966 with its
headquarters in Manila, Philippines. ADB and its operations NOTE B—SUMMARY OF SIGNIFICANT
are governed by the Agreement Establishing the Asian ACCOUNTING POLICIES
Development Bank (the Charter). Its purpose is to foster
economic development and co-operation in the Asian Functional Currencies and Reporting Currency
and Pacific region and to contribute to the acceleration of
the process of economic development of the developing The currencies of members are all functional currencies
member countries (DMCs) in the region, collectively and as these are the currencies of the primary economic
individually. With the adoption of its poverty reduction environment in which ADB generates and expends cash.
strategy at the end of 1999, ADB made reducing poverty The reporting currency is the United States dollar (USD),
in the region its main goal. ADB provides financial and and the financial statements are expressed in thousands
technical assistance (TA) for projects and programs, which of current United States dollars.
will contribute to achieving this purpose.
Mobilizing financial resources, including cofinanc- Translation of Currencies
ing, is an integral part of ADB's operational activities. In
addition, ADB, alone or jointly, administers on behalf of Effective 1 January 2006, ADB adopted the use of daily
donors, including members, their agencies and other de- exchange rates for accounting and financial reporting
velopment institutions, funds restricted for specific uses, purposes. This allows transactions in currencies other
which include TA grants as well as regional programs. than USD to be translated to the reporting currency using
ADB's ordinary operations comprise loans, equity exchange rates applicable at the time of transactions. At
investments, and guarantees. During the years 2001 and the end of each accounting month, translation of assets,
2002, limited technical assistance to member countries liabilities, capital, and reserves denominated in non-USD
to support high priority TA programs was included. ADB are adjusted using the applicable rates of exchange at the
finances its ordinary operations through borrowings, end of the reporting period. These translation adjustments,
paid-in capital, and reserves. other than those relating to the non-functional currencies
(Note M) and to the maintenance of Special Drawing Right
Limitations on Loans, Guarantees, and (SDR) capital values (Notes K and L), are charged or credited
Equity Investments to “Accumulated translation adjustments” and reported in
“CAPITAL AND RESERVES” as part of “Accumulated other
Article 12, paragraph 1 of the Charter provides that the comprehensive income.”
total amount outstanding of loans, equity investments,
and guarantees made by ADB shall not exceed the total of Valuation of Capital Stock
ADB's unimpaired subscribed capital, reserves, and surplus,
exclusive of the special reserve. At 31 December 2006, the The authorized capital stock of ADB is defined in Article
total of such loans, equity investments, and guarantees 4, paragraph 1 of the Charter "in terms of United States
aggregated approximately 71.1% (68.3% – 2005) of the dollars of the weight and fineness in effect on 31 January
total subscribed capital, reserves, and surplus as defined. 1966" (the 1966 dollar) and the value of each share is
38
OCR-8
31 December 2006 and 2005 CONTINUED
defined as 10,000 1966 dollars. The capital stock had hedging relationships, not because economic hedges do
historically been translated into the current United States not exist, but rather because the application of FAS 133
dollar (ADB's unit of account) on the basis of its par value hedging criteria does not make fully evident ADB’s risk
in terms of gold. From 1973 until 31 March 1978, the rate management strategies.
arrived at on this basis was $1.20635 per 1966 dollar. In February 2006, the Financial Accounting Standards
Since 1 April 1978, at which time the Second Amendment Board issued FAS 155, “Accounting for Certain Hybrid
to the Articles of Agreement of the International Monetary Financial Instruments, an amendment of FASB Statements
Fund (IMF) came into effect, currencies no longer have par No. 133 and 140.” ADB has decided to early adopt the
values in terms of gold. Pending ADB's selection of the provisions which allow hybrid financial instruments that
appropriate successor to the 1966 dollar, the capital stock contain embedded derivatives requiring bifurcation under
has been valued for purposes of these financial statements FAS 133 to be measured at fair value, effective 1 January
in terms of the SDR at the value in current United States 2006. With this, FAS 133 as presented in ADB’s financial
dollars as computed by the IMF, with each share valued at statements incorporates the provisions of FAS 155.
SDR10,000. ADB issues hybrid instruments, i.e. structured debts,
As of 31 December 2006, the value of the SDR in to lower its cost of borrowings, which are generally fully
terms of the current United States dollar was $1.5044 hedged through derivative transactions. However, this
($1.42927 – 2005) giving a value for each share of ADB's hedging relationship is not fully captured in the financial
capital equivalent to $15,044.00 ($14,292.70 – 2005). statements, because under FAS 133, the derivative transac-
However, ADB could decide to fix the value of each share tions and the embedded derivatives of the hybrid instru-
at $12,063.50 based on the 31 March 1978 par value of ments are required to be measured at fair value, while
the United States dollar in terms of gold. the contractual debts are reported at their carrying value.
This asymmetric treatment of the fair value measurement
Derivative Financial Instruments has caused undue volatility in net income.
With the adoption of FAS 155, ADB measures and
Effective 1 January 2001, ADB reported all derivative reports any of its qualified bifurcable structured debts and
transactions in accordance with Statement of Financial their corresponding derivatives at fair value with changes
Accounting Standards (FAS) No. 133, “Accounting for in fair value recognized in net income. This consistent
Derivative Instruments and Hedging Activities,” along accounting treatment would fully capture the economic
with its amendments, collectively referred as FAS 133. FAS hedging relationship between the hybrid instruments
133 requires that derivative instruments be recorded in and their derivatives. The cumulative effects of FAS 155,
the Balance Sheet as either assets or liabilities measured upon its adoption on 1 January 2006, are reported as
at fair value. The initial application of FAS 133 gave rise to net increase in Ordinary Reserves, Cumulative Revaluation
a transition loss of $81,657,000 in other comprehensive Adjustments, and net Accumulated Other Comprehensive
income and a gain of $34,656,000 was reported in net Income of $118,571,000, comprising of gross gains and
income. The amount recorded in other comprehensive losses of $126,276,000 and $7,705,000, respectively.
income as transition loss is being reclassified into earnings
in the same period or periods in which the underlying Investments
transactions affect earnings.
In applying FAS 133 for purposes of financial state- All investment securities and negotiable certificate of
ment reporting, ADB has elected not to define any qualifying deposits held by ADB other than derivative instruments
hedging relationships. Rather, all derivative instruments, are considered by Management to be “Available for Sale”
as defined by FAS 133, have been marked to fair value, and are reported at estimated fair value, which represents
and all changes in fair value have been recognized in net their fair market value. Time deposits are reported at cost,
income. ADB has elected not to define any qualifying which is a reasonable estimate of fair value. Unrealized
39
OCR-8
gains and losses are reported in "CAPITAL AND RESERVES" It is the policy of ADB to place loans in non-accrual
as part of “Accumulated other comprehensive income.” status for which principal, interest, or other charges are
Realized gains and losses are included in income from overdue by six months. Interest and other charges on
investments and are measured by the difference between non-accruing loans are included in income only to the
amortized cost and the net proceeds of sales. With respect extent that payments have been received by ADB. ADB
to exchange traded futures, realized gains or losses are re- maintains a position of not taking part in debt resched-
ported based on daily settlement of the net cash margin. uling agreements with respect to sovereign loans. In
Interest income on investment securities and time the case of nonsovereign loans, ADB may agree to debt
deposits is recognized as realized and reported, net of rescheduling only after alternative courses of action have
amortizations of premiums and discounts. been exhausted.
ADB determines that a loan is impaired and there-
Securities Transferred Under Securities Lending fore subject to provisioning when principal or interest is
Arrangement and Securities Purchased Under in arrears for one year for sovereign loans (unless there is
Resale Arrangement clear and convincing evidence warranting the deferment
or acceleration of such provisioning) and six months for
ADB accounts for transfers of financial assets in accordance nonsovereign loans. If the present value of expected future
with FAS 140, "Accounting for Transfers and Servicing of cash flows discounted at the loan’s effective interest rate
Financial Assets and Extinguishments of Liabilities - a re- is less than the carrying value of the loan, a valuation
placement of FAS 125." In general, transfers are accounted allowance is established with a corresponding charge to
for as sales when control over the transferred assets has provision for loan losses.
been relinquished. Otherwise the transfers are accounted ADB’s periodic evaluation of the adequacy of the
for as repurchase/resale agreements and collateralized provision for loan losses is based on its past loan loss
financing arrangements. Securities transferred under se- experience, known and inherent risks in existing loans,
curities lending arrangements are recorded as assets and and adverse situations that may affect a borrower’s abil-
reported at estimated fair value and the cash collateral ity to repay.
received is recorded as a liability. Securities received under In December 2006, the Board approved the appli-
resale arrangements are not recorded on ADB’s balance cation of the concept of expected loss for nonsovereign
sheet and are not re-pledged under securities lending credit exposure to establish loss provision and loss reserve,
arrangements. ADB monitors the fair value of the securi- the same concept that was applied to sovereign opera-
ties received under resale arrangements, and if necessary, tions in 2004. In line with generally accepted accounting
requires additional collateral. principles, the amount of expected loss pertaining to
credit exposures that are impaired and rated substandard
Loans or worse is charged to the income statement, following
the discounted cash flow method described above, while
ADB's loans are made to or guaranteed by members, with those that are better are recorded as loss reserve in the
the exception of nonsovereign loans, and have maturities equity section of the balance sheet. The implementation
ranging between 3 and 30 years. ADB requires its borrow- resulted to a decrease of $28,218,000 to the provision
ers to absorb exchange risks attributable to fluctuations in for losses of nonsovereign loans, with the corresponding
the value of the currencies which it has disbursed. Loan decrease to the expense account. Any adjustment to loan
interest income and loan commitment fees are recognized loss reserve following this new methodology is subject to
on accrual basis. In line with ADB's principle of cost pass the approval of the Board of Governors.
through pricing, any variation in the actual cost of bor- Effective 2000, ADB levies front-end fees on all new
rowings is passed to LIBOR-based borrowers as surcharge sovereign loans. These fees are deferred and amortized
or rebate. over the life of the loans after offsetting deferred direct
40
OCR-8
loan origination costs. In 2004, ADB waived the entire Investments in equity securities with readily de-
front-end fee on all new sovereign loans approved during terminable market price are reported at fair value, with
the year. Subsequently, the policy was extended to cover unrealized gains and losses excluded from net income
the period up to June 2007. and reported in “CAPITAL AND RESERVES” as part of
ADB levies a commitment charge on the undisbursed “Accumulated other comprehensive income.”
balance of effective loans. Unless otherwise provided by Investments in equity securities without readily de-
the loan agreement, the charges take effect commenc- terminable fair values are reported at cost or at impaired
ing on the 60th day after the loan signing date and are value, for investments where the impairment is deemed
credited to loan income. other than temporary. These investments are assessed
each quarter to reflect the amount that can be realized
Guarantees using valuation techniques appropriate to the market and
industry of each investment. To the extent that the fair
ADB extends guarantees to sovereign and nonsovereign values of these investments are below the base cost, the
borrowers. Guarantees are regarded as outstanding amount of expected loss is charged to loss reserve in the
when the underlying financial obligation of the borrower equity section of the balance sheet. When impairment
is incurred. ADB would be required to perform under its is identified and is deemed to be other than temporary,
guarantees if the payments guaranteed were not made by the equity investment is written down to the impaired
the debtor, and the guaranteed party called the guarantee value, which becomes the new cost basis of the equity
by demanding payments from ADB in accordance with the investments. Impairment losses are not reversed for sub-
term of the guarantee. sequent recoveries in the value of the equity investments,
Prior to 1 January 2003, guarantees in the absence until it is sold.
of any call, were not reflected in the financial statements ADB applies the equity method of accounting to
but disclosed as a note to the financial statements (Note investments where ADB has the ability to exercise signifi-
F) in accordance with the provisions of FASB No. 5, Ac- cant influence, limited partnerships (LLPs) with larger than
counting for Contingencies. FASB Interpretation No. 45 3% ownership, and to certain limited liability companies
(FIN 45), “Guarantor’s Accounting and Disclosure Require- (LLCs) that maintain a specific ownership account for
ments for Guarantees, Including Indirect Guarantees of each investor.
Indebtedness to Others,” which came into effect in 2003,
requires the recognition of two types of liabilities that are Variable Interest Entities
associated with guarantees: (a) the stand-by ready obli-
gation to perform, and (b) the contingent liability. ADB In January 2003, FASB issued FIN 46, “Consolidation of
recognizes at the inception of a guarantee, a liability for Variable Interest Entities – an interpretation of ARB No.
the stand-by ready obligation to perform on guarantees 51, Consolidated Financial Statements.” FIN 46 requires
issued and modified after 31 December 2002. The liability an entity to consolidate and provide disclosures for any
is included in “Miscellaneous liabilities.” Variable Interest Entities (VIE) for which it is the primary
Front-end fee income on guarantees received is de- beneficiary. An entity that will absorb a majority of VIE’s
ferred and amortized over the term of the guarantee contract expected losses or receive a majority of expected residual
and the unamortized balance of deferred front-end fee of return is deemed to be the primary beneficiary of the VIE.
guarantee is included in “Miscellaneous liabilities.” Variable interests can arise from equity investments, loans,
and guarantees. ADB is required to disclose information
Equity Investments about its involvement in VIE where ADB holds significant
variable interest (Note S).
All equity investments are considered as “Available for
Sale” and are reported at estimated fair value.
41
OCR-8
Property, Furniture, and Equipment reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
Property, furniture, and equipment are stated at cost and, of retained earnings and adjusting prior year balances for
except for land, depreciated over estimated useful lives comparative presentation. The standard did not impact
on a straight-line basis. Maintenance, repairs, and minor ADB’s financial statements as of 31 December 2006 in
betterments are charged to expense. relation to the adoption of FAS 155 and FAS 158 since
both pronouncements provided specific provisions for the
Borrowings transition.
In February 2006, the Financial Accounting Standards
Borrowings are generally reported on the balance sheet at Board issued FAS 155, “Accounting for Certain Hybrid Financial
their carrying book value, adjusted for any unamortized Instruments, an amendment of FASB Statements No. 133
discounts or premium. As part of its borrowing strategy, and 140,” which is effective for all financial instruments
ADB issues various types of contractual obligations, which acquired or issued after September 15, 2006. This allows
include structured debts containing embedded derivatives financial instruments that contain embedded derivatives
in order to minimize the cost of borrowings. ADB simulta- requiring bifurcation under FAS 133 to be reported at fair
neously enters into currency and/or interest rate swaps to value. ADB opted to early adopt FAS 155 effective 01 January
fully hedge the debt. 2006 and the cumulative effect of adopting the new policy
Upon the adoption of FAS 155 on 1 January 2006, is an increase in equity of $118,571,000.
ADB no longer bifurcates and fair values the embedded In September 2006, FASB issued FAS 157, “Fair Value
derivatives (the debt was valued at its carrying book value) Measurements.” This statement emphasizes the definition
in the structured debt portfolio that meet the bifurcation of fair value (FV) for financial reporting purposes to mean a
criteria under FAS 133. Instead, ADB measures and reports market-based measure and not an entity-specific measure.
at fair value any structured debt that contains embedded It also prescribes methods for measuring FV including a FV
derivatives that would otherwise be bifurcated under FAS hierarchy that ranks the quality and reliability of informa-
133, with changes in fair value reported in net income. tion used in FV measurements giving the highest priority to
quoted prices in active markets and the lowest to unobserv-
Accounting Estimates able inputs. This statement expands disclosure requirements
to focus on the inputs used to measure FV, especially those
The preparation of the financial statements in conformity using significant unobservable inputs. This statement will
with generally accepted accounting principles requires be effective for financial statements to be issued after 31
Management to make reasonable estimates and assump- December 2007.
tions that affect the reported amounts of assets and Also in September 2006, FASB issued FAS 158, “Em-
liabilities and disclosure of contingent liabilities at the end ployers’ Accounting for Defined Benefit Pension and Other
of the year and the reported amounts of revenues and Postretirement Plans, an amendment of FASB Statements
expenses during the year. The actual results could differ No. 87, 88, 106, and 132(R).” This statement improves
from those estimates. financial reporting by requiring an employer to recognize
the overfunded or underfunded status of a defined benefit
Accounting and Reporting Developments postretirement plan as an asset or liability in its statement of
financial position and to recognize changes in that funded
FAS 154, “Accounting Changes and Error Corrections, a status in the year in which the changes occur through
replacement of APB Opinion No. 20 and FAS 3,” became comprehensive income of a business entity. This statement
effective for ADB in 2006. This standard applies to volun- also improves financial reporting by requiring an employer
tary changes in accounting principles and new accounting to measure the funded status of a plan as of the date of its
pronouncements, which requires, among other things, year-end statement of financial position, with limited excep-
42
OCR-8
tions. Although ADB, being an employer without publicly Losses” in the Statement of Income and Expenses
traded equity securities, is not required to adopt this until (OCR-2), and the reporting of “Comprehensive income for
the end of the fiscal year ending after June 15, 2007, ADB the year” in the Statement of Changes in Capital and Reserves
opted to early adopt FAS 158 for the fiscal year ended 31 (OCR-4) to present it gross of the appropriation of guaran-
December 2006 (Note O). tee fees, which was reported as a separate line item.
In December 2006, the Board of Directors approved the
paper on “Review of Loss Provisioning Policy for Nonsover- NOTE C—RESTRICTIONS ON USE OF CURRENCIES
eign Operations.” This paper reviews ADB’s loss provisioning AND DEMAND OBLIGATIONS OF MEMBERS
policy for private sector operations, and proposes a revision
to the provisioning policy for all nonsovereign operations In accordance with Article 24, paragraph 2(i) of the Charter,
of OCR. These operations include loans, guarantees, equity the use by ADB or by any recipient from ADB of certain
investments, and other interventions that are not guaranteed currencies may be restricted by members to payments for
by a sovereign, and that do not allow ADB to accelerate goods or services produced and intended for use in their
repayments upon default of any other loan or guarantee territories. With respect to the currencies of 44 DMCs for
between ADB and that sovereign. This revision brought 2006 (42 – 2005), cash in banks (due from banks) and
about changes to the current loss provision estimates, which demand obligations totaling $63,381,000 ($51,124,000
resulted in the release of $33,532,000 provision for losses – 2005) and $172,396,000 ($170,856,000 – 2005),
to 2006 net income. This will also bring about the estab- respectively, may be, but are not currently so restricted.
lishment of loan loss reserve for nonsovereign operations, In accordance with Article 24, paragraphs 2(i) and
as an allocation of net income subject to the approval of (ii) of the Charter, one member (one – 2005) has re-
the Board of Governors, which management estimates to stricted the use by ADB or by any recipient from ADB of
be $30,500,000. its currency to payments for goods or services produced
In February 2007, FASB issued FAS 159, “Fair value in its territory. As such, cash in banks (due from banks)
Option for Financial Assets and Financial Liabilities.” This and investments totaling $20,000 ($19,000 – 2005) and
statement expands the scope of financial instruments that $2,965,000 ($2,824,000 – 2005), respectively, have been
may be carried at fair value. It offers an irrevocable option restricted. None of the demand obligations held by ADB
to carry the vast majority of financial assets and liabilities at in 2006 was restricted (nil – 2005).
fair value, with changes in fair value recorded in earnings.
This statement will be effective for financial statements to NOTE D—INVESTMENTS
be issued after 31 December 2007.
The main investment management objective is to maintain
Statement of Cash Flows security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments.
For the purposes of the Statement of Cash Flows, ADB Investments are governed by the Investment Authority
considers that its cash and cash equivalents are limited to approved by the Board of Directors in 1999, and reviewed
"DUE FROM BANKS." in 2006. The review endorsed a portfolio strategy that is
largely consistent with the 1999 approach. ADB is restricted
Reclassification by its Investment Authority to invest in government and
government-related debt instruments and in time deposits.
Certain reclassifications of prior year’s amounts and infor- In the US dollar portfolio only and up to limited amounts,
mation have been made to conform to the current year’s investments may be made in corporate bonds rated A or
presentation. These include the reclassification of exchange better, AAA-rated asset-backed securities, and AAA-rated
gain from translation of non-functional currencies from mortgage-backed securities. Securities may be lent and
“Revenue from Other Sources – net” to “Net Unrealized borrowed.
43
OCR-8
In addition, ADB may purchase and sell exchange Additional information relating to investments in
traded financial futures and option contracts, and enter government and government-guaranteed obligations
into currency and interest rate swaps, and forward rate and other securities are as follows:
agreements. Exposure to interest rate risk may be adjusted
within defined bands to reflect changing market condi- 2006 2005
tions. These adjustments are made through the purchase As of 31 December:

and sale of securities, and financial futures. Accordingly, Amortized cost $6,668,502,000 $ 7,448,978,000
financial futures are held for risk management purposes. At Estimated fair value 6,626,502,000 7,404,944,000
Gross unrealized gains 11,870,000 13,214,000
31 December 2006, the notional amount of outstanding Gross unrealized losses (53,870,000) (57,248,000)
purchase and sales futures contracts were $115,700,000
For the years ended
and $31,700,000, respectively, ($103,750,000 and
31 December:
$27,700,000 – 2005). Change in net unrealized
Included in “Other securities” as of 31 December gains (losses) from
prior year 2,034,000 (33,165,000)
2006 were corporate bonds and other obligations of banks
Proceeds from sales 3,082,284,000 11,265,412,000
amounting to $2,896,471,000 ($2,653,610,000 – 2005) Gross gain on sales 8,404,000 18,941,000
and asset/mortgage-backed securities of $735,709,000 Gross loss on sales (75,151,000) (21,025,000)
($716,429,000 – 2005).
The currency compositions of the investment portfolio As of 31 December 2006, gross unrealized losses
as of 31 December 2006 and 2005 expressed in United amounted to $53,870,000 ($57,248,000 – 2005) from
States dollars are as follows: government and government-guaranteed obligations,
corporate bonds and mortgage/asset-backed securities,
Currency 2006 2005 resulting from the market movement. There were 27

government and government-guaranteed obligations
Australian dollar $ 396,798,000 $ 351,594,000
Canadian dollar 239,893,000 232,121,000 (16 – 2005), 39 corporate obligations (52 – 2005), 217
Euro 734,178,000 656,701,000 mortgage/asset-backed security positions (78 – 2005)
Japanese yen 1,621,421,000 2,765,649,000
that sustained unrealized losses for over one year, rep-
Pound sterling 286,273,000 254,016,000
Swiss franc 250,470,000 224,222,000 resenting 10.87% (12.05% – 2005) of the investments.
United States dollar 8,755,071,000 6,071,043,000 Comparative details for 2006 and 2005 are shown on
Others 480,328,000 557,411,000
the next page.
Total $12,764,432,000 $11,112,757,000
Asset/Mortgage-backed Securities: Asset/Mortgage-
backed securities are instruments whose cash flow is
The estimated fair value and amortized cost of the
based on the cash flows of a pool of underlying assets or
investments by contractual maturity at 31 December 2006
mortgage loans managed by a trust.
are as follows:
Estimated Amortized
Exchange Traded Futures: Futures are contracts for de-
Fair Value Cost layed delivery of securities or money market instruments in
which the seller agrees to make delivery at a specified future
Due in one year or less $ 7,212,736,000 $ 7,216,506,000
Due after one year date of a specified instrument at a specified price or yield.
through five years 4,118,196,000 4,138,274,000 Initial margin requirements are met with cash or securities,
Due after five years and changes in the market prices are generally settled daily
through ten years 1,433,500,000 1,451,653,000
in cash. ADB generally closes out open positions prior to
Total $12,764,432,000 $12,806,433,000 maturity. Therefore, cash receipts or payments are limited
to the change in market value of the future contracts.
44
OCR-8
One year or less Over one year Total

For the year 2006 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Government and government-
guaranteed obligations $1,176,620,000 $ 8,935,000 $ 910,033,000 $19,770,000 $2,086,653,000 $28,705,000
Corporate bonds 1,596,435,000 14,151,000 167,617,000 3,484,000 1,764,052,000 17,635,000
Mortgage/Asset-backed securities 237,962,000 1,471,000 310,202,000 6,059,000 548,164,000 7,530,000
Total $3,011,017,000 $24,557,000 $1,387,852,000 $29,313,000 $4,398,869,000 $53,870,000

Government and government-

guaranteed obligations $1,734,260,000 $ 7,963,000 $ 618,592,000 $21,432,000 $2,352,852,000 $29,395,000
Corporate bonds 740,136,000 5,682,000 632,562,000 14,663,000 1,372,698,000 20,345,000
Mortgage/Asset-backed securities 390,275,000 5,287,000 88,117,000 2,221,000 478,392,000 7,508,000
Total $2,864,671,000 $18,932,000 $1,339,271,000 $38,316,000 $4,203,942,000 $57,248,000
NOTE E—LOANS charges discounted at the applicable market yield curves

for ADB’s borrowing cost plus lending spread. The es-
Loans timated fair value of sovereign loans is not generally
affected by credit risks based on ADB’s experience with
ADB does not currently sell its loans, nor does it believe its borrowers.
there is a comparable market for its loans. The estimated The carrying amount and estimated fair value of
fair value of all loans is based on the estimated cash loans outstanding at 31 December 2006 and 2005 are
flows from principal repayments, interest and other as follows:
2006 2005
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
Fixed rate multicurrency loans $ 27,377,000 $ 34,289,000 $ 148,881,000 $ 177,136,000
Pool-based single currency (JPY) loans 3,370,025,000 3,798,200,000 3,893,573,000 4,420,741,000
Pool-based single currency (US$) loans 8,212,633,000 8,779,759,000 8,930,128,000 9,739,443,000
LIBOR-based loans 14,425,615,000 14,405,210,000 10,370,249,000 10,465,957,000
Fixed rate loans 19,349,000 24,277,000 27,292,000 31,537,000
Local currency loans 122,407,000 120,050,000 108,666,000 112,357,000
Total $26,177,406,000 $27,161,785,000 $23,478,789,000 $24,947,171,000
Prior to 1 July 1986, the lending rate of ADB was duced a United States dollar pool-based variable lending
based on a multicurrency fixed lending rate system under rate system, and in November 1994, a market-based lending
which loans carried interest rates fixed at the time of loan rate system was made available to financial intermediaries
approval for the entire life of the loans. Effective 1 July of sovereign and nonsovereign borrowers.
1986, ADB adopted a multicurrency pool-based variable Commencing 1 July 2001, ADB offered LIBOR-based
lending rate system. In addition, in July 1992, ADB intro- loans (LBLs) in the following currencies – Euro, Japanese yen,
45
OCR-8
and United States dollar. The new LBL lending facility offers The front-end fees received for the year ended 31
borrowers the flexibility of (i) choice of currency and interest December 2006 were $4,293,000 ($11,714,000 – 2005).
rate basis; (ii) options to link repayment schedules to actual Administrative expenses relating to direct loan origination
disbursements for financial intermediary borrowers; (iii) change of $28,434,000 for the year ended 31 December 2006
the original loan terms (currency and interest rate basis) at ($24,481,000 – 2005) were deferred and offset against
any time during the life of the loan; and (iv) options to cap front-end fees earned. The excess, if any, is amortized
or collar the floating lending rate at any time during the life over the life of each loan.
of the loan. LBL terms are available for all loans for which the Undisbursed loan commitments and an analysis of
invitation to negotiate is issued on or after 1 July 2001. With loans by borrowing member countries as of 31 December
the introduction of LBLs, all other loan windows are no longer 2006 are shown in OCR-5. The carrying amounts of loan
offered to borrowers. In November 2002, ADB offered local outstanding by loan products at 31 December 2006 and
currency loans (LCLs) to nonsovereign borrowers. In August 2005 are as follows:
2005, ADB also offered LCLs to sovereign borrowers. 2006 2005
In 2006, ADB received prepayments for 24 loans (12
Sovereign Loans
loans – 2005) amounting to $460,314,000 ($597,423,000 Fixed rate multicurrency loans $ 27,377,000 $ 148,881,000
– 2005) and collected prepayment premiums of $7,236,000 Pool-based single currency
(JPY) loans 3,367,414,000 3,889,612,000
($16,457,000 – 2005) which have been included in "Other
Pool-based single currency
income from loans.” Eighty-four percent of the prepaid (US$) loans 8,219,478,000 8,933,196,000
amounts in 2006 were pool-based single currency US dollar LIBOR-based loans 13,694,950,000 9,960,837,000
and Japanese Yen loans and fixed rate multicurrency loans 25,309,219,000 22,932,526,000
compared to 95% for pool-based single currency US dollar Less: Provision for loan losses (6,116,000) (2,300,000)
loans in 2005. Unamortized direct loan
origination cost
(front-end fee) 17,656,000 (9,255,000)
Lending Spread and Front-End Fee
11,540,000 (11,555,000)
Since 1988, ADB has charged front-end fees for non- Sub-total 25,320,759,000 22,920,971,000
sovereign loans. Effective 1 January 2000, ADB levies Nonsovereign Loans
front-end fee of 1% for sovereign loans for which the loan Pool-based single currency
negotiations are completed after that date. In addition, (JPY) loans 2,611,000 5,282,000
Fixed rate loans 22,269,000 51,150,000
a flat commitment fee of 0.75% is charged for new pro- LIBOR-based loans 734,744,000 469,539,000
gram loans and a progressive commitment fee of 0.75% Local currency loans 122,887,000 110,833,000
is maintained for project loans. Effective 1 January 2000, 882,511,000 636,804,000
the lending spread applied to all outstanding pool-based
Less: Provision for loan losses (22,223,000) (77,164,000)
sovereign loans and new sovereign market-based loans Unamortized front-end fee (3,641,000) (1,822,000)
was increased from 0.4% to 0.6%. (25,864,000) (78,986,000)
In 2004, the Board of Governors approved the waiver
Sub-total 856,647,000 557,818,000
of the entire 1% front-end fee on all new sovereign loans
approved during 1 January 2004 to 30 June 2005 (waiver Total $26,177,406,000 $23,478,789,000
of 50 basis points on sovereign loans approved in 2003)

and waiver of 20 basis points of the lending spread on Loans in Non-accrual Status
sovereign loans outstanding from 1 July 2004 – 30 June
2005 for borrowers that do not have loans in arrears. Two sovereign loans were in non-accrual status as of 31
Subsequently, the policy was extended to cover the period December 2006 (one – 2005). The principal outstanding at
up to June 2007. that date was $6,116,000 ($2,300,000 – 2005) of which
46
OCR-8
$1,056,000 ($596,000 – 2005) was overdue. The loans provision (nil – 2005) was provided against one sovereign
in non-accrual status resulted in $312,000 ($144,000 loan. Loan loss provisions for nonsovereign loans have
– 2005) not being recognized as income from sovereign decreased significantly during the year to $22,223,000
loans for the year ended 31 December 2006. The accumu- from $77,164,000 in 2005, as a result of the revised pro-
lated interest and other charges on these loans that were visioning methodology adopted in 2006 and foreclosure
not recognized as income as of 31 December 2006 totaled of 3 Philippine loans (Notes B and M).
$1,158,000 ($846,000 – 2005). Information pertaining to loans which were subject
Six nonsovereign loans were in non-accrual status to loan loss provisions at 31 December 2006 and 2005
as of 31 December 2006 (ten – 2005). The principal are as follows:
outstanding at that date was $29,741,000 ($49,162,000 2006 2005
– 2005) of which $21,820,000 ($40,585,000 – 2005) was
Loans not subject to
overdue. Loans in non-accrual status resulted in $7,784,000 loss provisions $26,155,874,000 $23,487,887,000
($11,096,000 – 2005) not being recognized as income Loans subject to
loss provisions 35,856,000 81,443,000
from nonsovereign loans for the year ended 31 December
2006. The accumulated interest and other charges on Total $26,191,730,000 $23,569,330,000
these loans, net of loan charges of $40,455,000 waived Average amount of
and written off due to foreclosure of 3 Philippine loans loans subject to
loss provisions $ 35,856,000 $ 88,184,000
on 19 June 2006, that were not recognized as income as Related interest income
of 31 December 2006 would have totaled $20,168,000 on such loans
($52,839,000 – 2005). recognized in the year $ 69,000 $ 1,209,000
Cash received on related
interest income on
Loan Loss Provision such loans $ 215,000 $ 1,195,000
ADB has not suffered any losses of principal on sovereign The changes in the provision for loan losses during
loans. During the year, $3,816,000 additional loan loss 2006 and 2005 are as follows:
2006 2005
Sovereign Nonsovereign Sovereign Nonsovereign

Loans Loans Total Loans Loans Total
Balance 1 January $2,300,000 $77,164,000 $79,464,000 $2,300,000 $82,004,000 $84,304,000
Provision charged (written back)

during the year 3,816,000 (36,331,000) (32,515,000) – (3,477,000) (3,477,000)
Provision written off – (18,450,000) (18,450,000) – (664,000) (664,000)
Translation adjustment – (160,000) (160,000) – (699,000) (699,000)
Balance 31 December $6,116,000 $22,223,000 $28,339,000 $2,300,000 $77,164,000 $79,464,000
Cofinancing borrowers. In such capacity, ADB provides loan adminis-

tration services, which include loan disbursements and
ADB functions as lead lender in cofinancing arrange- loan collections. The participating financial institutions
ments with other participating financial institutions who have no recourse to ADB for their outstanding loan
also provide funds to ADB’s sovereign and nonsovereign balances.
47
OCR-8
Loans administered by ADB on behalf of participat- NOTE F—GUARANTEES

ing institutions as at 31 December 2006 and 2005 are
as follows: ADB extends guarantees to public sector and private sec-

tor borrowers. Such guarantees include (i) partial credit
2006 guarantees where only certain principal and/or interest
No.of
payments are covered; and (ii) political risk guarantees,
Amount Loans
which provide coverage against well-defined sovereign
Sovereign loans $577,636,000 38 risks. While counterguarantees from the host government
Nonsovereign loans 295,290,000 11
are required for all public sector guarantees, guarantees

Total $872,926,000 49 for private sector projects may be provided with or without
a host government counterguarantee. A counterguaran-
2005 tee takes the form of a member government agreement
No.of to indemnify ADB for any payments it makes under the
Amount Loans guarantee. In the event that a guarantee is called, ADB has

the contractual right to require payment from the govern-
Sovereign loans $802,678,000 40 ment, on demand, or as ADB may otherwise direct.
Nonsovereign loans 107,609,000 10 Guaranteed payments under partial credit guarantees

Total $910,287,000 50 are generally due 10 or more years from the loan inception
date. ADB’s political risk guarantee is callable when a guar-
anteed event has occurred and such an event has resulted
During the year ended 31 December 2006, a total of in debt service default to the guaranteed lender.
$989,000 ($965,000 – 2005) was received as compensation The committed and outstanding amounts of these
for arranging and administering such loans. This amount guarantee obligations as of 31 December 2006 and 2005
has been included in “Income from other sources.” covered:
2006 2005
Committed Outstanding Committed Outstanding

Amount Amount Amount Amount
Partial Credit Guarantees

with counterguarantee $1,004,095,000 $ 976,434,000 $1,024,030,000 $1,006,123,000
without counterguarantee 111,660,000 110,180,000 5,502,000 5,219,000
1,115,755,000 1,086,614,000 1,029,532,000 1,011,342,000
Political Risk Guarantees

with counterguarantee 146,494,000 120,943,000 145,558,000 113,237,000
without counterguarantee 30,507,000 28,695,000 100,858,000 66,098,000
177,001,000 149,638,000 246,416,000 179,335,000
Others 950,000 950,000 950,000 950,000
Total $1,293,706,000 $1,237,202,000 $1,276,898,000 $1,191,627,000
48
OCR-8
None of these amounts were subject to call as of NOTE H—DERIVATIVE INSTRUMENTS

31 December 2006 and 2005. The committed amount
represents the maximum potential amount of undis- The fair value of outstanding currency swap agreements
counted future payment that ADB could be required and interest rate swap agreements is determined at the
to make, inclusive of standby portion for which ADB is estimated amount that ADB would receive or pay to termi-
committed but not currently at risk. The outstanding nate the agreements using market-based valuation models.
amount represents the guaranteed amount utilized under The basis of valuation is the present value of expected cash
the related loans, which have been disbursed as of the flows based on observable market data.
end of a reporting period, exclusive of the standby por-
tion. ADB estimates that the present value of guarantees Interest rate swaps: Under a typical interest rate
outstanding at 31 December 2006 was $825,363,000 swap agreement, one party agrees to make periodic
($755,306,000 – 2005). payments based on a notional principal amount and an
As of 31 December 2006, a total liability of interest rate that is fixed at the outset of the agreement.
$10,544,000 ($15,839,000 – 2005) relating to stand-by The counterparty agrees to make floating rate payments
ready obligation for five partial credit risk guarantees (one based on the same notional principal amount. The terms
– 2005) and two political risk guarantees (three – 2005) of ADB's interest rate swap agreements usually match the
has been included in "Miscellaneous liabilities" on the terms of particular borrowings.
balance sheet.
Currency swaps: Under a typical currency swap
NOTE G—EQUITY INVESTMENTS agreement, one party agrees to make periodic payments
in one currency while the counterparty agrees to make
In 2005, ADB adopted the provision of Emerging Issues periodic payments in another currency. The payments may
Task Force 03-16 which requires the investments in be fixed at the outset of the agreement or vary based
limited liability companies that have the characteristics on interest rates. A receivable is created for the currency
of a partnership to be accounted for using the equity swapped out, and a payable is created for the currency
method. swapped in. The terms of ADB's currency swap agreements
ADB's investments in equity securities issued by pri- usually match the terms of particular borrowings.
vate enterprises located in DMCs include $123,081,000 Included in Receivable/Payable from Swaps-Others
investments in limited partnership and limited liability are interest rate and currency swaps that ADB has entered
companies which are accounted for on the equity method into for the purpose of hedging specific investments and
($87,427,000 – 2005). loans. The loan related swaps were executed to better
Accumulated net unrealized gains on equity invest- align the composition of certain outstanding loans with
ments reported at market value were $268,882,000 at funding sources and provide borrowers with financial risk
31 December 2006 ($110,331,000 – 2005) and were management tools.
reported in “CAPITAL AND RESERVES” as part of “Ac-
cumulated other comprehensive income.” NOTE I—PROPERTY, FURNITURE, AND EQUIPMENT
As of 31 December 2006, there were eight (seven
– 2005) equity investments which were reported at fair In 1991, under the terms of an agreement with the
value totaling $389,976,000 ($134,248,000 – 2005). Philippine Government, ADB returned the former headquar-
None of these (two – 2005) sustained unrealized losses ters premises, which had been provided by the Government.
as of year end. In accordance with the agreement as supplemented by a
Approved equity investment facility that has not memorandum of understanding, ADB was compensated
been disbursed was $391,618,000 at 31 December $22,657,000 for the return of these premises. The com-
2006 ($309,528,000 – 2005). pensation is in lieu of being provided premises under the
49
OCR-8
agreement and accordingly, is deferred and amortized over or is payable in installments, partly in convertible curren-
the estimated life of the new headquarters building as a cies and partly in the currency of the subscribing member
reduction of occupancy expense. The amortization for the which may be convertible. In accordance with Article 6,
year ended 31 December 2006 amounted to $354,000 paragraph 3 of the Charter, ADB accepts non-negotiable,
($337,000 – 2005) reducing depreciation expense for the non-interest-bearing demand obligations in satisfaction
new headquarters building from $4,471,000 ($4,471,000 of the portion payable in the currency of the member,
– 2005) to $4,117,000 ($4,134,000 – 2005). At 31 provided such currency is not required by ADB for the
December 2006, the unamortized deferred compensation conduct of its operations. The settlement of such amounts
balance (included in "ACCOUNTS PAYABLE AND OTHER is not determinable and, accordingly, it is not practicable
LIABILITIES - Miscellaneous") was $8,766,000 ($8,639,000 to determine a fair value for these receivables.
– 2005). At 31 December 2006, accumulated depreciation As of 31 December 2006, all matured install-
for property, furniture, and equipment was $136,254,000 ments amounting to $3,724,424,000 ($3,517,201,000
($124,312,000 – 2005). – 2005) were received. Installments not due aggregating
$15,138,000 ($10,980,000 – 2005) are as follows:
NOTE J—BORROWINGS
For the Year ending 31 December:
The key objective of ADB’s borrowing strategy is to raise
funds at the lowest possible cost for the benefit of its 2007 $5,976,000 2008 $5,976,000 2009 $3,186,000
borrowers. ADB uses financial derivative instruments in
connection with its borrowing activities to increase cost Capital Transferred to Asian Development Fund
efficiency, while achieving risk management objectives.
Currency swaps enable ADB to raise operationally needed Pursuant to the provisions of Article 19, paragraph 1(i) of
currencies in a cost-efficient way and to maintain its bor- the Charter, the Board of Governors has authorized the
rowing presence in major capital markets. Interest rate setting aside of 10% of the unimpaired "paid-in" capital
swaps are used generally to reduce interest rate mismatches paid by members pursuant to Article 6, paragraph 2(a)
arising from lending operations. of the Charter and of the convertible currency portion
paid by members pursuant to Article 6, paragraph 2(b) of
NOTE K—CAPITAL STOCK, CAPITAL TRANSFERRED the Charter as of 28 April 1973 to be used as a part of the
TO ASIAN DEVELOPMENT FUND, Special Funds of ADB. The resources so set aside amounting
MAINTENANCE OF VALUE OF CURRENCY to $71,624,000 as of 31 December 2006 ($68,047,000
HOLDINGS, AND MEMBERSHIP – 2005) expressed in terms of the SDR on the basis of
$1.5044 ($1.42927 – 2005) per SDR ($57,434,000 in
Capital Stock terms of $1.20635 per 1966 dollar—Note B), were allo-
cated and transferred to the Asian Development Fund.
The authorized capital stock of ADB as of the end of 2006
consists of 3,534,230 shares (3,509,728 – 2005), all of Maintenance of Value of Currency Holdings
which have been subscribed by members (3,509,728
– 2005). Of the subscribed shares, 3,285,655 (3,262,876 Prior to 1 April 1978, the effective date of the Second
– 2005) are "callable" and 248,575 (246,852 – 2005) are Amendment to the IMF Articles, ADB implemented main-
"paid-in." The "callable" share capital is subject to call by tenance of value (MOV) in respect of holdings of member
ADB only as and when required to meet ADB's obligations currencies in terms of 1966 dollars, in accordance with the
incurred on borrowings of funds for inclusion in its Ordinary provisions of Article 25 of the Charter and relevant resolu-
Capital Resources (OCR) or on guarantees chargeable to tions of the Board of Directors. Since then, settlement of
such resources. The "paid-in" share capital has been paid MOV has been put in abeyance.
50
OCR-8
In as much as the valuation of ADB's capital stock and net income shall be allocated, after making provision for
the basis of determining possible MOV obligations are still reserves, to surplus and what part, if any, shall be distri
under consideration, notional amounts have been calculated buted to the members.
provisionally as receivable from or payable to members in In May 2006, the Board of Governors approved the
order to maintain the value of currency holdings in terms allocation of 2005 net income of $105,202,000 and additions
of the SDR. In view thereof, the notional MOV amounts from Cumulative Revaluation Adjustments account and Loan
of receivables and payables are offset against one another Loss Reserve of $308,743,000 and $36,900,000, respectively,
and shown as net notional amounts to maintain value of to Surplus for $320,000,000 ($40,000,000 – 2005), to
currency holdings in the “CAPITAL AND RESERVES” portion Ordinary Reserve for $70,845,000 ($37,917,000 – 2005), to
of the Balance Sheet. The carrying book value for such the Asian Development Fund (ADF) for $40,000,000 and to
receivables and payables approximates its fair value. the Technical Assistance Special Fund (TASF) for $20,000,000
The net notional amounts as of 31 December ($288,000,000, $40,000,000 and $32,000,000 to Asian
2006 consisted of (a) the increase of $655,080,000 Tsunami Fund (ATF), ADF and TASF, respectively – 2005).
($497,298,000 – 2005) in amounts required to maintain The restatement of the capital stock for purposes of
the value of currency holdings to the extent of matured these financial statements on the basis of the SDR instead
and paid capital subscriptions due to the increase in the of the 1966 dollar (Note B) resulted in a net charge of
value of the SDR in relation to the United States dollar $31,533,000 to the Ordinary Reserve during the year ended
during the period from 1 April 1978 to 31 December 31 December 2006 (credit of $54,061,000 – 2005). That
2006 and (b) the net decrease of $17,819,000 (decrease charge is the increase in the value of the matured and paid
of $88,807,000 – 2005) in the value of such currency capital subscriptions caused by the change during the year
holdings in relation to the United States dollar during the in the value of the SDR in relation to the United States
same period. In terms of receivable from and payable to dollar not allocated to members as notional maintenance
members, they are as follows: of value adjustments in accordance with resolutions of
the Board of Directors.
2006 2005

Notional MOV Receivables $841,500,000 $791,945,000 Cumulative Revaluation Adjustments Account
Notional MOV Payables 168,601,000 205,840,000
In May 2002, the Board of Governors approved the alloca-
Total $672,899,000 $586,105,000
tion of net income representing the cumulative net unreal-
ized gains (losses) on derivatives, as required by FAS 133 to
Membership a separate category of Reserves - "Cumulative Revaluation
Adjustments Account." During the year, the 2005 net
As of 31 December 2006, ADB is owned by 66 member unrealized losses on derivatives of $308,743,000 offset
countries, 47 countries from the region and 19 countries by the reversal of $101,429,000 cumulative losses conse-
from outside the region (OCR-7). During 2006, Brunei quent to the adoption of FAS 155 resulted to a decrease
Darussalam and Ireland subscribed to 12,462 and 12,040 of the balance of the Cumulative Revaluation Adjustments
shares, respectively, of ADB’s capital stock. account at 31 December 2006 (increase of $40,963,000
– 2005) to $27,519,000 ($234,833,000 – 2005).
NOTE L—RESERVES
Special Reserve
Ordinary Reserve and Net Income
The Special Reserve includes commissions on loans and
Under the provisions of Article 40 of the Charter, the Board guarantee fees on guarantees set aside pursuant to
of Governors shall determine annually what part of the Article 17 of the Charter. Special Reserve assets consist
51
OCR-8
of term deposits and government and government-guar- Comprehensive Income

anteed obligations and are included under the heading
"INVESTMENTS." For the year ended 31 December 2006, Comprehensive income has two major components: net
guarantee fees amounting to $4,169,000 ($4,090,000 income and other comprehensive income comprising
– 2005) were appropriated to Special Reserve. gains and losses affecting equity that, under generally
accepted accounting principles, are excluded from net in-
Loan Loss Reserve come. Other comprehensive income includes such items as
the effects of the implementation of FAS 133, unrealized
In 2004, the Board of Directors approved the creation of gains and losses on available-for-sale securities and listed
Loan Loss Reserve through an allocation of $218,800,000 equity investments, currency translation adjustments, and
out of prior year net income. The Loan Loss Reserve forms pension and post-retirement liability adjustment.
part of Capital and Reserves to be used as a basis for capi-
tal adequacy against the estimated expected loss in ADB’s NOTE M—INCOME AND EXPENSES
sovereign loans and guarantees portfolio. In December
2006, the Board of Directors approved the adoption of Total income from loans for the year ended 31 December
this policy to nonsovereign credit exposures. 2006 was $1,210,071,000 ($1,036,329,000 – 2005). The
In 2006, the estimated loan loss reserve requirement average yield on the loan portfolio during the year was
was $130,100,000 resulting to a decrease of $36,900,000. 4.98% (4.35% – 2005), excluding premium received on
The estimated expected loss is determined using ADB’s prepayment and other loan income. Premium on prepaid
credit risk model net of loan loss provisions taken up in ac- loans collected during 2006 amounted to $7,236,000
cordance with generally accepted accounting principles. ($16,457,000 – 2005).
Pursuant to the adoption of the new provisioning Total income from investments including net realized
methodology for nonsovereign operations which was ap- losses on sales, net unrealized losses on derivatives, and
proved in 2006, management’s estimate of the loan loss interest earned for securities transferred under securi-
reserve for nonsovereign operations is $30,500,000. This ties lending and resale arrangements for the year ended
will be established as an allocation of net income subject 31 December 2006 was $563,249,000 ($371,357,000
to the approval of the Board of Governors. – 2005). The annualized rate of return on the average
investments held during the year, based on the portfolio
Surplus held at the beginning and end of each month, was 4.18%
(2.96% – 2005) excluding unrealized gains and losses on
Surplus represents funds for future use to be determined by investments and 4.27% (2.44% – 2005) including unreal-
the Board of Governors. In the first half of 2006, the Board ized gains and losses on investments.
of Governors approved the allocation of $320,000,000 Income from other sources primarily includes divi-
out of 2005 net income to Surplus ($40,000,000 – 2005). dends received for the year ended 31 December 2006
In June 2006, unutilized amounts from Asian Tsunami Fund amounting to $8,952,000 ($3,409,000 – 2005), share in the
of $10,000,000 was transferred back to surplus to be net gain of equity investments of $32,338,000 ($3,497,000
earmarked for use to support post-disaster management, – 2005) accounted for on the equity method, and income
rehabilitation, immediate construction, and urgent vital received as executing agency of $11,611,000.
development activities in earthquake-affected regions in Total interest expense incurred for the year ended
Indonesia. 31 December 2006 amounted to $1,099,541,000
($881,540,000 – 2005). Other borrowings and related
expenses consist of amortization of borrowings’ issuance
costs and other expenses of $16,785,000 ($11,678,000
– 2005).
52
OCR-8
Administrative expenses (other than those pertain- ments of financial instruments denominated in non-func-
ing directly to ordinary operations and special operations) tional currencies (South African Rand and Mexican Peso),
for the year ended 31 December 2006 were apportioned and net unrealized losses on derivatives of $138,479,000
between OCR and ADF in proportion of the relative vol- ($308,743,000 – 2005), which were made up of:
ume of operational activities of each fund. Of the total
administrative expenses of $346,336,000 ($335,921,000 2006 2005
– 2005), $190,233,000 ($175,751,000 – 2005) was ac- Unrealized(losses)gains on:

cordingly charged to ADF. The balance of administrative Hybrid financial instruments* $ (8,948,000) $ –
expenses after allocation was reduced by the deferral of Borrowings related swaps (132,219,000) (55,522,000)
Investments related swaps (9,858,000) (3,925,000)
direct loan origination costs of $28,434,000 ($24,481,000 Loan related swaps 8,629,000 258,000
– 2005) related to new loans that became effective for Embedded derivatives in
structured borrowings* – (241,700,000)
the year ended 31 December 2006 (Notes B and E).
FX Forward 5,522,000 (3,548,000)
During 2005, the Bank offered an enhanced separa- Amortization of the FAS 133
tion program to eligible staff to resign before their normal transition adjustment (1,605,000) (4,306,000)
retirement date. Administrative expenses for 2006 include Total $(138,479,000) $(308,743,000)
the $6,711,000 ($4,661,000 – 2005) termination benefits
for staff who accepted the program. * Figures are not comparable due to the adoption of FAS 155 in 2006,
which allows fair valuation of structured borrowings as a whole. In
Following the approval by the Board of Directors in 2005, only the embedded derivatives of the structured borrowings
June 2003 of the resumption of direct net income allocation are fair valued, as required by FAS 133.
to TASF to finance technical assistance (TA) operations,
no new TA commitments during the year were charged
NOTE N—OTHER ASSETS AND
to OCR current income as "TECHNICAL ASSISTANCE TO
LIABILITIES–MISCELLANEOUS
MEMBER COUNTRIES." Accordingly, the write-back in the
amount of $1,220,000 ($3,446,000 – 2005) for the year
At 31 December 2006 and 2005, ADB had the following
represented cancellations of the undisbursed amounts of
receivables from/payables to special funds and trust funds
completed TA projects committed in prior periods.
resulting from administrative arrangements and operating
As of 31 December 2006, the net cumulative amount
activities:
of TA commitments that had been charged to OCR net
2006 2005
income in the prior years amounted to $68,531,000
Amounts receivable from:
($69,751,000 – 31 December 2005) out of which
Asian Development Fund
$63,804,000 ($60,020,000 – 2005) had been disbursed. (Note M) $25,970,000 $32,064,000
For the year ended 31 December 2006, write-back of Technical Assistance
provision for losses of $32,515,000 ($3,477,000 – 2005) Special Fund 97,000 –
Japan Special Fund 125,000 109,000
corresponded to net $36,331,000 write-back of provision Asian Tsunami Fund 253,000 –
for nonsovereign loans offset by $3,816,000 provision Asian Development Bank
for one sovereign loan. The amount of write-back for Institute Special Fund 254,000 177,000
Staff Retirement Plan – 584,000
nonsovereign loans resulted from the revised provision- Agency Trust Funds (net) 686,000 –
ing methodology adopted in 2006 (Notes B and E), and
Total $27,385,000 $32,934,000
repayments during the year.
Amounts payable to:
Other expenses of $3,767,000 ($4,248,000 – 2005)
Technical Assistance
included non-borrowings related financial expenses such as Special Fund $ – $ 24,000
fees paid to external asset managers and bank charges. Staff Retirement Plan 451,000 –
Agency Trust Funds (net) – 328,000
Net unrealized losses incorporate $3,008,000 net gain
($500,000 net loss – 2005) from the translation adjust- Total $ 451,000 $ 352,000
53
OCR-8
Included in Miscellaneous Liabilities at 31 December Expected Contributions

2006 is the amount of $1,101,000 received from Georgia
as payment of the convertible currency portion of its first The expected amount of contributions to the Plan for 2007
installment payment under membership subscription to amounts to $58,763,000 ($66,287,000 – 2005) represent-
ADB’s capital stock. The amount was recorded as Deferred ing ADB’s contributions of $21,422,000 ($20,627,000
Credits pending completion of the remaining requirements – 2005), based on budgeted contribution rate of 16%
for effectivity of its membership. (16% – 2005), participants’ mandatory contributions of
$12,341,000 ($12,025,000 – 2005) and discretionary
NOTE O—STAFF RETIREMENT PLAN AND contributions of $25,000,000 ($33,635,000 – 2005).
POSTRETIREMENT MEDICAL BENEFITS
Investment Strategy
Staff Retirement Plan
Contributions in excess of current benefits payments are
ADB has a contributory defined benefit Staff Retirement invested in international financial markets and in a vari-
Plan (the Plan). Every employee, as defined under the Plan, ety of investment vehicles. The Plan employs six external
shall, as a condition of service, become a participant from asset managers and one global custodian who function
the first day of service, provided that at such a date, the within the guidelines established by the Plan’s Investment
employee has not reached the normal retirement age of 60. Committee. The investment of these assets, over the long
The Plan applies also to members of the Board of Directors term, is expected to produce higher returns than short-
who elect to join the Plan. Retirement benefits are based term investments. The investment policy incorporates the
on length of service and highest average remuneration Plan’s package of desired investment return and tolerance
during two years of eligible service. The Plan assets are for risk, taking into account the nature and duration of
segregated and are not included in the accompanying the Plan’s liabilities. The Plan’s assets are diversified among
Balance Sheet. The costs of administering the Plan are different markets and different asset classes. The use of
absorbed by ADB, except for fees paid to the investment derivatives for speculation, leverage or taking risks is
managers and related charges, including custodian fees, prohibited. Selected derivatives are used for hedging and
which are borne by the Plan. transactional efficiency purposes.
Participants hired on or before 30 September 2006 The Plan’s investment policy is periodically reviewed
are required to contribute 9 1/3% of their salary to the and revised to reflect the best interest of the Plan’s par-
Plan, while those hired after that date do not anymore ticipants and beneficiaries. The current policy, adopted
contribute to the plan. Participants may also make additional in January 2003, specifies an asset-mix structure of 70%
voluntary contributions. ADB's contribution is determined of assets in equities and 30% in fixed income securities.
at a rate sufficient to cover that part of the costs of the At present, investments of the Plan’s assets are divided
Plan not covered by the participants' contributions. into three categories: US equity, Non-US equity, and US
fixed income.
54
OCR-8
As of 31 December 2006 and 2005, the breakdown Other assets include forward exchange contracts in
of the fair value of plan assets held is as follows: various foreign currencies transacted to hedge currency
exposure in the investment portfolio, which are reported
at fair value.
2006
For the year ended 31 December 2006, the net return
Amount Percentage on the Plan assets was 12.9% (8.0% – 2005). ADB expects
Equity Securities the long-term rate of return on the assets to be 8%.
US $ 536,100,000
Non-US 377,825,000
Assumptions
913,925,000 74.0%
The assumed overall rate of return takes into account long-
Fixed Income Securities 319,265,000 25.8
term return expectations of the underlying asset classes
Other Assets(Liabilities) – net 2,156,000 0.2
within the investment portfolio mix, and the expected
Total $1,235,346,000 100.0% duration of the Plan’s liabilities. Return expectations are
forward looking and, in general, not much weight is given
to short-term experience. Unless there is a drastic change
2005
in investment policy or market environment, the assumed
Amount Percentage
investment return of 8% on the Plan’s assets is expected to
Equity Securities remain broadly the same, year to year.
US $ 471,767,000
Non-US 300,554,000
Postretirement Medical Benefits Plan
772,321,000 71.4%
In 1993, ADB adopted a cost-sharing plan for retirees’
Fixed Income Securities 299,334,000 27.7
Other Assets(Liabilities) – net 9,478,000 0.9 medical insurance premiums. Under the plan, ADB is
obligated to pay 75% of the Group Medical Insurance
Total $1,081,133,000 100.0%
Plan premiums for retirees, including retired members of
the Board of Directors, and their eligible dependents who
All investments excluding time deposits are valued elected to participate. The cost-sharing plan is currently
using market prices. Time deposits are reported at cost unfunded.
which is a reasonable estimate of fair value. Fixed income Generally accepted accounting principles require an
securities include US government and government guar- actuarially determined assessment of the periodic cost of
anteed obligations, corporate bonds and time deposits. postretirement medical benefits.
55
OCR-8
The following table sets forth the pension and postretirement medical benefits at 31 December 2006 and
2005:
Pension Benefits Postretirement Medical Benefits

2006 2005 2006 2005
Change in benefit obligation:

Benefit obligation at beginning of year $1,226,453,000 $1,111,357,000 $ 227,338,000 $ 173,874,000
Service cost 38,481,000 35,993,000 11,047,000 8,112,000
Interest cost 72,030,000 68,057,000 13,586,000 10,823,000
Participants’ contributions 11,843,000 43,495,000 – –
Actuarial loss (gain) 44,382,000 12,203,000 (62,416,000) (43,783,000)
Amendments – – – 80,480,000
Benefits paid (56,356,000) (44,652,000) (2,525,000) (2,168,000)
Benefit obligation at end of year $1,336,833,000 $1,226,453,000 $ 187,030,000 $ 227,338,000
Change in plan assets:

Fair value of plan assets at beginning of year $1,081,133,000 $ 981,284,000 $ – $ –
Actual return on plan assets 140,076,000 81,916,000 – –
Employer’s contribution 20,106,000 19,090,000 2,525,000 2,168,000
Plan participants’ contributions 50,387,000 43,495,000 – –
Benefits paid (56,356,000) (44,652,000) (2,525,000) (2,168,000)
Fair value of plan assets at end of year $1,235,346,000 $1,081,133,000 $ – $ –
Funded status $ (101,487,000) $ (145,320,000) $(187,030,000) $(227,338,000)

Unrecognized actuarial loss – 97,825,000 – 130,580,000
Unrecognized prior service cost (credit) – 24,121,000 – (45,940,000)
Net amount recognized $ (101,487,000) $ (23,374,000) $(187,030,000) $(142,698,000)
Amounts recognized in the Balance sheet

consist of:
Current liability $ – $ – $ (3,902,000) $ –
Non-current liability (101,487,000) (52,426,000) (183,128,000) (142,698,000)
Intangible asset – 24,121,000 – N/A
Minimum pension liability adjustment – 4,931,000 – N/A
Net amount recognized $ (101,487,000) $ (23,374,000) $(187,030,000) $(142,698,000)
Amounts recognized in the accumulated other

comprehensive income consist of:
Net actuarial loss $ 39,745,000 $ – $ 59,109,000 $ –
Prior service cost (credit) 19,991,000 – (37,294,000) –
Total amount recognized $ 59,736,000 $ – $ 21,815,000 $ –
Weighted-average assumptions as of 31 December

Discount rate 6.00% 5.75% 6.00% 5.75%
Expected return on plan assets 8.00% 8.00% N/A N/A
Rate of compensation increase varies with age
and averages 5.00% 4.75% 5.00% 4.75%
56
OCR-8
For measurement purposes, a 9.0% annual rate of 2006. The rate was assumed to decrease gradually to 5.0%
increase in the per capita cost of covered health care for 2010 and remain at the level thereafter.
benefits was assumed for the valuation as at 31 December

2006 2005 2006 2005
Components of net periodic benefit cost:

Service cost $ 38,481,000 $ 35,993,000 $ 11,047,000 $ 8,112,000
Interest cost 72,030,000 68,057,000 13,586,000 10,823,000
Expected return on plan assets (80,225,000) (75,822,000) – –
Amortization of prior service cost 4,130,000 4,238,000 (8,646,000) (385,000)
Amortization of transition obligation – – – 479,000
Recognized actuarial (gain) loss 4,067,000 586,000 9,055,000 3,488,000
Net periodic benefit cost $ 38,483,000 $ 33,052,000 $ 25,042,000 $ 22,517,000
The accumulated benefit obligation of the pen- Estimated Future Benefits Payments
sion plan as of 31 December 2006 was $1,237,070,000
($1,133,559,000 – 2005). The following table shows the benefit payments expected
The estimated net loss and prior service cost for the to be paid in each of the next five years and subsequent
defined benefit pension plans that will be amortized from five years. The expected benefit payments are based on the
accumulated other comprehensive income into net periodic same assumptions used to measure the benefit obligation
benefit cost over the next fiscal year are $2,569,000 and at 31 December 2006:
$4,079,000, respectively. The estimated net loss and prior Postretirement
Pension Benefits Medical Benefits
service credit for the other postretirement benefits plan that
will be amortized from accumulated other comprehensive 2007 $ 56,760,000 $ 3,902,000
2008 58,099,000 4,548,000
income into net periodic benefit cost over the next fiscal
2009 60,380,000 5,220,000
year are $3,304,000 and $(8,646,000), respectively. 2010 63,281,000 5,902,000
A one-percentage-point change in assumed health 2011 68,013,000 6,605,000
2012-2016 398,349,000 43,737,000
care trend rates would have the following effects:
1- Percentage- 1-Percentage-
Point Increase Point Decrease Incremental Effects of FAS 158

Effect on total service and
interest cost components $ 6,320,000 $ (4,779,000) The following table shows the incremental effects of the
Effect on postretirement application of FAS 158 on the individual Balance Sheet
benefit obligation 37,305,000 (29,314,000)
items as of 31 December 2006:
57
OCR-8
Adjustments

Pension Postretirement
Before FAS 158 Benefits Medical Benefits After FAS 158

Accrued pension and postretirement
medical benefit costs 207,090,000 59,612,000 21,815,000 288,517,000
Total liabilities 43,625,492,000 59,612,000 21,815,000 43,706,919,000
Accumulated other comprehensive income (733,000) (59,612,000) (21,815,000) (82,160,000)
Total capital and reserves 13,224,326,000 (59,612,000) (21,815,000) 13,142,899,000

NOTE P—FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of ADB's significant financial instruments as of 31 December 2006
and 2005 are summarized as follows:
2006 2005
Carrying Estimated Carrying Estimated
Amounta Fair Value Amounta Fair Value
On-balance sheet financial instruments:
ASSETS:
Due from banks $ 205,418,000 $ 205,418,000 $ 81,662,000 $ 81,662,000

Investments (Note D) 12,764,432,000 12,764,432,000 11,112,757,000 11,112,757,000
Securities transferred under securities
lending arrangement 1,922,901,000 1,922,901,000 2,770,965,000 2,770,965,000
Securities purchased under resale arrangement 432,963,000 432,963,000 1,118,748,000 1,118,748,000
Loans outstanding (Note E) 26,177,406,000 27,161,785,000 23,478,789,000 24,947,171,000
Equity investments (Note G) 655,819,000 655,819,000 404,975,000 404,975,000
Other assets
Nonnegotiable, noninterest-bearing
demand obligations 173,667,000 108,822,000 172,966,000 100,974,000
Receivable from swaps – others (Note H) 655,151,000 655,151,000 1,582,337,000 1,582,337,000
Receivable from swaps –
borrowings (Note H) 12,986,831,000 12,986,831,000 9,733,958,000 9,733,958,000
Future guarantee receivable 10,544,000 10,544,000 15,839,000 15,839,000
LIABILITIES:
Borrowings (Note J) 27,910,832,000 27,972,473,000 24,660,637,000 24,960,951,000
Other liabilities
Payable for swaps – others (Note H) 655,461,000 655,461,000 1,586,604,000 1,586,604,000
Payable for swaps – borrowings (Note H) 12,502,403,000 12,502,403,000 9,354,776,000 9,354,776,000
Guarantee liability 10,544,000 10,544,000 15,839,000 15,839,000
Off-balance sheet financial instruments:
Guarantees (Note F) $ 1,076,316,000 $ 695,557,000 $ 1,107,048,000 $ 691,908,000
a The carrying amount for borrowings and swaps are inclusive of accrued interest.
58
OCR-8
Additional fair value information, including methods other approved liquid securities based on mark-to-market
used to estimate certain values, is included in the notes exposure.
referenced in the above table. As of 31 December 2006, ADB had received collateral
Fair value of a financial instrument is defined as the of $371,063,000 ($213,954,000 – 2005) in connection
amount at which the instrument could be exchanged in with the swap agreements. ADB has also entered into
a current transaction between willing parties, other than master swap agreements which contain legally enforce-
in a forced or liquidation sale. able close-out netting provisions for all counterparties
If available, quoted market values are used to with outstanding swap transactions.
determine fair values. Financial instruments for which
market quotations are not readily available are valued NOTE R—SPECIAL AND TRUST FUNDS
using valuation models. The basis of valuation is the
present value of expected cash flows based on observ- ADB's operations include special operations, which are
able market data. financed from special fund resources, consisting of the
Asian Development Fund, the Technical Assistance Special
NOTE Q—CREDIT RISK Fund, Japan Special Fund, the Asian Development Bank
Institute Special Fund, the Asian Tsunami Fund, and the
ADB is exposed to risk if the borrowers fall in arrears on Pakistan Earthquake Fund.
payments. ADB manages country risk for lending opera- The OCR and special fund resources are at all times
tions through continuous monitoring of creditworthiness used, committed, and invested entirely separate from each
of the borrowers and rigorous capital adequacy framework. other. The Board of Governors may approve allocation of
Guarantees involve elements of credit risk which are also the net income of OCR to special funds, based on the
not reflected on the balance sheet. Credit risk represents funding and operational requirements of the funds. The
the potential loss due to possible nonperformance by obli- administrative and operational expenses pertaining to the
gors and counterparties under the terms of the contract. OCR and special funds are charged to the respective special
As of 31 December 2006, ADB has a significant funds. The administrative expenses of ADB are allocated
concentration of credit risk to Asian and the Pacific region amongst OCR and special funds and are settled on a
associated with loan and guarantee products with credit regular basis between the OCR and the special funds.
exposure determined based on fair value of loans and In addition, ADB, alone or jointly with donors,
outstanding guarantees amounting to $28,398,987,000 administers on behalf of the donors, including members
($26,138,798,000 – 2005). of ADB, their agencies and other development institu-
ADB undertakes derivative transactions with its eligible tions, projects/programs supplementing ADB's operations.
counterparties and transacts in various financial instru- Such projects/programs are funded with external funds
ments as part of liquidity and asset/liability management administered by ADB and with external funds not under
purposes that may involve credit risks. For all securities, ADB's administration. ADB charges administrative fees
ADB manages credit risks by following the guidelines set for external funds administered by ADB. The funds are
forth in the Investment Authority (Note D). restricted for specific uses including technical assistance to
ADB has a potential risk of loss if the swap counter- borrowers and technical assistance for regional programs.
party fails to perform its obligations. In order to reduce The responsibilities of ADB under these arrangements
such credit risk, ADB only enters into long-term swap range from project processing to project implementation
transactions with counterparties eligible under ADB's including the facilitation of procurement of goods and
swap guidelines which include a requirement that the services. These funds are held in trust with ADB, and
counterparties have a credit rating of A-/A3 or higher are held in a separate investment portfolio, which is not
and requires certain counterparties with executed Credit commingled with ADB’s funds, nor are they included in
Support Annex, to provide collateral in form of cash or the assets of ADB.
59
OCR-8
Special funds and funds administered by ADB on the funds of the special operations as of 31 December
behalf of the donors are not included in the assets of OCR. 2006 and 2005 is as follows:
The breakdown of the total of such funds together with
2006 2005
Total Net No.of Total Net No.of
Assets Funds Assets Funds
Special Funds
Asian Development Fund $29,247,470,000 1 $27,605,408,000 1
Technical Assistance Special Fund 220,533,000 1 215,467,000 1
Japan Special Fund 163,792,000 1 177,661,000 1
Asian Development Bank Institute Special Fund 17,408,000 1 16,839,000 1
Asian Tsunami Fund 19,482,000 1 6,344,000 1
Pakistan Earthquake Fund 6,046,000 1 85,497,000 1
Subtotal 29,674,731,000 6 28,107,216,000 6
Trust Funds
Funds administered by ADB 1,016,475,000 60 949,947,000 48
Funds not administered by ADB 7,358,000 2 8,684,000 2
Subtotal 1,023,833,000 62 958,631,000 50
Total $30,698,564,000 68 $29,065,847,000 56
During the year ended 31 December 2006, a total this provision of FIN 46 no longer applies to any private
of $8,666,000 ($2,297,000 – 2005) was recorded as sector enterprise where ADB has outstanding loans and
compensation for administering projects/programs under guarantees since required information became available.
Trust Funds. The amount has been included in "Revenue In 2005, this applied to 14 entities where ADB’s maxi-
from Other Sources – net." mum exposure to losses as a result of its involvement was
$312,268,000. ADB recognized $19,137,000 income from
NOTE S—VARIABLE INTEREST ENTITIES these entities last year.
The review of ADB’s loan, equity investments, and
As of 31 December 2006, ADB did not identify any VIE in guarantee portfolio, has identified 2 (4 – 2005) invest-
which ADB is the primary beneficiary, requiring consolida- ments in VIEs in which ADB is not the primary beneficiary,
tion in OCR financial statements. ADB may hold significant but in which it is reasonably possible that ADB could be
variable interests in VIE, which requires disclosures. deemed to hold significant variable interest. ADB’s total
FIN 46 does not require application of VIE created investment in these entities, comprising disbursed and
before 31 December 2003, if after making exhaustive ef- committed but undisbursed balances, corresponded to
fort, it is unable to obtain the information necessary to the maximum exposure to loss totaling $108,130,000 as
(i) determine whether the entity is a VIE; (ii) determine of 31 December 2006 ($95,175,000 – 2005). Based on
whether the entity is variable interest entity’s primary ben- the most recent available information from these VIEs, the
eficiary, or (iii) perform accounting required to consolidate assets of these VIEs totaled $309,182,000 ($347,216,000
the variable interest entity for which it is determined to – 2005).
be the primary beneficiary. As of 31 December 2006,
60
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D
Co. Reg. No.: 52871777D
We have audited the accompanying special purpose statements of assets, liabilities, and fund balances
of the Asian Development Bank—Asian Development Fund as of 31 December 2006 and 2005, and
the related special purpose statements of revenues and expenses, cash flows and changes in fund
balances for the years then ended. These financial statements are the responsibility of the manage-
ment of the Asian Development Bank. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial state-
ments, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
As discussed in Note B, the Board of Directors approved in May 2001 the adoption of special purpose
financial statements for the Asian Development Bank—Asian Development Fund. With the adoption of
the special purpose financial statements, loan loss provisioning has been eliminated. The accompanying
financial statements are not intended to be a presentation in conformity with accounting principles
generally accepted in the United States of America.
In our opinion, the special purpose financial statements referred to above present fairly, in all mate-
rial respects, the assets, liabilities and fund balances of Asian Development Bank—Asian Development
Fund at 31 December 2006 and 2005, and the revenues and expenses and cash flows for the years
then ended, on the basis explained in Note B.
Our audits were conducted for the purpose of forming an opinion on the special purpose finan-
cial statements taken as a whole. The accompanying special purpose statements of loans as at
31 December 2006 and 2005, and of resources as at 31 December 2006 are presented for purposes
of additional analyses and are not required parts of the special purpose financial statements. Such
information has been subjected to the auditing procedures applied in the audits of the special purpose
financial statements and in our opinion, is fairly stated in all material respects in relation to the special
purpose financial statements taken as a whole.
This report is intended solely for the information and use of the Board of Governors, Board of Directors,
management and members of the Asian Development Bank—Asian Development Fund.
Singapore
7 March 2007
61
ADF-1
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES
2006 2005
ASSETS
DUE FROM BANKS (Note B) $ 2,602 $ 21,557

INVESTMENTS (Notes B, C, and L)
Government and government-guaranteed obligations $ 591,905 $ 956,618
Time deposits 5,511,612 3,039,051
Corporate bonds 281,810 6,385,327 1,537,511 5,533,180
SECURITIES TRANSFERRED UNDER SECURITIES LENDING
ARRANGEMENT (Notes B, C, and L) – 225,683
RESALE ARRANGEMENT (Notes B, C, and L) 55,085 182,048
LOANS OUTSTANDING (ADF-5) (Notes B, D, and L) 21,522,213 20,238,051
ACCRUED REVENUE
On investments 36,933 41,492
On loans 46,777 83,710 44,669 86,161
DUE FROM CONTRIBUTORS (Notes B, E, and L) 1,675,849 1,737,594
OTHER ASSETS
Investment related receivables – 215
Others 25,420 25,420 3,950 4,165
TOTAL $29,750,206 $28,028,439

LIABILITIES AND FUND BALANCES
PAYABLE UNDER SECURITIES
LENDING ARRANGEMENT (Notes B and L) $ – $ 229,134
PAYABLE TO RELATED FUNDS (Notes F and H) 28,621 36,778
ADVANCE PAYMENTS ON CONTRIBUTIONS (ADF-6) (Note B) 102,440 99,040

UNDISBURSED COMMITMENTS (Notes B, K, and L) 355,857 24,000
OTHER LIABILITIES (Note G) 15,818 34,079
TOTAL LIABILITIES 502,736 423,031
FUND BALANCES
Amounts available for operational commitments (ADF-6)
Contributed Resources (Notes B and G) $25,997,183 $24,425,701
Unamortized Discount (Note B) (33,537) (21,234)
25,963,646 24,404,467
Set-Aside Resources (Note I) 71,624 68,047
Transfers from Ordinary Capital Resources and
Technical Assistance Special Fund (Note A) 663,614 623,283
26,698,884 25,095,797
Accumulated surplus (ADF-4) 2,260,723 2,342,886
Accumulated other comprehensive income (ADF-4)

(Notes B and J) 287,863 29,247,470 166,725 27,605,408
TOTAL $29,750,206 $28,028,439

The accompanying notes are an integral part of these special purpose financial statements (ADF-7).
62
ADF-2
SPECIAL PURPOSE STATEMENT OF REVENUE AND EXPENSES
2006 2005
REVENUE
From loans (Notes B and D) $ 204,804 $202,264
From investments (Notes B and C) 254,307 207,494
From other sources—net 1,213 $460,324 310 $ 410,068
EXPENSES
Grants (Notes B and K) 346,540 24,000
Administrative expenses (Note H) 190,233 175,751
Amortization of discounts on contributions (Notes B and G) 2,046 611
Other expenses 259 539,078 24 200,386
NET REALIZED (LOSSES) GAINS

From loans (1,546) –
From investments (2,145) (3,691) 930 930
NET UNREALIZED GAINS (Note B) 282 –
REVENUE (LESS THAN) IN EXCESS OF EXPENSES $ (82,163) $210,612

63
ADF-3
SPECIAL PURPOSE STATEMENT OF CASH FLOWS
2006 2005


Interest charges on loans received $ 180,161 $ 178,667
Interest received for securities purchased under resale arrangement 1,277 135
Cash received from other sources 1,243 310
Administrative expenses paid (196,327) (168,356)
Grants disbursed (34,488) (1,400)
Financial expenses paid (20) (24)
Sales of investments 280,321 166,824
Net receipts from (payments for) securities purchased under resale arrangement 128,531 (131,107)
Principal collected on loans 468,418 433,667
Loans disbursed (1,314,933) (1,227,972)
Net Cash Used in Investing Activities (1,182,865) (1,404,050)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions received and encashed1 915,762 1,163,536
Cash received from Ordinary Capital Resources 40,000 40,000
Cash Provided by Financing Activities 955,762 1,203,536
Effect of Exchange Rate Changes on Due from Banks (1,146) (5,402)
Net (Decrease) Increase in Due from Banks (18,955) 12,856
RECONCILIATION OF REVENUE (LESS THAN) IN EXCESS OF EXPENSES
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Revenue (less than) in excess of expenses (ADF-2) $ (82,163) $ 210,612
Adjustments to reconcile revenue (less than) in excess of expenses
to net cash provided by operating activities:
Amortization of discounts/premiums (3,769) (17,261)
Net loss (gain) on sales of investments 2,145 (930)
Capitalized charges on loans (23,436) (22,076)
Write-off of loans 1,546 –
Decrease in accrued revenue on investments and loans 7,249 17,821
Increase in advances for grants (19,793) (1,400)
Change in accrued administrative expenses (6,093) 7,395
Increase in undisbursed grants 331,844 24,000
Amortization of discount under ANE 2,046 611
Translation adjustments (282) –
1 Supplementary disclosure on noncash financing activities:
Nonnegotiable, noninterest-bearing demand promissory notes amounting to $802,477 ($801,955 – 2005) were received from contributing
members.
64
ADF-4
SPECIAL PURPOSE STATEMENT OF CHANGES IN FUND BALANCES
Accumulated
Transfers Other
Contributed Set-Aside from OCR Accumulated Comprehensive
Resources Resources & TASF Surplus Income Total
Balance–
1 January 2005 $26,292,598 $73,692 $583,717 $2,132,274 $488,914 $29,571,195
for the year 2005 (Note J) 210,612 (322,189) (111,577)
Change in amounts available
for operational commitments
Contributed Resources (1,866,897) (1,866,897)
Unamortized Discount (21,234) (21,234)
Transfer from ordinary capital resources 40,000 40,000
set-aside resources (5,645) (5,645)
Change in value of transfers from
Technical Assistance Special Fund (434) (434)
Balance–
31 December 2005 $24,404,467 $68,047 $623,283 $2,342,886 $166,725 $27,605,408
for the year 2006 (Note J) (82,163) 121,138 38,975
Change in amounts available
for operational commitments
Contributed Resources 1,571,482 1,571,482
Unamortized Discount (12,303) (12,303)
Transfer from ordinary capital resources 40,000 40,000
Change in SDR value of set-aside resources 3,577 3,577
Change in value of transfers from
Technical Assistance Special Fund 331 331
Balance–
31 December 2006 $25,963,646 $71,624 $663,614 $2,260,723 $287,863 $29,247,470
Accumulated Other Comprehensive Income (Note J)

Accumulated Translation Unrealized Investment Accumulated Other

Adjustments Holding Gains (Losses) Comprehensive Income
2006 2005 2006 2005 2006 2005

Balance, 1 January $ 170,155 $ 484,739 $(3,430) $ 4,175 $ 166,725 $ 488,914
Other comprehensive income for the year 118,545 (314,584) 2,593 (7,605) 121,138 (322,189)

Balance, 31 December $288,700 $ 170,155 $ (837) $(3,430) $287,863 $166,725
65
SPECIAL PURPOSE SUMMARY STATEMENT OF LOANS
Undisbursed Loans
Loans Balances of Not Yet Total Percent of
Borrowers/Guarantors1 Outstanding Effective Loans2 Effective2 Loans Total Loans
Afghanistan $ 308,311 $ 343,398 $ 114,530 $ 766,239 2.68

Azerbaijan 4,502 42,091 – 46,593 0.16
Bangladesh 4,921,072 1,177,506 44,667 6,143,245 21.46
Bhutan 97,085 30,962 38,254 166,301 0.58
Cambodia 623,865 228,116 62,878 914,859 3.20
Cook Islands 25,403 1,451 – 26,854 0.09
Indonesia 898,435 414,560 111,348 1,424,343 4.98
Kazakhstan 56,215 353 – 56,568 0.20
Kiribati 13,000 242 – 13,242 0.05
Kyrgyz Republic 505,138 94,656 – 599,794 2.10
Lao PDR 917,965 164,168 35,907 1,118,040 3.91
Maldives 58,247 25,788 – 84,035 0.29
Marshall Islands 60,694 7,531 – 68,225 0.24
Micronesia, Fed. States of 40,146 31,658 – 71,804 0.25
Mongolia 513,240 105,098 46,927 665,265 2.32
Myanmar 462,763 – – 462,763 1.61
Nepal 1,336,210 456,650 30,738 1,823,598 6.37
Pakistan 4,829,677 1,254,328 50,755 6,134,760 21.43
Papua New Guinea 284,867 55,299 – 340,166 1.19
Philippines 829,028 1,498 – 830,526 2.90
Samoa 82,327 18,517 – 100,844 0.35
Solomon Islands 52,302 3,749 – 56,051 0.20
Sri Lanka 2,299,541 567,334 47,360 2,914,235 10.18
Tajikistan 135,443 133,457 27,361 296,261 1.04
Thailand 46,057 – – 46,057 0.16
Tonga 45,756 – – 45,756 0.16
Tuvalu 5,466 2,647 – 8,113 0.03
Uzbekistan 19,554 30,550 53,867 103,971 0.36
Vanuatu 49,147 – – 49,147 0.17
Viet Nam 2,000,607 850,983 391,806 3,243,396 11.33
Regional 150 1,402 – 1,552 0.01
BALANCE – 31 December 2006 $21,522,213 $6,043,992 $1,056,398 $28,622,603 100.00
BALANCE – 31 December 2005 $20,238,051 $5,841,720 $1,195,407 $27,275,178
1 Loans other than those made directly to a member or to its central bank have been guaranteed by the member with the exception of nonsovereign loans
amounting to nil ($5,186 – 2005).
2 Loans negotiated before 1 January 1983 were denominated in current United States dollars. Loans negotiated after that date are denominated in Special
Drawing Rights (SDR) for the purpose of commitment. The undisbursed portions of such SDR loans are translated into United States dollars at the appli-
cable exchange rates as of the end of a reporting period. Of the undisbursed balances, ADB has entered into irrevocable commitments to disburse various
amounts totaling $56,956 ($55,359 – 2005).
66
ADF-5
MATURITY OF EFFECTIVE LOANS
Ending 31 Dec Amount Ending 31 Dec Amount
2007 $734,981 2016 5,778,392

2008 637,193 2021 6,205,062
2009 755,480 2026 5,388,736
2010 856,630 2031 3,767,579
2011 972,865 2036 1,982,850
2041 364,946
over 2041 121,491

Total $27,566,205
SUMMARY OF CURRENCIES RECEIVABLE ON LOANS OUTSTANDING
Currency 2006 2005 Currency 2006 2005
Australian dollar $ 213,580 $ 230,271 Norwegian krone 242,923 223,766

Canadian dollar 800,964 833,564 Pound sterling 367,341 125,453
Danish krone 76,575 70,034 Singapore dollar 2,460 2,258
Euro 4,210,008 3,440,043 Swedish krona 278,490 239,644
Japanese yen 11,331,138 11,406,668 Swiss franc 337,060 317,191
Korean won 97,449 89,656 Thai baht 3,472 2,977
Malaysian ringgit 6,506 6,053 United States dollar 3,470,779 3,234,957
New Zealand dollar 12,208 15,516 Special Drawing Rights 71,260
Total $21,522,213 $20,238,051
67
ADF-6
SPECIAL PURPOSE STATEMENT OF RESOURCES
31 December 2006
Effective Effective Amounts

Amounts Amounts Committed Not Yet Amounts
Committed At Exchange At 31 December 2006 Available Available

During Rates Per Exchange For Operational For Operational Amounts Amounts
2006 Resolutions Rates Commitments Commitments Received Receivable

CONTRIBUTED RESOURCES
Australia $ – $ 1,528,867 $ 1,502,396 $ 108,711 $ 1,393,685 $ 1,393,685 $ –
Austria – 196,897 254,468 24,589 229,879 229,879 –
Belgium 24,499 181,749 220,432 13,278 207,154 207,154 –
Brunei6 – – – – – – –
Canada 6,192 1,570,696 1,697,886 93,682 1,604,204 1,604,204 –
China, People’s
Republic of – 28,004 28,004 14,002 14,002 14,002 –
Denmark 1,125 209,700 249,346 17,191 232,155 232,155 –
Finland 576 131,451 138,336 9,528 128,808 128,808 –
France 150,056 1,096,317 1,276,435 75,027 1,201,408 1,201,408 –
Germany – 1,479,254 1,908,251 146,643 1,761,608 1,761,608 –
Hong Kong – 54,459 54,459 8,954 45,505 45,505 –
Indonesia – 14,960 14,960 – 14,960 14,960 –
Italy – 818,732 754,204 – 754,204 754,204 –
Ireland7 – – – – – – –
Japan – 8,602,366 11,957,077 499,069 11,458,008 11,458,008 –
Korea, Rep. of 668 264,615 303,536 67,464 236,072 236,072 –
Luxembourg 3,604 38,328 44,901 1,803 43,098 43,098 –
Malaysia – 14,667 12,252 2,513 9,739 9,739 –
Nauru – 1,933 1,933 – 1,933 1,433 500
The Netherlands – 587,468 749,647 49,337 700,310 700,310 –
New Zealand – 112,518 122,107 17,971 104,136 104,136 –
Norway – 200,475 211,063 22,070 188,993 188,993 –
Portugal 20,416 65,994 87,992 10,209 77,783 77,783 –
Singapore – 7,734 8,533 2,075 6,458 6,458 –
Spain – 295,384 360,659 36,742 323,917 323,917 –
Sweden 1,898 335,513 318,629 26,889 291,740 291,740 –
Switzerland – 288,698 386,664 20,301 366,363 366,363 –
Taipei,China – 63,475 60,670 8,765 51,905 51,905 –
Thailand – 9,470 8,849 1,575 7,274 7,274 –
Turkey – 110,520 110,520 5,090 105,430 105,430 –
United Kingdom 208,701 1,051,133 1,180,065 104,350 1,075,715 1,075,715 –
United States 430,321 3,767,249 3,767,249 440,049 3,327,200 3,327,200 –
Totals 848,056 23,128,626 27,791,523 1 1,827,877 2 25,963,646 3 25,963,146 4 500
SET-ASIDE RESOURCES – – 71,624 – 71,624 – –
TRANSFER FROM ORDINARY
CAPITAL RESOURCES 40,000 – 660,000 – 660,000 – –
TRANSFERS FROM
TECHNICAL ASSISTANCE
SPECIAL FUND5 – – 3,614 – 3,614 – –
TOTALS $888,056 $23,128,626 $28,526,761 $1,827,877 $26,698,884 $25,963,146 $500

1 Represents amounts committed per Instrument of Contribution including the discounted amount of contribution of $36,238 due to accelerated note
encashment for ADF IX based on donor’s encashment profile.
2 Includes the balance of unamortized discount on contributions of $33,538.
3 Includes amortized discount of $2,700 and foregone interest received.
4 Excludes advance payments received from donors of $102,440, which have not been made available for operational commitments as of 31 December 2006.
5 Includes translation adjustments amounting to $143 as of 31 December 2006.
6 Became a member of ADB on June 2006, with offer to contribute to ADF IX a total amount equivalent to $9.5 million.
7 In addition to its subscription to ADB’s share, Ireland offered to contribute $28.0 million equivalent to ADF IX, of which, $15.245 million ( 11.55 million)
had been received but is excluded from this statement pending receipt and President’s acknowledgment of the Instrument of Contribution.
68
ADF-7
Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
NOTE A—NATURE OF OPERATIONS subscriptions and are presented in US dollar equivalents at

the reporting dates. With the adoption of the special pur-
The Asian Development Fund (ADF) was established on 28 pose financial statements, loan loss provisioning has been
June 1974 to more effectively carry out the special opera- eliminated. With the exceptions of the aforementioned,
tions of the Asian Development Bank (ADB) by providing the ADF financial statements are prepared in accordance
resources on concessional terms which are made avail- with accounting principles generally accepted in the United
able almost exclusively to the least developed borrowing States of America.
countries.
The resources of ADF have been subsequently aug- Functional Currencies and Reporting Currency
mented by eight replenishments, the most recent of which
became effective in April 2005 consisting of $3,302,547,000 The implementation of the full-fledged SDR framework is
in contributions from donors and $3,700,000,000 from in- expected to change the primary economic environment
ternal resources to cover the operational requirements for of ADF. However, until this process is completed, and a
the four-year period from January 2005. Under the new significant change in the primary economic environment
replenishment, ADB is authorized to provide financing in becomes evident, the currencies of contributing member
the form of grants for projects and programs of high de- countries are functional currencies as these represent the
velopmental priority. During the year, an allocation in the currencies of the primary economic environment in which
amount of $40,000,000 ($40,000,000 – 2005) was made ADF generates and expends cash. The reporting currency
to ADF from the 2005 net income of ADB’s Ordinary Capital is USD, and the special purpose financial statements are
Resources (OCR). expressed in thousands of current United States dollars.
In November 2005, the Board of Governors approved
a resolution to adopt a full-fledged SDR approach to improve Translation of Currencies
ADF currency management practices. This will facilitate re-
source administration and operational planning to benefit Effective 1 January 2006, ADB adopted the use of daily
borrowers. The currency management framework for ADF exchange rates for accounting and financial reporting
loans was implemented on 1 January 2006. In this connec- purposes. This allows transactions in currencies other
tion, ADB is authorized to convert ADF resources held in than USD to be translated to the reporting currency using
various currencies into Euro, Pound sterling, Japanese yen, exchange rates applicable at the time of transactions. At
and United States dollar (USD), the currencies which con- the end of each accounting month, translation of assets,
stitute the Special Drawing Rights (SDR); to value disburse- liabilities, and amounts available for operational commit-
ments, repayments, and loan charges in terms of SDR; and ments denominated in non-USD are adjusted using the
to determine in case of withdrawal of a Contributor from applicable rates of exchange at the end of the reporting
ADF or the termination of ADF, the value of Contributors’ period. Translation adjustments relating to set-aside
paid-in contributions and the value of all other resources of resources (Note I) are recorded as notional amounts receiv-
the Fund in terms of SDR. able from or payable to OCR. All other translation adjust-
ments except those relating to the maintenance of SDR
NOTE B—SUMMARY OF SIGNIFICANT loans, are charged or credited to “Accumulated translation
ACCOUNTING POLICIES adjustments” and reported in “FUND BALANCES” as part
of “Accumulated other comprehensive income.”
In May 2001, the Board of Directors approved the adop-
tion of the special purpose financial statements for ADF. Investments
Due to the nature and organization of ADF, these financial
statements have been prepared for the specific purpose Investment securities and negotiable certificate of deposits
of reflecting the sources and applications of member held as of 31 December 2006 are classified as “Available
69
ADF-7
for Sale” while those held as of 31 December 2005 were six months. Interest on non-accruing loans is included in
classified as “Held-to-Maturity” or “Available for Sale.” revenue only to the extent that payments have actually
Investments are classified as “Held-to-Maturity” when been received by ADF. ADB maintains a position of not
ADB has the intent to hold until maturity and are carried taking part in debt rescheduling agreements with respect
at amortized cost. Investments classified as “Available for to sovereign loans. In the case of nonsovereign loans,
Sale” are reported at estimated fair value, which represents ADB may agree to debt rescheduling only after alternative
their fair market value. Unrealized gains and losses are courses of action have been exhausted. When ADB decides
reported in "FUND BALANCES" as part of “Accumulated that a particular loan is no longer collectible, the entire
other comprehensive income.” Realized gains and losses amount is expensed during the period.
are measured by the difference between amortized cost
and the net proceeds of sales. Time deposits are reported Contributed Resources
at cost, which is a reasonable estimate of fair value.
Interest income on investment securities and time de- Contributions by donors are included in the financial
posits is recognized as realized and reported, net of amorti- statements as amounts committed and are reported in
zations of premiums and discounts. “Contributed Resources” as part of “FUND BALANCES”
from the date Instruments of Contribution are deposited
Securities Transferred Under Securities Lending and related formalities are completed.
Arrangement and Securities Purchased Under Contributions are generally received in the currency of
Resale Arrangement the contributor either in cash or notes.
Under ADF IX, contributors have the option to pay
ADF accounts for transfers of financial assets in accordance their contributions under accelerated note encashment
with FAS 140, "Accounting for Transfers and Servicing of (ANE) program and receive a discount. ADF invests the cash
Financial Assets and Extinguishments of Liabilities - a re- generated from this program and the investment income is
placement of FAS 125." In general, transfers are accounted used to finance operations. The related contributions are re-
for as sales when control over the transferred assets has corded at the full undiscounted amount, and the discount
been relinquished. Otherwise the transfers are accounted is amortized over the standard encashment period of 10
as repurchase/resale agreements and collateralized financ- years.
ing arrangements. Securities transferred under securities
lending arrangements are recorded as assets and reported Advanced Payments on Contributions
at estimated fair value, and the cash collateral received is
recorded as a liability. Securities received under resale ar- Payments received in advance or as qualified contributions
rangements are not recorded on ADF’s balance sheets and that cannot be made available for operational commit-
are not re-pledged under securities lending arrangements. ment are recorded as advance payments and included
ADB monitors the fair value of the securities received under under “Liabilities.”
resale arrangements, and if necessary, requires additional
collateral. Grants and Undisbursed Commitments
Loans Grants are recognized in the financial statements when

the related grant is approved and becomes effective.
Loan interest income is recognized on accrual basis. It is Upon completion of a project or cancellation of a grant,
the policy of ADF to place in non-accrual status loans made any undisbursed amount is written back as a reduction in
to eligible borrowing member countries if the principal the grants for the year and the corresponding undisbursed
or interest with respect to any such loans is overdue by commitment is eliminated accordingly.
70
ADF-7
Accounting Estimates Special Purpose Statement of Cash Flows
The preparation of special purpose financial statements in For the purposes of the Special Purpose Statement of Cash
conformity with generally accepted accounting principles Flows, ADF considers that its cash and cash equivalents are
requires Management to make reasonable estimates and limited to "DUE FROM BANKS."
assumptions that affect the reported amounts of assets,
liabilities, and fund balances as at the end of the year and NOTE C—INVESTMENTS
the reported amounts of revenue and expenses during the
year. The actual results could differ from those estimates. The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
Accounting and Reporting Developments seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
FAS 154, “Accounting Changes and Error Corrections, a approved by the Board of Directors in 1999, and reviewed
replacement of APB Opinion No. 20 and FAS 3,” became in 2006. The review endorsed a portfolio strategy that
effective for ADB in 2006. This standard applies to volun- is largely consistent with the 1999 approach. ADB is re-
tary changes in accounting principles and new accounting stricted by its Investment Authority to invest in government
pronouncements, which requires, among other things, and government-related debt instruments and in time
reporting the cumulative effect of adopting new account- deposits. In the US dollar portfolio only and up to limited
ing principles as an adjustment to the opening balance amounts, investments may be made in corporate bonds
of retained earnings and adjusting prior year balances for rated A or better, AAA-rated asset-backed securities, and
comparative presentation. The standard does not apply to AAA-rated mortgage-backed securities. Securities may be
ADF’s financial statements as of 31 December 2006. lent or borrowed.
In September 2006, FASB issued FAS 157, “Fair Value In relation to the adoption of a full-fledged SDR ap-
Measurements,” which emphasizes the definition of fair proach, as discussed in Note B, the investments which were
value (FV) for financial reporting purposes to mean a mar- classified as “Held-to-Maturity” had been reclassified to
ket-based measure and not an entity-specific measure. It “Available for Sale” as the securities held in non-SDR cur-
also prescribes methods for measuring FV including a FV rencies were sold and replaced by investments in any of the
hierarchy that ranks the quality and reliability of informa- SDR currencies. A net loss of $470,000 was realized from
tion used in FV measurements giving the highest priority the conversion exercises during the period ended 31 De-
to quoted prices in active markets and the lowest to unob- cember 2006. The net unrealized gains on the outstanding
servable inputs. This statement expands disclosure require- ANE portfolio amounted to $1,079,000.
ments to focus on the inputs used to measure FV, especially The currency composition of the investment portfo-
those using significant unobservable inputs. This statement lio as of 31 December 2006 and 2005 expressed in United
will be effective for financial statements to be issued after States dollars are as follows:
31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value Currency 2006 2005

Option for Financial Assets and Financial Liabilities.” This Australian dollar $ 60,574,000 $1,170,029,000
statement expands the scope of financial instruments that Canadian dollar 82,050,000 947,873,000
Euro 2,340,451,000 1,726,303,000
may be carried at fair value. It offers an irrevocable option
Japanese yen 320,779,000 –
to carry the vast majority of financial assets and liabilities at Pound sterling 920,062,000 928,774,000
fair value, with changes in fair value recorded in earnings. United States dollar 2,660,972,000 496,135,000
Others 439,000 264,066,000
This statement will be effective for financial statements to
be issued after 31 December 2007. Total $6,385,327,000 $5,533,180,000
71
ADF-7
The estimated fair value and amortized cost of the Additional information relating to investments in gov-
investments as of 31 December 2006 are as follows: ernment and government-guaranteed obligations and cor-
porate bonds are as follows:

2006 2005
Estimated Amortized As of 31 December:
Fair Value Cost Amortized cost $874,553,000 $2,497,359,000
Estimated fair value 873,716,000 2,494,129,000
Due in one year or less $6,171,003,000 $6,171,929,000 Gross unrealized gains 1,593,000 877,000
Due in one year through Gross unrealized losses (2,430,000) (4,107,000)
five years 110,850,000 111,351,000
Due after five years For the years ended
through ten years 103,474,000 102,884,000 31 December:
Change in net unrealized gains
Total $6,385,327,000 $6,386,164,000 (losses) from prior year 2,393,000 (7,705,000)
Proceeds from sales 280,321,000 166,824,000
Gross gain on sales 71,000 959,000
Gross loss on sales (2,216,000) (29,000)
The rate of return on the average investments held As of 31 December 2006, gross unrealized losses
during the year, including securities transferred under se- amounted to $2,430,000 ($4,107,000 – 2005) from gov-
curities lending arrangement and securities purchased un- ernment and government-guaranteed obligations and cor-
der resale arrangement, based on the portfolio held at the porate bonds, resulting from market movements. There are
beginning and end of each month, was 3.98% (3.54% – twenty positions in 2006 (eleven – 2005) that sustained
2005) excluding unrealized gains and losses on investment unrealized losses for over one year, representing only 5.0%
securities, and 4.02% (3.41% – 2005) including unrealized (2.2% – 2005) of the investments. Comparative details for
gains and losses on investments. 2006 and 2005 are as follows:

Government and
government-guaranteed
obligations $ 44,921,000 $ 506,000 $195,753,000 $ 727,000 $ 240,674,000 $1,233,000
Corporate bonds 151,094,000 355,000 123,590,000 842,000 274,684,000 1,197,000
Total $ 196,015,000 $ 861,000 $319,343,000 $1,569,000 $ 515,358,000 $2,430,000


Government and
government-guaranteed
obligations $ 810,419,000 $2,634,000 $ 83,426,000 $ 432,000 $ 893,845,000 $3,066,000
Corporate bonds 275,224,000 873,000 38,035,000 168,000 313,259,000 1,041,000
Total $1,085,643,000 $3,507,000 $121,461,000 $ 600,000 $1,207,104,000 $4,107,000
72
ADF-7
NOTE D—LOANS AND LOAN LOSS PROVISION terest on these loans that was not recognized as income
as of 31 December 2006 would have totaled $43,335,000
Loans ($38,067,000 – 2005). The loans in non-accrual status as
of 31 December 2006 were 28 loans to Myanmar (same in
Prior to 1 January 1999, loans of ADF were extended to 2005) and 5 loans made to the Republic of Marshall Islands
eligible borrowing member countries, which bore a service (nil – 2005).
charge of 1% and required repayment over periods rang- No nonsovereign loans were outstanding as of 31 De-
ing from 35 to 40 years. On 14 December 1998, the Board cember 2006 ($5,186,000 – 2005), and there was neither
of Directors approved an amendment to ADF loan terms, undisbursed loan commitment nor loan in non-accrual sta-
as follows: (i) for loans to finance specific projects, the ma- tus outstanding in both years.
turity was shortened to 32 years including an 8-year grace
period; (ii) for program loans to support sector develop- NOTE E—DUE FROM CONTRIBUTORS
ment, the maturity was shortened to 24 years including an
8-year grace period; and (iii) all new loans bear a 1% inter- Included in “Due from contributors” are notes of contribu-
est charge during the grace period, and 1.5% during the tors and contributions receivable. Notes of contributors are
amortization period, with equal amortization. The revised nonnegotiable, noninterest-bearing and, subject to certain
ADF lending terms took effect on 1 January 1999 for loans restrictions imposed by applicable Board of Governors'
for which formal loan negotiations were completed on or resolutions, encashable by ADB at par upon demand.
after 1 January 1999. ADF requires borrowers to absorb ADB currently expects that the notes outstanding at
exchange risks attributable to fluctuations in the value of 31 December 2006 will be encashed in varying amounts
the currencies disbursed. over an eight-year period ending 31 December 2014.
ADB believes that there is no comparable market, nor The fair value of notes of contributors is determined
ADB intends to sell ADF loans. The use of market data to using an entry value method, whereby fair value is deter-
arrive at the loan at fair value will give meaningless results. mined based on the terms at which notes are currently be-
As such, the fair value of loans is determined using an entry ing accepted from contributors. On this basis, the fair value
value method. Under this method, fair value is determined of outstanding notes of contributors approximates their
based on the terms at which a similar loan would currently carrying amount.
be made by ADB to a similar borrower. For such loans, fair
value approximates the carrying amount. The estimated NOTE F—PAYABLE TO RELATED FUNDS
fair value of loans is not affected by credit risks because
the amount of any such adjustment is not considered to The OCR and special fund resources are at all times used,
have a material effect based on ADB's experience with its committed, and invested entirely separate from each other.
borrowers. The administrative and operational expenses pertaining
Undisbursed loan commitments and an analy- to the OCR and ADF are allocated based on operational
sis of loans by country as of 31 December 2006 are activities and are settled regularly. Under ADF IX and third
shown in ADF-5. regularized replenishment of Technical Assistance Special
The principal amount outstanding of sovereign Fund (TASF), a specific portion of the total contributions
loans in non-accrual status as of 31 December 2006 are to be allocated to TASF. ADF receives all contributions
was $487,877,000 ($461,263,000 – 2005) of which of members and subsequently transfers TASF’s portion to
$175,526,000 ($150,301,000 – 2005) was overdue. Loans TASF.
in non-accrual status resulted in $4,933,000 ($4,880,000 ADF’s outstanding payables as of 31 December 2006
– 2005) not being recognized as income from loans for comprised a payable to OCR representing administration
the year ended 31 December 2006. The accumulated in- charges of $25,971,000 ($32,064,000 – 2005) and a pay-
73
ADF-7
able to TASF of $2,650,000 ($4,714,000 – 2005) represent- The capital stock of ADB is defined in Article 4, para-
ing contributions from donors incorporated in ADF IX for graph 1 of the Charter, "in terms of United States dollars of
the third regularized replenishment of TASF. the weight and fineness in effect on 31 January 1966" (the
1966 dollar). Therefore, Set-Aside Resources had historically
NOTE G—CONTRIBUTED RESOURCES/ been translated into the current United States dollar (ADB's
OTHER LIABILITIES unit of account), on the basis of its par value in terms of
gold. From 1973 until 31 March 1978, the rate arrived at on
As of 31 December 2006, Instruments of Contributions this basis was $1.20635 per 1966 dollar. Since 1 April 1978,
from 27 donors (21 donors in 2005) were received for at which time the Second Amendment to the Articles of
ADF IX. Of these, contributions totaling $1,367,390,000 Agreement of the International Monetary Fund (IMF) came
($525,776,000 – 2005), including amortized discount of into effect, currencies no longer had par values in terms of
$2,700,000 ($620,000 – 2005) at translated amounts gold. Pending ADB's selection of the appropriate successor
were received and recorded in “Contributed Resources.” to the 1966 dollar, the Set-Aside Resources have been val-
The contributions as of 31 December 2006 do not ued for purposes of the accompanying financial statements
include 11,550,000 ($15,245,000 equivalent) contribu- in terms of the Special Drawing Right (SDR), at the value
tions received from Ireland pending receipt of the Instru- in current United States dollars as computed by the IMF.
ment of Contribution. This has been temporarily recorded in As of 31 December 2006, the value of the SDR in terms
Deferred Credits and included in “Other liabilities.” As of 31 of the current United States dollar was $1.5044 ($1.42927
December 2005, $33,647,000 contributions received from – 2005). On this basis, Set-Aside Resources amounted to
France was similarly classified. $71,624,000 ($68,047,000 – 2005). If the capital stock of
ADB as of 31 December 2006 had been valued in terms
NOTE H—ADMINISTRATIVE EXPENSES AND of $12,063.50 per share, Set-Aside Resources would have
ADMINISTRATION CHARGE been $57,434,000.
Administrative expenses represent administration charge NOTE J—COMPREHENSIVE INCOME

from OCR which is an apportionment of all administrative
expenses of ADB (other than those pertaining directly to Comprehensive income has two major components:
ordinary operations and special operations), in the propor- revenue (less than) in excess of expenses and other com-
tion of the relative volume of operational activities of each prehensive income. Other comprehensive income includes
fund. unrealized gains and losses on “Available for Sale” securi-
ties and currency translation adjustments.
NOTE I—SET-ASIDE RESOURCES
NOTE K—GRANTS AND UNDISBURSED
Pursuant to the provisions of Article 19, paragraph COMMITMENTS
1(i) of the Articles of Agreement Establishing the Asian
Development Bank (the Charter), the Board of Governors The ADF IX introduced financing in the form of grants for
has authorized the setting aside of 10% of the unimpaired the first time. As of 31 December 2006 and 2005, 16 grants
"paid-in" capital paid by member countries pursuant to amounting to $274,910,000 and 19 grants amounting
Article 6, paragraph 2(a) of the Charter and of the convert- to $246,640,000 were approved, respectively. Of which,
ible currency portion paid by member countries pursuant $346,540,000 ($24,000,000 – 2005) became effective.
to Article 6, paragraph 2(b) of the Charter as of 28 April The fair value of undisbursed commitments approxi-
1973, to be used as a part of the Special Funds of ADB. mates the amount of undisbursed commitments because
The capital so set aside was allocated and transferred from ADB expects that grants will be made for all projects/pro-
the OCR to ADF as Set-Aside Resources. grams covered by the commitments.
74
ADF-7
NOTE L—FAIR VALUE OF FINANCIAL INSTRUMENTS ation models. The basis of valuation is the expected cash
flows discounted based on observable market data.
Fair value of a financial instrument is defined as the amount See Notes C, D, E, and K for discussions relating to
at which the instrument could be exchanged in a current investments, loans, due from contributors, and undisbursed
transaction between willing parties, other than in a forced commitments. In all other cases, the carrying amounts of
or liquidation sale. ADF's assets, liabilities, and fund balances are consid-
If available, quoted market values are used to deter- ered to approximate fair values for all significant financial
mine fair values. Financial instruments for which market instruments.
quotations are not readily available are valued using valu-
75
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D

Co. Reg. No.: 52871777D
In our opinion, the accompanying statements of financial position and the related statements
of activities and changes in net assets and cash flows present fairly, in all material respects,
the financial position of the Asian Development Bank—Technical Assistance Special Fund at
31 December 2006 and 2005, and the results of its activities and changes in net assets and its
cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the responsibility of the manage-
statements based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic financial state-
ments taken as a whole. The accompanying statement of resources as at 31 December 2006
and summary statement of technical assistance approved and effective for the year ended 31
December 2006 are presented for purposes of additional analyses and are not required parts of
the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
Singapore
7 March 2007
76
TASF-1
Asian Development Bank—Technical Assistance Special Fund
STATEMENT OF FINANCIAL POSITION
2006 2005
ASSETS

DUE FROM BANKS (Note B) $ 1,828 $ 1,493

INVESTMENTS (Notes B, C, and G)
Time deposits 275,639 254,164

ACCRUED REVENUE 1,186 609

DUE FROM CONTRIBUTORS (Notes B and D) 115,138 109,598

OTHER ASSETS (Note F) 10,916 12,658
TOTAL $404,707 $378,522
LIABILITIES AND UNCOMMITTED BALANCES

MISCELLANEOUS LIABILITIES (Note F) $ 111 $ 2,489

UNDISBURSED COMMITMENTS (Notes B, E, and G) 184,063 160,566

UNCOMMITTED BALANCES (TASF-2 and TASF-4) (Notes B and D)
Unrestricted net assets 220,533 215,467
TOTAL $404,707 $378,522
The accompanying notes are an integral part of these financial statements (TASF-6).
77
TASF-2
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
2006 2005
CHANGES IN UNRESTRICTED NET ASSETS
CONTRIBUTIONS (TASF-4) (Notes B and D) $ 77,242 $ 187,515
REVENUE
From investments (Notes B and C) 11,832 7,223
From other sources—net (Note E) 325 753
Total 89,399 195,491
EXPENSES
Technical assistance—net (TASF-5) (Notes B and E) 91,781 76,959
Financial expenses 6 13
Total 91,787 76,972
CONTRIBUTIONS AND REVENUE (LESS THAN)

IN EXCESS OF EXPENSES (2,388) 118,519
EXCHANGE GAINS (LOSSES)—net (Note B) 7,454 (2,237)

INCREASE IN NET ASSETS 5,066 116,282
NET ASSETS AT BEGINNING OF YEAR 215,467 99,185
NET ASSETS AT END OF YEAR $220,533 $215,467

78
TASF-3
2006 2005
Contributions received $ 77,869 $ 71,354
Cash received from other activities 408 1,638
Technical assistance disbursed (68,617) (67,576)
Financial expenses paid (6) (13)

Net payments for securities purchased under resale arrangement (168) (110)

Net Cash Used in Investing Activities (20,685) (12,111)

Effect of Exchange Rate Changes on Due from Banks 79 (307)

Net Increase (Decrease) in Due from Banks 335 (107)



RECONCILIATION OF INCREASE IN NET ASSETS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Increase in net assets (TASF-2) $ 5,066 $ 116,282

Adjustments to reconcile increase in net assets
to net cash provided by operating activities:
Increase in accrued revenue and others (545) (308)
Change in due from contributors 627 (116,161)
Increase in advances for technical assistance to member countries (333) (1,019)
Increase in undisbursed commitments 23,497 10,445
Translation adjustments (7,371) 3,072


79
TASF-4
STATEMENT OF RESOURCES
31 December 2006
Contributions Direct
Committed Voluntary Regularized Total
During 2006 Contributions Replenishment1 Contributions
DIRECT VOLUNTARY CONTRIBUTIONS
Australia $ – $ 2,484 $ 29,368 $ 31,852

Austria – 159 3,793 3,952
Bangladesh – 47 – 47
Belgium 1,613 1,394 3,207 4,601
Canada – 3,346 26,638 29,984
China, People’s Rep. of – 1,600 1,996 3,596
Denmark – 1,963 4,034 5,997
Finland – 237 2,058 2,295
France 9,878 1,697 20,969 22,666
Germany – 3,315 26,642 29,957
Hong Kong, China – 100 1,397 1,497
India 50 3,008 – 3,008
Indonesia – 250 40 290
Italy – 774 9,371 10,145
Japan – 47,710 157,606 205,316
Korea, Rep. of – 1,900 8,104 10,004
Luxembourg 238 – 238 238
Malaysia – 909 333 1,242
Nauru – – 67 67
The Netherlands – 1,338 11,823 13,161
New Zealand – 1,096 2,234 3,330
Norway – 3,279 4,308 7,587
Pakistan – 1,666 – 1,666
Portugal 1,344 – 1,344 1,344
Singapore – 1,100 266 1,366
Spain – 190 6,189 6,379
Sri Lanka – 6 – 6
Sweden – 862 6,855 7,717
Switzerland – 1,035 5,463 6,498
Taipei,China – 200 1,710 1,910
Thailand – – 202 202
Turkey – – 2,720 2,720
United Kingdom 13,440 5,617 21,662 27,279
United States 30,679 1,500 65,031 66,531
Total $ 57,242 $ 88,782 $ 425,668 514,450
Transfers to Asian Development Fund (3,472)
Allocation from OCR Net Income 20,000 683,000
Other Resources2 152,882
TOTAL $ 77,242 $ 1,346,860

1 Represents TASF portion of contributions to the replenishment of the Asian Development Fund and the Technical Assistance Special Fund authorized by
Governors’ Resolution Nos. 182, 214 and 300 at historical values.
2 Represents income, repayments, and reimbursement accruing to TASF since 1980.
80
TASF-5
SUMMARY STATEMENT OF TECHNICAL ASSISTANCE APPROVED AND EFFECTIVE
For the Year Ended 31 December 2006
Project
Project Implementation/
Recipient Preparation Advisory Total
Afghanistan $ 4,724 $ 2,155 $ 6,879

Armenia 150 – 150
Azerbaijan 912 (1) 911
Bangladesh – 19 19
Bhutan – 1,079 1,079
Cambodia 1,083 463 1,546
China, People’s Rep. of 7,264 7,087 14,351
Fiji Islands 800 (0) 800
India (315) 6,177 5,862
Indonesia 1,058 4,229 5,287
Kazakhstan (5) (60) (65)
Kyrgyz Republic – (206) (206)
Lao PDR 3 932 935
Malaysia – 150 150
Maldives 600 218 818
Marshall Islands – 250 250
Micronesia, Fed. States of – 218 218
Mongolia 650 68 718
Nepal 449 360 809
Pakistan 1,390 4,079 5,469
Papua New Guinea 150 (300) (150)
Philippines (31) 3,606 3,575
Samoa 441 345 786
Solomon Islands – 495 495
Sri Lanka 524 995 1,519
Tajikistan 900 – 900
Thailand – 864 864
Timor-Leste – (195) (195)
Tonga – (206) (206)
Uzbekistan 713 (165) 548
Vanuatu – (122) (122)
Viet Nam 711 2,289 3,000
Total $ 22,171 $ 34,823 56,994
Regional Activities 34,787
TOTAL $ 91,781
0 Less than 1 thousand.
Negative amounts represent net undisbursed commitments written back to balances available for future commitments (Notes B and E).
81
TASF-6
NOTE A—NATURE OF OPERATIONS at the end of the reporting period. These translation
adjustments are accounted for as exchange gains or losses
The Technical Assistance Special Fund (TASF) was estab- and are credited or charged to operations.
lished to provide technical assistance on a grant basis to
developing member countries of the Asian Development Investments
Bank (ADB) and for regional technical assistance. TASF
resources consist of direct voluntary contributions by All investment securities held by TASF are reported at esti-
members, allocations from the net income of Ordinary mated fair value, which represents their fair market value.
Capital Resources (OCR) and Asian Development Fund Realized and unrealized gains and losses are included in
(ADF) contributions, and revenue from investments and revenue. Time deposits are reported at cost which is a
other sources. reasonable estimate of fair value.
NOTE B—SUMMARY OF SIGNIFICANT Securities Purchased Under Resale Arrangements

ACCOUNTING POLICIES
TASF accounts for transfer of financial assets in accordance
Presentation of the Financial Statements with FAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities – a re-
The financial statements of the TASF are presented on the placement of FAS 125.” In general, transfers are accounted
basis of those for not-for-profit organizations. for as sale under FAS 140 when control over the transferred
TASF reports contributed cash and other assets as assets has been relinquished. Otherwise, the transfers are
unrestricted asset as these are made available without accounted for as repurchase/resale arrangements and
conditions other than for the purpose of pursuing the collateralized financing arrangements. Securities received
objectives of the TASF. under resale arrangement are not recorded on TASF’s bal-
ance sheet and are not re-pledged under securities lending
Functional and Reporting Currency arrangements. ADB monitors the fair value of the securi-
ties received under resale arrangements, and if necessary,
The financial statements are expressed in thousands of cur- requires additional collateral.
rent United States dollars. The United States dollar is the
functional and reporting currency, representing the currency Contributions
of the primary economic operating environment of TASF.
The contributions from donors and the allocations from
Translation of Currencies OCR net income are included in the financial statements,
from the date of effectivity of the contribution agreement,
Effective 1 January 2006, ADB adopted the use of daily and the Board of Governors’ approval, respectively.
exchange rates for accounting and financial reporting
purposes. This allows transactions denominated in non- Technical Assistance to Member Countries and
US dollar to be translated to the reporting currency using Undisbursed Commitments
exchange rates applicable at the time of transactions.
Contributions included in the financial statements during Technical assistance is recognized in the financial state-
the year are recognized at applicable exchange rates as of ments when the related project is approved and becomes
the respective dates of commitment. At the end of each effective. Upon completion or cancellation of a TA project,
accounting month, translation of assets, liabilities, and any undisbursed amount is written back as a reduction
uncommitted balances which are denominated in non-US in technical assistance for the year and the corresponding
dollar are adjusted using the applicable rates of exchange undisbursed commitment is eliminated accordingly.
82
TASF-6
Accounting Estimates Statement of Cash Flows
The preparation of financial statements in conformity For the purposes of the Statement of Cash Flows, the TASF
with generally accepted accounting principles requires considers that its cash and cash equivalents are limited to
Management to make reasonable estimates and assump- "DUE FROM BANKS."
tions that affect the reported amounts of assets and
liabilities and uncommitted balances as at the end of the NOTE C—INVESTMENTS
year and the reported amounts of revenue and expenses
during the year. The actual results could differ from those The main investment management objective is to maintain
estimates. security and liquidity. Subject to these parameters, ADB seeks
the highest possible return on its investments. Investments
Accounting and Reporting Developments are governed by the Investment Authority approved by the
Board of Directors in 1999, and reviewed in 2006. The re-
FAS 154, “Accounting Changes and Error Corrections, a view endorsed a portfolio strategy that is largely consistent
replacement of APB Opinion No. 20 and FAS 3,” became with the 1999 approach. ADB is restricted by its Investment
effective for ADB in 2006. This standard applies to volun- Authority to invest in government and government-related
tary changes in accounting principles and new accounting debt instruments and in time deposits. In the US dollar
pronouncements, which requires, among other things, portfolio only and up to limited amounts, investments may
reporting the cumulative effect of adopting new account- be made in corporate bonds rated A or better, AAA-rated
ing principles as an adjustment to the opening balance asset-backed securities, and AAA-rated mortgage-backed
of retained earnings and adjusting prior year balances for securities.
comparative presentation. The standard does not apply to The currency composition of the investment portfolio
TASF’s financial statements as of 31 December 2006. as of 31 December 2006 and 2005 expressed in United
In September 2006, FASB issued FAS 157, “Fair States dollars are as follows:
Value Measurements,” which emphasizes the definition
of fair value (FV) for financial reporting purposes to mean Currency 2006 2005

a market-based measure and not an entity-specific meas- Australian dollar $ 18,204,000 $ 12,840,000
ure. It also prescribes methods for measuring FV includ- Canadian dollar 162,726,000 156,567,000
ing a FV hierarchy that ranks the quality and reliability of Euro – 20,573,000
United States dollar 86,657,000 61,238,000
information used in FV measurements giving the highest Others 8,052,000 2,946,000
priority to quoted prices in active markets and the lowest
Total $275,639,000 $254,164,000
to unobservable inputs. This statement expands disclosure
requirements to focus on the inputs used to measure FV,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be The annualized rate of return on the average invest-
issued after 31 December 2007. ments held during the year, based on the portfolio held at
In February 2007, FASB issued FAS 159, “Fair value the beginning and end of each month was 4.34% (2.95%
Option for Financial Assets and Financial Liabilities.” This – 2005).
statement expands the scope of financial instruments that There were no outstanding securities purchased under
may be carried at fair value. It offers an irrevocable option resale arrangements as of 31 December 2006 and 2005.
to carry the vast majority of financial assets and liabilities at
fair value, with changes in fair value recorded in earnings.
This statement will be effective for financial statements to
be issued after 31 December 2007.
83
TASF-6
NOTE D—CONTRIBUTIONS AND are refunded by the borrower through the loan proceeds
UNCOMMITTED BALANCES under the terms of that ADB loan. Refinanced amount of
$147,000 ($677,000 – 2005) was charged to such loans

Since inception in 1967, direct contributions have been and credited to revenue from other sources of the TASF
made by 29 member countries. India made direct and vol- during the year ended 31 December 2006. All project
untary contribution of Rs2.25 million ($50,000 equivalent) preparatory technical assistance (PPTA) funded from TASF
in 2006. and OCR current income approved on or after 1 January
In 1986, 1992, and 2005, the Board of Governors of 2002 are no longer subject to cost recovery.
ADB, in authorizing replenishments of the ADF, provided
for allocations to the TASF in aggregate amounts equivalent NOTE F—OTHER ASSETS AND MISCELLANEOUS
to $72,000,000, $140,000,000, and $221,000,000, to be LIABILITIES
used for technical assistance to ADF borrowing developing
member countries and for regional technical assistance. The OCR and special fund resources are at all times used,
In 2006, $20,000,000 was allocated out of OCR net committed, and invested entirely separate from each other.
income to TASF bringing the accumulated allocation out Under ADF IX and the third regularized replenishment of
of OCR net income to $683,000,000. TASF, a specific portion of the total contributions are to be
Some of the direct contributions received can be allocated to TASF. ADF receives all contributions of mem-
subject to restricted procurement sources, while some are bers and subsequently transfers TASF’s portion to TASF.
given on condition that the technical assistance be made Regional technical assistance projects and programs may
on a reimbursable basis. The total contributions received be combined activities between special and trust funds.
for the years ended 31 December 2006 and 2005 were Interfund accounts are settled on a regular basis between
without restrictions. TASF and the other funds.
Uncommitted balances comprised of amounts which The interfund account balances included in other
have not been committed by ADB as at 31 December 2006 assets and miscellaneous liabilities are as follows:
and 2005. These balances include approved TA projects/
programs that are not yet effective. 2006 2005
Receivable from:
NOTE E—UNDISBURSED COMMITMENTS OCR $ – $ 24,000
ADF 2,650,000 4,714,000
JSF 5,000 9,000
Undisbursed commitments are denominated in United States Agency Trust Funds 26,000 12,000
dollars and represent effective ongoing grant-financed TA
Total $2,681,000 $4,759,000
projects/programs which are not yet disbursed as of the
end of the year. During 2006, an amount of $9,393,000 Payable to:
($11,339,000 – 2005) representing completed and can- OCR $ 97,000 $ –
Agency Trust Funds 14,000 90,000
celed TA projects has been written back as a reduction in
technical assistance of the period and the corresponding Total $ 111,000 $ 90,000
undisbursed commitment has been eliminated. The fair
value of undisbursed commitments approximates the
amounts undisbursed, because ADB expects that grants will At 31 December 2005, miscellaneous liabilities in-
be made for all projects/programs covered by the commit- cluded advanced contribution of $2,398,000 ( 2,026,000)
ments. For technical assistance approved prior to 1 January from the Government of France for the TASF’s third regu-
2002, and provided as a project preparatory grant leading larized replenishment, which was formally acknowledged
to an ADB loan, the amount of grant exceeding $250,000 in January 2006.
84
TASF-6
NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS See Notes C and E for discussions with respect to
investments and undisbursed commitments, respectively.
Fair value of a financial instrument is defined as the amount In all other cases, the carrying amounts of TASF's assets,
at which the instrument could be exchanged in a current liabilities, and uncommitted balances are considered
transaction between willing parties, other than in a forced to approximate fair values for all significant financial
or liquidation sale. instruments.
85
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D

Co. Reg. No.: 52871777D
In our opinion, the accompanying statements of financial position and the related state-
ments of activities and changes in net assets and cash flows present fairly, in all mate-
rial respects, the financial position of the Asian Development Bank—Japan Special Fund at
cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements are the responsibility of the manage-
statements based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
Singapore
7 March 2007
86
JSF-1
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
2006 2005
JSF JSF
Regular & Regular &
ACCSF Supplementary Total ACCSF Supplementary Total
ASSETS
DUE FROM BANKS (Note B) $ 1,865 $ 3,035 $ 4,900 $ 1,742 $ 3,616 $ 5,358

INVESTMENTS (Notes A, B, C, and G)
Time deposits 32,208 208,064 240,272 25,645 182,047 207,692
Other securities – – – 5,884 24,595 30,479
32,208 208,064 240,272 31,529 206,642 238,171
ACCRUED REVENUE 55 1,167 1,222 170 2,101 2,271

OTHER ASSETS (Note D) 50 4,391 4,441 60 1,706 1,766

TOTAL $34,178 $216,657 $250,835 $33,501 $214,065 $247,566

ACCOUNTS PAYABLE AND OTHER LIABILITIES (Note D) $ 70 $ 198 $ 268 $ 149 $ 197 $ 346

UNDISBURSED COMMITMENTS (Notes B, E, and G)
Technical assistance 1,259 85,516 86,775 2,566 66,993 69,559

TOTAL LIABILITIES 1,329 85,714 87,043 2,715 67,190 69,905

NET ASSETS (JSF-2) (Note B), represented by:
Uncommitted balances (Notes A and F)
Unrestricted – 130,943 130,943 – 146,875 146,875
Temporarily restricted 27,418 – 27,418 26,895 – 26,895
27,418 130,943 158,361 26,895 146,875 173,770
Net accumulated investment income (Notes A and F)

Temporarily restricted 5,431 – 5,431 3,891 – 3,891
32,849 130,943 163,792 30,786 146,875 177,661
TOTAL $34,178 $216,657 $250,835 $33,501 $214,065 $247,566
The accompanying notes are an integral part of these financial statements (JSF-4).
87
JSF-2
2006 2005
JSF JSF
Regular & Regular &

CONTRIBUTIONS (Notes B and F) $ – $ 24,513 $ 24,513 $ – $ 27,237 $ 27,237
REVENUE FROM INVESTMENTS (Notes B and C) – 10,489 10,489 – 6,975 6,975
REVENUE FROM OTHER SOURCES – 235 235 – 129 129
NET ASSETS REVERTED BACK TO TEMPORARILY

RESTRICTED ASSETS (Notes B and F) (397) – (397) (826) – (826)
Total (397) 35,237 34,840 (826) 34,341 33,515
EXPENSES
Technical assistance—net (Notes B, E, and F) (420) 50,035 49,615 (847) 34,923 34,076
Administrative expenses 23 1,075 1,098 21 1,014 1,035
Financial expenses – 0 0 – 0 0
Total (397) 51,110 50,713 (826) 35,937 35,111
CONTRIBUTIONS AND REVENUE LESS THAN EXPENSES – (15,873) (15,873) – (1,596) (1,596)
EXCHANGE LOSSES (Note B) – (59) (59) – (758) (758)
DECREASE IN UNRESTRICTED NET ASSETS – (15,932) (15,932) – (2,354) (2,354)
CHANGES IN TEMPORARILY RESTRICTED NET ASSETS
REVENUE FROM INVESTMENTS AND OTHER SOURCES

(Notes B and C) 1,666 – 1,666 1,073 – 1,073
NET ASSETS REVERTED BACK TO TEMPORARILY

RESTRICTED ASSETS (Notes B and F) 397 – 397 826 – 826
INCREASE IN TEMPORARILY RESTRICTED NET ASSETS 2,063 – 2,063 1,899 – 1,899
INCREASE (DECREASE) IN NET ASSETS 2,063 (15,932) (13,869) 1,899 (2,354) (455)
NET ASSETS AT BEGINNING OF YEAR 30,786 146,875 177,661 28,887 149,229 178,116
NET ASSETS AT END OF YEAR $32,849 $130,943 $163,792 $30,786 $146,875 $177,661
0 - Less than 1 thousand.
88
JSF-3
2006 2005
JSF JSF
Regular and Regular and

Contributions received $ – $ 24,513 $ 24,513 $ – $ 27,237 $ 27,237
Interest on investments received 1,656 11,405 13,061 1,376 7,258 8,634
Technical assistance disbursed (956) (34,207) (35,163) (2,000) (33,589) (35,589)
Administrative expenses paid (23) (1,068) (1,091) (21) (941) (962)
Financial expenses paid – 0 0 – 0 0
Others—net 102 180 282 27 (642) (615)
Net Cash Provided by (Used in) Operating Activities 779 823 1,602 (618) (677) (1,295)

Maturities of investments 950,776 2,468,999 3,419,775 3,494,396 9,224,295 12,718,691
Purchases of investments (951,432) (2,470,403) (3,421,835) (3,492,363) (9,221,018) (12,713,381)
Net receipts from (payments for) securities
purchased under resale arrangement – 233 233 – (469) (469)
Net Cash (Used in) Provided by Investing Activities (656) (1,171) (1,827) 2,033 2,808 4,841
Effect of Exchange Rate Changes on Due from Banks – (233) (233) – 468 468
Net Increase (Decrease) in Due from Banks 123 (581) (458) 1,415 2,599 4,014
Due from Banks at Beginning of Year 1,742 3,616 5,358 327 1,017 1,344
Due from Banks at End of Year $ 1,865 $ 3,035 $ 4,900 $ 1,742 $ 3,616 $ 5,358
RECONCILIATION OF INCREASE (DECREASE)

IN NET ASSETS TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Increase (decrease) in net assets (JSF-2) $ 2,063 $ (15,932) $ (13,869) $ 1,899 $ (2,354) $ (455)
Adjustments to reconcile increase (decrease)
in net assets to net cash provided by
(used in) operating activities:
Amortization of discounts/premiums (10) 26 16 124 852 976
Unrealized investment gains (13) (44) (57) (20) (151) (171)
Change in undisbursed commitments (1,308) 18,524 17,216 (2,404) 445 (1,959)
Translation adjustment – 2 2 – (1) (1)
Others—net 47 (1,753) (1,706) (217) 532 315
Net Cash Provided by (Used in) Operating Activities $ 779 $ 823 $ 1,602 $ (618) $ (677) $ (1,295)
0 - Less than 1 thousand.

89
JSF-4
Asian Development Bank—JAPAN SPECIAL Fund
NOTE A—NATURE OF OPERATIONS Functional and Reporting Currency

The Japan Special Fund (JSF) was established in March The financial statements are expressed in thousands of cur-
1988 when Japan and the Asian Development Bank (ADB) rent United States dollars. The United States dollar is the
entered into a financial arrangement whereby Japan agreed functional and reporting currency, representing the currency
to make an initial contribution and ADB became the admin- of the primary economic operating environment of JSF.
istrator. The purpose of JSF is to help developing member
countries (DMCs) of ADB restructure their economies and Translation of Currencies
broaden the scope of opportunities for new investments,
thereby assisting the recycling of funds to DMCs of ADB. Effective 1 January 2006, ADB adopted the use of daily
While JSF resources are used mainly to finance technical exchange rates for accounting and financial reporting
assistance (TA) operations, these resources may also be purposes. This allows transactions denominated in non-
used for equity investment operations in ADB's DMCs. US dollar to be translated to the reporting currency using
Under the agreement between ADB and Japan, ADB may exchange rates applicable at the time of transactions.
invest the proceeds of JSF pending disbursement. Contributions included in the financial statements during
In March 1999, the Board approved the acceptance the year are recognized at applicable exchange rates as of
and administration by ADB of the Asian Currency Crisis Sup- the respective dates of commitment. At the end of each
port Facility (ACCSF) to assist Asian currency crisis-affected accounting month, translation of assets, liabilities, and
member countries (CAMCs). Funded by Japan, ACCSF was uncommitted balances which are denominated in non-US
established within JSF to assist in the economic recovery of dollar are adjusted using the applicable rates of exchange
CAMCs through interest payment assistance (IPA) grants, at the end of the reporting period. These translation ad-
TA grants, and guarantees. With the general fulfillment of justments are accounted for as exchange gains or losses
the purpose of the facility, Japan and ADB agreed to ter- and are credited or charged to operations.
minate the ACCSF on 22 March 2002. The ACCSF account
is to be kept open until the completion of all TA disburse- Investments
ments and the settlement of all administrative expenses.
All investment securities held by JSF are reported at esti-
NOTE B—SUMMARY OF SIGNIFICANT mated fair value, which represents their fair market value.
ACCOUNTING POLICIES Realized and unrealized gains and losses are included in
revenue. Time deposits are reported at cost which is a
Presentation of the Financial Statements reasonable estimate of fair value.
Interest on investment securities and time deposits
The financial statements of JSF are presented on the basis are recognized as realized and reported, net of amortiza-
of those for not-for-profit organizations and as unre- tions of premium and discounts.
stricted and temporarily restricted net assets. ACCSF funds
are separately reported in the financial statements. Securities Purchased Under Resale Arrangements
JSF reports the contributions of cash and other assets
as restricted support if they are received with donor stipu- JSF accounts for transfer of financial assets in accord-
lations that limit the use of the donated assets. When the ance with FAS 140, “Accounting for Transfers and Servicing
donor restriction expires, that is, when a stipulated time or of Financial Assets and Extinguishments of Liabilities – a
purpose restriction is accomplished, temporarily restricted replacement of FAS 125.” In general, transfers are
net assets are reclassified to unrestricted net assets and accounted for as sale under FAS 140 when control over
reported in the Statement of Activities and Changes in Net the transferred assets has been relinquished. Otherwise,
Assets as “NET ASSETS RELEASED FROM RESTRICTIONS.” the transfers are accounted for as repurchase/resale ar-
90
JSF-4
rangements and collateralized financing arrangements. reporting the cumulative effect of adopting new account-
Securities received under resale arrangement are not re- ing principles as an adjustment to the opening balance
corded on JSF’s balance sheet and are not re-pledged un- of retained earnings and adjusting prior year balances for
der securities lending arrangements. ADB monitors the fair comparative presentation. The standard does not apply to
value of the securities received under resale arrangements, JSF’s financial statements as of 31 December 2006.
and if necessary, requires additional collateral. In September 2006, FASB issued FAS 157, “Fair Value
Measurements,” which emphasizes the definition of fair
Contributions value (FV) for financial reporting purposes to mean a mar-
ket-based measure and not an entity-specific measure. It
Contributions by Japan are included in the financial state- also prescribes methods for measuring FV including a FV
ments from the date indicated by Japan that funds are hierarchy that ranks the quality and reliability of informa-
expected to be made available. Contributions which are tion used in FV measurements giving the highest prior-
restricted by the donor for specific TA projects/programs ity to quoted prices in active markets and the lowest to
or for IPA grants are classified as temporarily restricted unobservable inputs. This statement expands disclosure
contributions. Those without any stipulation as to spe- requirements to focus on the inputs used to measure FV,
cific use are accounted for and reported as unrestricted especially those using significant unobservable inputs. This
contributions. statement will be effective for financial statements to be
issued after 31 December 2007.
Technical Assistance and Undisbursed Commitments In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
Technical assistance is recognized in the financial state- statement expands the scope of financial instruments that
ments when the related project is approved and becomes may be carried at fair value. It offers an irrevocable option
effective. Upon completion of a TA project or cancellation to carry the vast majority of financial assets and liabilities
of a grant, any undisbursed amount is written back as a at fair value, with changes in fair value recorded in earn-
reduction in the TA for the year and the corresponding ings. This statement will be effective for financial state-
undisbursed commitment is eliminated accordingly. ments to be issued after 31 December 2007.
Accounting Estimates Statement of Cash Flows
The preparation of financial statements in conformity For the purposes of the Statement of Cash Flows, the JSF
with generally accepted accounting principles requires considers that its cash and cash equivalents are limited to
Management to make reasonable estimates and assump- "DUE FROM BANKS."
tions that affect the reported amounts of assets and li-
abilities as at the end of the year and the reported amounts NOTE C—INVESTMENTS
of income and expenses during the year. The actual results
could differ from those estimates. The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
Accounting and Reporting Developments seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
FAS 154, “Accounting Changes and Error Corrections, a approved by the Board of Directors in 1999, and reviewed
replacement of APB Opinion No. 20 and FAS 3,” became in 2006. The review endorsed a portfolio strategy that is
effective for ADB in 2006. This standard applies to volun- largely consistent with the 1999 approach. ADB is restricted
tary changes in accounting principles and new accounting by its Investment Authority to invest in government and
pronouncements, which requires, among other things, government-related debt instruments and in time deposits.
91
JSF-4
In the US dollar portfolio only and up to limited amounts, NOTE E—UNDISBURSED COMMITMENTS
investments may be made in corporate bonds rated A or
better, AAA-rated asset-backed securities, and AAA-rated Undisbursed commitments are denominated in United
mortgage-backed securities. States dollars and represent TA projects/programs which
The investment portfolios of both JSF and ACCSF as have become effective but not yet disbursed. During 2006,
of 31 December 2006 and 2005 are comprised of United an amount of $5,946,000 representing completed and
States dollars holdings. Other securities consisted of cor- partially canceled TA projects ($7,145,000 – 2005) have
porate bonds. been written back as a reduction in technical assistance
The annualized rates of return on the average invest- for the year, and the corresponding undisbursed commit-
ments held under ACCSF and JSF funds during the year, ments have been eliminated. $420,000 ($847,000 – 2005)
based on the portfolio held at the beginning and end of of this amount corresponds to ACCSF. The fair value of
each month were 4.96% and 4.89%, respectively (3.20% undisbursed commitments approximates the amounts
and 3.25%, respectively – 2005). outstanding, because ADB expects that disbursements
There were no outstanding securities purchased will substantially be made for all the projects/programs
under resale arrangements as of 31 December 2006 and covered by the commitments.
2005.
NOTE F—CONTRIBUTIONS AND
NOTE D—OTHER ASSETS AND LIABILITIES UNCOMMITTED BALANCES
The Ordinary Capital Resources (OCR) and special fund All contributions for the years ended 31 December 2006
resources are at all times used, committed, and invested and 2005 were received during the respective years.
entirely separate from each other. The administrative Effective 31 December 2002, all remaining tem-
and operational expenses pertaining to OCR and special porarily restricted net assets under JSF were transferred
fund resources are charged to the respective funds. The and integrated into the unrestricted regular net assets,
administrative expenses of JSF are settled on a regular as concurred by Japan, in order to optimize the use of
basis between OCR and JSF. Regional technical assistance JSF. Similarly, Japan lifted the restriction over the use of
projects and programs may be combined activities between net accumulated investment income, which under the
special and trust funds. Interfund accounts are settled on a original terms of agreement between ADB and Japan, may
regular basis between JSF and the other funds. only be used for defraying JSF's administrative expenses.
The interfund balances between other funds, which Japan agreed to use the net accumulated investment in-
are included in other assets and liabilities are as follows: come as additional resources for funding future ADB's TA
operations.
2006 2005 Uncommitted balances comprised of amounts which
Amounts Receivable have not been committed by ADB as at 31 December 2006
by JSF from ACCSF $ 70,000 $149,000 and 2005. These balances include approved TA projects/
programs that are not yet effective.
Amounts Payable by:
JSF to: OCR $125,000 $109,000
TASF 5,000 9,000
Agency Trust Funds 1,000 1,000
Total $131,000 $119,000
ACCSF to JSF $ 70,000 $149,000
92
JSF-4
As of 31 December 2006 and 2005 these balances are as follows:
2006 2005
JSF JSF
Regular and Regular and
Uncommitted balances $27,418,000 $130,943,000 $158,361,000 $26,895,000 $146,875,000 $173,770,000
TA projects/programs
approved by Japan
and ADB but not yet
effective – (14,930,000) (14,930,000) – (15,050,000) (15,050,000)
TA projects/programs
approved by Japan
and not yet effective – (12,908,000) (12,908,000) – (5,400,000) (5,400,000)
Uncommitted balances
available for new
commitments $27,418,000 $103,105,000 $130,523,000 $26,895,000 $126,425,000 $153,320,000
The temporarily restricted uncommitted balance re- NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS
maining available as of 31 December 2006 corresponds to
funds under ACCSF of $27,418,000 ($26,895,000 – 2005) Fair value of a financial instrument is defined as the amount
to cover completion of TA disbursements and the amount at which the instrument could be exchanged in a current
of net accumulated investment income of $5,431,000 transaction between willing parties, other than in a forced
($3,891,000 – 2005) for settlement of all administrative or liquidation sale.
expenses. See Notes C and E for discussions relating to invest-
Net assets reverted back to temporarily restricted as- ments and undisbursed commitments. In all other cases,
sets under ACCSF relate to savings on financially complet- the carrying amounts of JSF's assets, liabilities, and uncom-
ed technical assistance net of amount from accumulated mitted balances are considered to approximate fair values
investment income, released from restrictions to defray for all significant financial instruments.
the administrative expenses of ACCSF.
93
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D

Co. Reg. No.: 52871777D
ments of activities and changes in net assets, and cash flows present fairly, in all material
respects, the financial position of the Asian Development Bank—Asian Development Bank
Institute Special Fund at 31 December 2006 and 2005, and the results of its operations and
its cash flows for the years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the responsibility
of the management of the Asian Development Bank Institute. Our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstate-
ment. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Singapore
7 March 2007
94
ADBISF-1
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND

2006 2005
ASSETS
DUE FROM BANKS (Note B) $ 696 $ 699
INVESTMENTS (Notes B, C, and D)


RESALE ARRANGEMENT (Notes B and C) 1,595 15,464
PROPERTY, FURNITURE, AND EQUIPMENT (Notes B and E)

Leasehold Improvements $1,687 $1,699
Less–allowance for depreciation 1,586 101 1,428 271

Furniture and Equipment 2,362 2,211
Less–allowance for depreciation 2,177 185 2,106 105
DUE FROM CONTRIBUTORS (Note F) 11,263 –
OTHER ASSETS (Note G) 1,791 1,791
TOTAL $20,675 $19,604

ACCOUNTS PAYABLE AND OTHER LIABILITIES (Notes B, E, and G) $ 3,267 $ 2,765
UNCOMMITTED BALANCES (ADBISF-2)

TOTAL $20,675 $19,604

The accompanying notes are an integral part of these financial statements (ADBISF-4)
95
ADBISF-2

2006 2005
CONTRIBUTIONS (Notes B and F) $11,263 $13,890

REVENUE
Income from investments (Notes B and C) 16 0
Income from other sources—net 4 3
Total 11,283 13,893
EXPENSES
Administrative expenses 8,113 8,392
Program expenses 2,690 2,935
Total 10,803 11,327

CONTRIBUTIONS AND REVENUE IN EXCESS OF EXPENSES 480 2,566
EXCHANGE GAINS—NET 56 86
TRANSLATION ADJUSTMENTS (Note B) (26) (2,658)
EFFECT OF ADOPTION OF FASB STATEMENT NO. 158 (NOTE H) 59 –
INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS 569 (6)
NET ASSETS AT BEGINNING OF YEAR 16,839 16,845
NET ASSETS AT END OF YEAR $17,408 $16,839

The accompanying notes are an integral part of these financial statements (ADBISF-4).
96
ADBISF-3

2006 2005
Contributions received $ – $ 13,890
Interest on investments received 8 0
Expenses paid (9,923) (10,141)
Other – (747)
Net Cash (Used in) Provided by Operating Activities (9,915) 3,002

Maturity and sales of investment 74,651 5,479
Purchases of investment (78,621) (5,496)
Net receipts from (payments for) securities purchased
under resale arrangement 13,897 (3,385)
Net Cash Provided by (Used in) Investing Activities 9,927 (3,402)
Effect of Exchange Rate Changes on Due from Banks (15) (227)
Net Decrease in Due from Banks (3) (627)
Due from Banks at Beginning of Year 699 1,326
Due from Banks at End of Year $ 696 $ 699
RECONCILIATION OF INCREASE (DECREASE) IN UNRESTRICTED NET ASSETS

TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Increase (decrease) in unrestricted net assets (ADBISF-2) $ 510 $ (6)

Adjustments to reconcile increase (decrease) in net unrestricted assets
to net cash (used in) provided by operating activities:
Depreciation 277 253
Increase in due from contributors (11,263) –
Decrease in due to JFPPT – (747)
Translation adjustments 26 2,658
Others—net 535 844
Net Cash (Used in) Provided by Operating Activities $ (9,915) $ 3,002

The accompanying notes are an integral part of these financial statements (ADBISF-4).
97
ADBISF-4
Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTE A—NATURE OF OPERATIONS States dollar are translated for each semi-monthly period
generally at the applicable rates of exchange at the be-
In 1996, the Asian Development Bank (ADB) approved the ginning of each period; such practice approximates the
establishment of the Asian Development Bank Institute application of average rates in effect during the period.
(the Institute) in Tokyo, Japan as a subsidiary body of ADB. Translation adjustments are accounted for as exchange
The Institute commenced its operations upon the receipt gains or losses and are credited or charged to operations.
of the first funds from Japan on 24 March 1997, and it
was inaugurated on 10 December 1997. The Institute’s Investments
funds may consist of voluntary contributions, donations,
and grants from ADB member countries, non-government All investment securities held by the Institute are reported
organizations, and foundations. The objectives of the at estimated fair value which represents their fair market
Institute, as defined under its Statute, are the identification value. Realized and unrealized gains and losses are included
of effective development strategies and capacity improve- in revenue. Time deposits are reported at cost which is a
ment for sound development management in developing reasonable estimate of fair value.
member countries.
Securities Purchased Under Resale Arrangement
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES ADBI accounts for transfers of financial assets in accord-
ance with FAS 140, “Accounting for Transfers and Servicing
Presentation of the Financial Statements of Financial Assets and Extinguishments of Liabilities
– a replacement of FAS 125.” In general, transfers are
The financial statements of the Institute are presented on accounted for as sale under FAS 140 when control over
the basis of those for not-for-profit organizations. the transferred assets has been relinquished. Otherwise,
The Institute reports donors’ contributed cash and the transfers are accounted for as repurchase/resale
other assets as unrestricted support as these are made agreements and collateralized financing arrangements.
available to the Institute without conditions other than for Securities received under resale arrangements are not
the purposes of pursuing the objectives of the Institute. recorded on ADBI’s balance sheet.
Functional and Reporting Currency Property, Furniture, and Equipment
The functional currency of the Institute is the Japanese yen. Property, furniture, and equipment are stated at cost and
The reporting currency is the United States dollar, and the depreciated over their estimated useful lives using the
financial statements are expressed in thousands of current straight-line method. Maintenance, repairs and minor
United States dollars. betterments are charged to expense.
The Institute distinguishes between capital leases and
Translation of Currencies operating leases based on the objective of the expenditure.
Expenditures amounting to more than $30,000 for a single
Assets, liabilities, and uncommitted balances are translated asset or a combination of assets forming an integral part
from the functional currency to the reporting currency at of a separate asset are capitalized.
the applicable rates of exchange at the end of a reporting
period. Commitments included in the financial statements Contributions
during the year are recognized at the applicable exchange
rates as of the respective dates of commitment. Revenue Contributions from donors are included in the financial
and expense amounts in currency other than the United statements from the date committed.
98
ADBISF-4
Accounting Estimates statement also improves financial reporting by requiring

an employer to measure the funded status of a plan as
The preparation of the financial statements in conformity of the date of its year-end statement of financial position,
with generally accepted accounting principles requires with limited exceptions. Although ADBI, being an employer
Management to make reasonable estimates and assump- without publicly traded equity securities, is not required
tions that affect the reported amounts of assets and li- to adopt this until the end of the fiscal year ending after
abilities as at the end of the year and the reported amounts June 15, 2007, ADB opted to early adopt FAS 158 for
of revenue and expenses during the year. Actual results the fiscal year ended 31 December 2006.
could differ from those estimates. In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
Accounting and Reporting Developments statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable
FAS 154, “Accounting Changes and Error Corrections, a option to carry the vast majority of financial assets and
replacement of APB Opinion No. 20 and FAS 3,” became liabilities at fair value, with changes in fair value recorded
effective for ADB in 2006. This standard applies to volun- in earnings. This statement will be effective for financial
tary changes in accounting principles and new accounting statements to be issued after 31 December 2007.
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account- Statement of Cash Flows
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for For the purposes of the Statement of Cash Flows, the
comparative presentation. Institute considers that its cash and cash equivalents are
In September 2006, FASB issued FAS 157, “Fair Value limited to "DUE FROM BANKS.”
Measurements.” This statement emphasizes the definition
of fair value (FV) for financial reporting purposes to mean NOTE C—INVESTMENTS
a market-based measure and not an entity-specific meas-
ure. It also prescribes methods for measuring FV including The main investment management objective is to maintain
a FV hierarchy that ranks the quality and reliability of security and liquidity. Subject to these parameters, ADB
information used in FV measurements giving the highest administers the Institute’s investments and seeks the high-
priority to quoted prices in active markets and the lowest est possible return on its investments. Investments are gov-
to unobservable inputs. This statement expands disclosure erned by the Investment Authority approved by the Board
requirements to focus on the inputs used to measure FV, of Directors in 1999, and reviewed in 2006. The review
especially those using significant unobservable inputs. This endorsed a portfolio strategy that is largely consistent with
statement will be effective for financial statements to be the 1999 approach. ADB is restricted by its Investment
issued after 31 December 2007. Authority to invest in government and government-related
Also in September 2006, FASB issued FAS 158, “Em- debt instruments and in time deposits.
ployers’ Accounting for Defined Benefit Pension and Other The investment portfolio was composed wholly
Postretirement Plans, an amendment of FASB Statements of investments denominated in Japanese yen as of 31
No. 87, 88, 106, and 132(R).” This statement improves December 2006 and 2005. All such investments are due
financial reporting by requiring an employer to recognize within one year. The total investment income reported
the overfunded or underfunded status of a defined benefit as of 31 December 2006 consisted of interest income
postretirement plan as an asset or liability in its statement earned during the year.
of financial position and to recognize changes in that The annualized rate of return on the average in-
funded status in the year in which the changes occur vestments held during the year including receivable for
through comprehensive income of a business entity. This securities purchased under resale arrangement, based
99
ADBISF-4
on the portfolio held at the beginning and end of each NOTE G—DUE TO AND DUE FROM ADB
month was 0.136% (0.002% – 2005).
As of 31 December 2006, ADBI did not hold any Other Assets include amounts due from ADB of $4,000
investments in an unrealized loss position. as of 31 December 2006 ($4,000 – 2005). Accounts pay-
able and other liabilities include amounts due to ADB of
NOTE D—FAIR VALUE OF FINANCIAL INSTRUMENTS $254,000 and $177,000 at 31 December 2006 and 2005,
respectively.
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current NOTE H—STAFF RETIREMENT PLAN AND
transaction between willing parties, other than in a forced POSTRETIREMENT MEDICAL BENEFITS
or liquidation sale.
The carrying amounts for all significant financial Staff Retirement Plan
instruments in the Institute’s Statement of Financial Posi-
tion are considered to approximate fair values. The Institute participates in the contributory defined benefit
Staff Retirement Plan (the Plan) of ADB. Every employee,
NOTE E—LEASED ASSETS as defined under the Plan, shall, as a condition of service,
become a participant from the first day of service, provided
The Institute leases office space and other assets. The that at such a date, the employee has not reached the
minimum rental payments required under operating leases normal retirement age of 60. Retirement benefits are
that have initial or non-cancelable lease terms in excess of based on length of service and highest average remunera-
one year at 31 December 2006 are as follows: tion during two years of eligible service. The Plan assets
are segregated and are not included in the accompanying
Year ending 31 December Minimum future rentals Balance Sheet. The costs of administering the Plan are
absorbed by ADB, except for fees paid to the investment
2007 $128,000 managers and related charges, including custodian fees,
2008 55,000 which are borne by the Plan.
2009 9,000 Participants hired on or before 30 September 2006
are required to contribute 9 1/3% of their salary to the
On 6 January 2006, the Institute concluded an Plan while those hired after that date do not anymore
agreement regarding the lease of a server, which requires contribute to the plan. Participants may also make additional
ADBI to pay a total amount of $205,000 over the period voluntary contributions. ADBI's contribution is determined
of 60 months for the lease of the server. at a rate sufficient to cover that part of the costs of the
Plan not covered by the participants' contributions.
NOTE F—CONTRIBUTIONS
Expected Contributions
In 2006, the Government of Japan committed its 11 th
contribution to ADBI amounting to ¥1,340,988,000 The expected amount of contributions to the Plan for 2007,
($11,263,000 equivalent), which was transferred to the based on the Institute’s contribution rate for the coming
Fund on 15 January 2007. The amount contributed was year of 16%, and the participants’ mandatory contribution
reported in 31 December 2006 balance sheet as “Due are $115,300 and $67,300, respectively (2005 – $154,000
from Contributors.” and $90,000).
100
ADBISF-4
Investment Strategy derivatives for speculation, leverage or taking risks is

prohibited. Selected derivatives are used for hedging and
Contributions in excess of current benefits payments are transactional efficiency purposes.
invested in international financial markets and in a vari- The Plan’s investment policy is periodically reviewed
ety of investment vehicles. The Plan employs six external and revised to reflect the best interest of the Plan’s par-
asset managers and one global custodian who function ticipants and beneficiaries. The current policy, adopted in
within the guidelines established by the Plan’s Investment January 2003, specifies an asset-mix structure of 70% of
Committee. The investment of these assets, over the long assets in equities and 30% in fixed income securities.
term, is expected to produce higher returns than short- At present, investments of the Plan’s assets are
term investments. The investment policy incorporates the divided into three categories: US equity, Non-US equity,
Plan’s package of desired investment return, and tolerance and US fixed income.
for risk, taking into account the nature and duration of As of 31 December 2006 and 2005, the breakdown
the Plan’s liabilities. The Plan’s assets are diversified among of the fair value of plan assets held is as follows:
different markets and different asset classes. The use of
2006 2005
Amount Percentage Amount Percentage
Equity Securities
US $1,139,000 $ 945,000
Non-US 803,000 602,000
1,942,000 74.0% 1,547,000 71.4%
Fixed income securities 679,000 25.9 599,000 27.7

Other Assets—net 2,000 0.1 19,000 0.9
Total $2,623,000 100.0% $2,165,000 100.0%
All investments, excluding time deposits, are valued Assumptions

using market prices. Time deposits are reported at cost
which is the reasonable estimate of the fair value. Fixed The assumed overall rate of return takes into account long-
income securities include US government and govern- term return expectations of the underlying asset classes
ment guaranteed obligations, corporate bonds and time within the investment portfolio mix, and the expected
deposits. Other assets include forward exchange contracts duration of the Plan’s liabilities. Return expectations are
in various foreign currencies transacted to hedge currency forward looking and, in general, not much weight is given
exposure in the investment portfolio, which are reported to short-term experience. Unless there is a drastic change
at fair value. in investment policy or market environment, the assumed
For the year ended 31 December 2006 the net return investment return of 8% on the Plan’s assets is expected to
on the Plan assets was 12.9% (8% – 2005). ADB expects remain broadly the same, year to year.
the long-term rate of return on the assets to be 8%.
101
ADBISF-4
Postretirement Medical Benefits Plan Generally accepted accounting principles require an

actuarially determined assessment of the periodic cost of
The Institute participates in the cost-sharing plan of ADB postretirement medical benefits.
for retirees’ medical insurance premiums. Under the plan, The following table sets forth the pension and
the Institute is obligated to pay 75% of the Group Medical postretirement benefits at 31 December 2006 and 31
Insurance Plan premiums for retirees and their eligible December 2005:
dependents who elected to participate. The cost-sharing
plan is currently unfunded.

2006 2005 2006 2005

Change in benefit obligation:
Benefit obligation at beginning of year $ 3,378,000 $ 2,971,000 $ 454,000 $ 403,000
Service cost 188,000 260,000 10,000 22,000
Interest cost 202,000 194,000 26,000 25,000
Plan participants’ contributions 78,000 59,000 – –
Amendments – – – (87,000)
Actuarial loss (gain) 484,000 43,000 (246,000) 106,000
Benefits paid (61,000) (149,000) (13,000) (15,000)
Benefit obligation at end of year $ 4,269,000 $ 3,378,000 $ 231,000 $ 454,000
Change in plan assets:

Fair value of plan assets at beginning of year $ 2,165,000 $ 1,959,000 $ – $ –
Actual return on plan assets 290,000 165,000 – –
Employer’s contribution 113,000 131,000 13,000 15,000
Plan participants’ contributions 116,000 59,000 – –
Benefits paid (61,000) (149,000) (13,000) (15,000)
Fair value of plan asets of end of year $ 2,623,000 $ 2,165,000 $ – $ –
Funded Status $(1,646,000) $(1,213,000) $ (231,000) $(454,000)

Unrecognized actuarial loss – (41,000) – (53,000)
Unrecognized prior service cost (credit) – 25,000 – (94,000)
Net amount recognized $(1,646,000) $(1,229,000) $ (231,000) $(601,000)
Amounts recognized in the Balance sheet consist of:

Current liability $ – $ – $ (5,000) $ –
Non–current liability (1,646,000) (1,229,000) (226,000) (601,000)
Net amount recognized $(1,646,000) $(1,229,000) $ (231,000) $(601,000)
Amounts recognized in the Unrestricted net assets

consist of:
Net actuarial loss (gain) $ 282,000 $ – $(298,000) $ –
Prior service cost (credit) 20,000 – (63,000) –
Net amount recognized $ 302,000 $ – $(361,000) $ –
Weighted-average assumptions as of 31 December

Discount rate 6.00% 5.75% 6.00% 5.75%
Expected return on plan assets 8.00% 8.00% N/A N/A
Rate of compensation increase varies
with age and averages 5.00% 4.75% 5.00% 4.75%
102
ADBISF-4
For measurement purposes, a 9.0% annual rate December 2006. The rate was assumed to decrease
of increase in the per capita cost of covered health gradually to 5.0% for 2011 and remain at that level
care benefits was assumed for the valuation as at 31 thereafter.

Postretirement
Pension Benefits Medical Benefits
2006 2005 2006 2005
Components of net periodic benefit cost:

Service cost $188,000 $260,000 $ 10,000 $ 22,000
Interest cost 202,000 194,000 26,000 25,000
Expected return on plan assets (167,000) (154,000) – –
Amortization of prior service cost 5,000 5,000 (31,000) (2,000)
Recognized actuarial loss – – (1,000) (17,000)
Net periodic benefit cost $228,000 $305,000 $ 4,000 $ 28,000
The accumulated benefit obligation of the pension five years. The expected benefit payments are based on the
plan as of 31 December 2006 was $4,041,000 ($3,169,000 same assumptions used to measure the benefit obligation
– 2005). at 31 December 2006:
A one-percentage-point change in assumed health Postretirement
care cost trend rates would have the following effects: Pension Benefits Medical Benefits
2007 $ 325,000 $ 5,000

1-Percentage- 1-Percentage- 2008 89,000 5,000
Point Increase Point Decrease 2009 96,000 6,000
2010 140,000 7,000
Effect on total service and 2011 146,000 7,000
interest cost components $ 8,000 $ (6,000) 2012-2016 1,164,000 44,000
Effect on postretirement
benefit obligation 47,000 (36,000)
Incremental Effects of FAS 158
Estimated Future Benefits Payments
The following table shows the incremental effects
The following table shows the benefit payments expected of the application of FAS 158 on the individual Balance
to be paid in each of the next five years and subsequent Sheet items as of 31 December 2006:
Adjustments
Postretirement
Before FAS 158 Pension Benefits Medical Benefits After FAS 158

Other Assets $ 1,811,000 $ (20,000) $ – $ 1,791,000
Total Assets 20,695,000 (20,000) – 20,675,000
Accounts Payable and Other Liabilities 3,400,000 228,000 (361,000) 3,267,000
Unrestricted Net Assets 17,295,000 (248,000) 361,000 17,408,000
Total Liabilities and Uncommitted Balances 20,695,000 (20,000) – 20,675,000
103
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D

Co. Reg. No.: 52871777D
ments of activities and changes in net assets and cash flows present fairly, in all mate-
rial respects, the financial position of the Asian Development Bank—Asian Tsunami Fund at
cash flows for the year ended 31 December 2006 and for the period from 11 February 2005
(establishment of the Fund) to 31 December 2005, in conformity with accounting principles gen-
erally accepted in the United States of America. These financial statements are the responsibility
of the management of the Asian Development Bank. Our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Singapore
7 March 2007
104
ATF-1
Asian Development Bank—ASIAN TSUNAMI Fund
2006 2005
ASSETS
DUE FROM BANKS (Note B) $ 283 $ 553
INVESTMENTS (Notes B, C, and G)

ACCRUED REVENUE 761 1,936
ADVANCES FOR GRANTS (Note B) 41,900 43,036
TOTAL $517,129 $558,863
PAYABLE TO ORDINARY CAPITAL RESOURCES (Note D) $ 253 $ 102
UNDISBURSED COMMITMENTS (Notes B, E, and G) 497,394 552,417
UNCOMMITTED BALANCES (ATF-2) (Notes B and F)

TOTAL $517,129 $558,863

The accompanying notes are an integral part of these financial statements (ATF-4).
105
ATF-2
For the Year Ended 31 December 2006 and For the Period 11 February to 31 December 2005

2006 2005

CONTRIBUTIONS (Notes B and F) $ – $604,796
REVENUE
From investments (Note C) $25,181 $ 13,782
From other sources 117 25,298 54 13,836
Total 25,298 618,632
EXPENSES
Grants (Note B) 1,000 572,000
Administrative expenses (Note D) 1,141 2,141 392 572,392
CONTRIBUTIONS AND REVENUE IN EXCESS OF EXPENSES 23,157 46,240
TRANSFER TO ORDINARY CAPITAL RESOURCES (Note F) (10,000) (40,000)
EXCHANGE (LOSSES) GAINS (Note B) (19) 104
INCREASE IN NET ASSETS 13,138 6,344
NET ASSETS AT THE BEGINNING OF YEAR 6,344 –
NET ASSETS AT END OF YEAR $19,482 $ 6,344
106
ATF-3
For the Year Ended 31 December 2006 and For the Period 11 February to 31 December 2005
2006 2005
Contributions received $ – $ 604,893
Net cash received from other sources 98 61
Grants disbursed (54,886) (62,619)
Transfer to Ordinary Capital Resources (10,000) (40,000)
Administrative expenses paid (991) (290)

Net (Decrease) Increase in Due from Banks (270) 553
Due from Banks at Beginning of Year 553 –
Due from Banks at End of Year $ 283 $ 553
RECONCILIATION OF INCREASE IN NET ASSETS

Increase in net assets (ATF-2) $ 13,138 $ 6,344

Adjustments to reconcile increase in net assets
Change in accrued revenue 1,176 (1,936)
Change in advances for grants 1,136 (43,036)
Increase in payable to Ordinary Capital Resources 150 102
Change in undisbursed commitments (55,022) 552,417

107
ATF-4
NOTE A—NATURE OF OPERATIONS purposes. This allows transactions denominated in non-

US dollar to be translated to the reporting currency using
The Asian Tsunami Fund (ATF) was established on 11 exchange rates applicable at the time of transactions.
February 2005 in response to the special circumstances Contributions included in the financial statements during
surrounding the developing member countries (DMCs) that the year are recognized at applicable exchange rates as of
were stricken by the effects of the tsunami on 26 December the respective dates of commitment. At the end of each
2004. The purpose of ATF is to provide emergency grant accounting month, translation of assets, liabilities, and
financing promptly and effectively to affected DMCs in the uncommitted balances which are denominated in non-US
form of technical assistance (TAs) and investment projects dollar are adjusted using the applicable rates of exchange
to support reconstruction, rehabilitation, and associated at the end of the reporting period. These translation
development activities following the tsunami disaster. adjustments are accounted for as exchange gains or losses
ATF will serve as a dedicated source of grant financing and are credited or charged to operations.
to support priority rehabilitation and reconstruction needs
on a multi-sector basis. Resources from the Fund will be Investments
available to central governments and other suitable entities
including, non-governmental organizations. All investment securities held by ATF are reported at esti-
ATF’s resources may consist of allocations from the net mated fair value, which represents their fair market value.
income of Ordinary Capital Resources (OCR) and contribu- Realized and unrealized gains and losses are included in
tions from bilateral, multilateral, and individual sources. revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Contributions
Presentation of the Financial Statements The contributions from donors and the allocations from
OCR net income are included in the financial statements,
The financial statements of the ATF are presented on the from the date of effectivity of the contribution agreement,
basis of those for not-for-profit organizations. and the Board of Governors’ approval, respectively.
ATF reports donor’s contributions of cash and other
assets as unrestricted asset as these are made available Grants and Undisbursed Commitments
to ATF without conditions other than for the purposes of
pursuing its objectives. Grants are recognized in the financial statements when
the related project is approved and becomes effective.
Functional and Reporting Currency Upon completion of the project or cancellation of a grant,
any undisbursed amount is written back as a reduction
The financial statements are expressed in thousands of in grants for the year and the corresponding undisbursed
current United States dollars. The United States dollar is commitment is eliminated accordingly.
the functional and reporting currency, representing the
currency of the primary economic operating environment Accounting Estimates
of ATF.
The preparation of financial statements in conformity
Translation of Currencies with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
Effective 1 January 2006, ADB adopted the use of daily tions that affect the reported amounts of assets and
exchange rates for accounting and financial reporting liabilities and uncommitted balances as at the end of the
108
ATF-4
year and the reported amounts of revenue and expenses Reclassification

during the year. The actual results could differ from those
estimates. The amount of $40,000,000 that was returned to OCR
in 2005 was reclassified in ATF–2 and ATF–3 from
Accounting and Reporting Developments “Contributions” and “Contributions received,” respectively,
to “Transfer to OCR” to conform to the current year’s
FAS 154, “Accounting Changes and Error Corrections, a presentation.
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun- NOTE C—INVESTMENTS
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things, The main investment management objective is to maintain
reporting the cumulative effect of adopting new account- security and liquidity. Subject to these parameters, ADB seeks
ing principles as an adjustment to the opening balance the highest possible return on its investments. Investments
of retained earnings and adjusting prior year balances for are governed by the Investment Authority approved by the
comparative presentation. The standard does not apply to Board of Directors in 1999, and reviewed in 2006. The re-
ATF’s financial statements as of 31 December 2006. view endorsed a portfolio strategy that is largely consistent
In September 2006, FASB issued FAS 157, “Fair with the 1999 approach. ATF is restricted by its Investment
Value Measurements,” which emphasizes the definition of Authority to invest in government and government-related
fair value (FV) for financial reporting purposes to mean a debt instruments and in time deposits. In the US dollar
market-based measure and not an entity-specific measure. portfolio only and up to limited amounts, investments may
It also prescribes methods for measuring FV including be made in corporate bonds rated A or better, AAA-rated
a FV hierarchy that ranks the quality and reliability of asset-backed securities, and AAA-rated mortgage-backed
information used in FV measurements giving the highest securities.
priority to quoted prices in active markets and the lowest All investments comprised of holdings in time deposits
to unobservable inputs. This statement expands disclosure denominated in United States dollar as of 31 December
requirements to focus on the inputs used to measure FV, 2006 and 2005. The reported total investment income
especially those using significant unobservable inputs. This consisted of interest income earned during the year.
statement will be effective for financial statements to be The annualized rate of return on the average invest-
issued after 31 December 2007. ments held during the year, based on the portfolio held
In February 2007, FASB issued FAS 159, “Fair value at the beginning and end of each month was 5.01%
Option for Financial Assets and Financial Liabilities.” This (3.46% - 2005).
statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable NOTE D—PAYABLE TO ORDINARY CAPITAL
option to carry the vast majority of financial assets and RESOURCES
liabilities at fair value, with changes in fair value recorded
in earnings. This statement will be effective for financial The OCR and special fund resources are at all times used,
statements to be issued after 31 December 2007. committed, and invested entirely separate from each other.
The administrative and operational expenses pertaining to
Statement of Cash Flows ATF are settled on a regular basis between OCR and ATF.
As of 31 December 2006, $253,000 ($102,000 – 2005)
For the purposes of the Statement of Cash Flows, ATF was payable to OCR.
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."

109
ATF-4
NOTE E—UNDISBURSED COMMITMENTS subsequently transferred to PEF. Another $10,000,000

was returned to OCR in June 2006 to be earmarked for
Undisbursed commitments are denominated in United use to support post-disaster management, rehabilitation,
States dollars and represent grants not yet disbursed. The immediate construction, and urgent vital development
fair value of undisbursed commitments approximates the activities in earthquake-affected regions in Indonesia.
amounts outstanding, because ADB expects that disburse- Uncommitted balances comprised of amounts which
ments will substantially be made for all the projects/pro- have not been committed by ATF as at end of year.
grams covered by the commitments.
NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS
NOTE F—CONTRIBUTIONS AND
UNCOMMITTED BALANCES Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
In April and May 2005, ADB contributed $600,000,000 to transaction between willing parties, other than in a forced
ATF. Contributions were also received from Australia and or liquidation sale.
Luxembourg amounting to $3,796,000 and $1,000,000, See Notes C and E for discussions relating to invest-
respectively. In November 2005, following the establish- ments and undisbursed commitments. In all other cases,
ment of Pakistan Earthquake Fund (PEF) in response to the carrying amounts of the ATF's assets, liabilities, and
the special circumstances surrounding the 8 October uncommitted balances are considered to approximate fair
2005 earthquake in Pakistan, unutilized ATF fund of values for all significant financial instruments.
$40,000,000 was transferred back to OCR, which was
110
PWC Building
Singapore 048424
Telephone (65) 6236 3388
Facsimile (65) 6236 3300
www.pwc.com/sg
GST No: 52-871777-D
Co. Reg. No.: 52871777D
ments of activities and changes in net assets and cash flows present fairly, in all material
respects, the financial position of the Asian Development Bank—Pakistan Earthquake Fund at
cash flows for the year ended 31 December 2006 and for the period from 14 November 2005
(establishment of the Fund) to 31 December 2005, in conformity with accounting principles gen-
erally accepted in the United States of America. These financial statements are the responsibility
of the management of the Asian Development Bank. Our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Singapore
7 March 2007
111
PEF-1
Asian Development Bank—pakistan earthquake Fund
2006 2005
ASSETS
DUE FROM BANKS (Note B) $ 1,618 $ 200
INVESTMENTS (Notes B, C, and F)

Time Deposits 35,280 79,865
ACCRUED REVENUE 65 105
DUE FROM CONTRIBUTORS (Notes B and E) 11,293 5,327
ADVANCES FOR GRANTS (Note B) 290 –
TOTAL $48,546 $85,497
UNDISBURSED COMMITMENTS (Notes B, D, and F) $ 42,500 $ –
UNCOMMITTED BALANCES (PEF-2) (Notes B and E)

TOTAL $48,546 $85,497

The accompanying notes are an integral part of these financial statements (PEF-4).
112
PEF-2
ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
For the Year Ended 31 December 2006 and For the Period 14 November to 31 December 2005
2006 2005
CONTRIBUTIONS (Notes B and E) $ 26,918 $85,379
REVENUE
From investments (Note C) $ 1,484 $ 170
From other sources 87 1,571 – 170
Total 28,489 85,549
EXPENSES
Grants (Note B) 107,500 –
Administrative expenses (Note G) 1,305 108,805 – –
CONTRIBUTIONS AND REVENUE (LESS THAN)

IN EXCESS OF EXPENSES (80,316) 85,549
NET EXCHANGE GAINS (LOSSES) (Note B) 865 (52)
(DECREASE) INCREASE IN NET ASSETS (79,451) 85,497
NET ASSETS AT BEGINNING OF YEAR 85,497 –
NET ASSETS AT END OF YEAR $ 6,046 $85,497

113
PEF-3
Asian Development Bank—pakistan earthquake Fund
For the Year Ended 31 December 2006 and For the Period 14 November to 31 December 2005
2006 2005

Contributions received $ 21,821 $ 80,000
Interest on investments received 1,524 65
Net cash received from other sources 87 –
Grant disbursed (65,290) –
Administrative expenses paid (1,305) –


Maturities of investments 727,110 79,000
Acquisition of investments (682,520) (158,865)


Effect of Exchange Rate Changes on Due from Banks (9) –

Net Increase in Due from Banks 1,418 200

Due from Banks at Beginning of Year 200 –

Due from Banks at End of Year $ 1,618 $ 200
RECONCILIATION OF (DECREASE) INCREASE IN NET ASSETS

(Decrease) increase in net assets (PEF-2) $ (79,451) $ 85,497

Adjustments to reconcile (decrease) increase in net assets
Change in accrued revenue 40 (105)
Increase in due from contributors (5,368) (5,327)
Increase in advances for grants (290) –
Increase in undisbursed commitments 42,500 –
Translation adjustments (594) –

114
PEF-4
Asian Development Bank—PAKISTAN EARTHQUAKE Fund
NOTE A—NATURE OF OPERATIONS Contributions included in the financial statements during

the year are recognized at applicable exchange rates as of
The Pakistan Earthquake Fund (PEF) was established on 14 the respective dates of commitment. At the end of each
November 2005 in response to the special circumstances accounting month, translation of assets, liabilities, and
confronted by Pakistan resulting from the effects of an uncommitted balances which are denominated in non-US
earthquake on 8 October 2005. The objective of the PEF is dollar are adjusted using the applicable rates of exchange
to deliver emergency grant financing promptly and effec- at the end of the reporting period. These translation
tively to Pakistan for technical assistance and investment adjustments are accounted for as exchange gains or losses
projects to support reconstruction, rehabilitation, and and are credited or charged to operations.
associated development activities.
PEF resources will be available to the Government Investments
of Pakistan and other suitable entities acceptable to the
Government of Pakistan and ADB, including, where ap- All investment securities held by PEF are reported at esti-
propriate, non-government organizations. mated fair value, which represents their fair market value.
PEF’s resources may consist of allocations from the net Realized and unrealized gains and losses are included in
income of Ordinary Capital Resources (OCR) and contribu- revenue. Time deposits are reported at cost which is a
tions from bilateral, multilateral, and individual sources. reasonable estimate of fair value.
NOTE B—SUMMARY OF SIGNIFICANT Contributions

ACCOUNTING POLICIES
The contributions from donors and the allocations from
Presentation of the Financial Statements OCR net income are included in the financial statements,
from the date of effectivity of the contribution agreement,
The financial statements of the PEF are presented on the and the Board of Governors’ approval, respectively.
basis of those for not-for-profit organizations.
PEF reports donor’s contributions of cash and other Grants and Undisbursed Commitments
assets as unrestricted asset as these are made available
to PEF without conditions other than for the purposes of Grants are recognized in the financial statements when
pursuing its objectives. the related project is approved and becomes effective.
Upon completion of the project or cancellation of a grant,
Functional and Reporting Currency any undisbursed amount is written back as a reduction
in grants for the year and the corresponding undisbursed
The financial statements are expressed in thousands of cur- commitment is eliminated accordingly.
rent United States dollars. The United States dollar is the
functional and reporting currency, representing the currency Accounting Estimates
of the primary economic operating environment of PEF.
The preparation of financial statements in conformity
Translation of Currencies with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
Effective 1 January 2006, ADB adopted the use of daily tions that affect the reported amounts of assets and
exchange rates for accounting and financial reporting liabilities and uncommitted balances as at the end of the
purposes. This allows transactions denominated in non- year and the reported amounts of revenue and expenses
US dollar to be translated to the reporting currency using during the year. The actual results could differ from those
exchange rates applicable at the time of transactions. estimates.
115
PEF-4
Accounting and Reporting Developments the highest possible return on its investments. Investments
are governed by the Investment Authority approved by the
FAS 154, “Accounting Changes and Error Corrections, a Board of Directors in 1999, and reviewed in 2006. The re-
replacement of APB Opinion No. 20 and FAS 3,” became view endorsed a portfolio strategy that is largely consistent
effective for ADB in 2006. This standard applies to volun- with the 1999 approach. PEF is restricted by its Investment
tary changes in accounting principles and new accounting Authority to invest in government and government-related
pronouncements, which requires, among other things, debt instruments and in time deposits. In the US dollar
reporting the cumulative effect of adopting new account- portfolio only and up to limited amounts, investments may
ing principles as an adjustment to the opening balance be made in corporate bonds rated A or better, AAA-rated
of retained earnings and adjusting prior year balances for asset-backed securities, and AAA-rated mortgage-backed
comparative presentation. The standard does not apply to securities.
PEF’s financial statements as of 31 December 2006. The currency compositions of the investment portfolio
In September 2006, FASB issued FAS 157, “Fair as of 31 December 2006 and 2005 expressed in United
Value Measurements,” which emphasizes the definition of States dollars are as follows:
fair value (FV) for financial reporting purposes to mean a
market-based measure and not an entity-specific measure. Currency 2006 2005
It also prescribes methods for measuring FV including Pakistan rupee $ 3,844,000 $ –
a FV hierarchy that ranks the quality and reliability of United States dollar 31,436,000 79,865,000
information used in FV measurements giving the highest
Total $35,280,000 $79,865,000
priority to quoted prices in active markets and the lowest
to unobservable inputs. This statement expands disclosure
requirements to focus on the inputs used to measure FV, The annualized rate of return on the average invest-
especially those using significant unobservable inputs. This ments held during the year, based on the portfolio held at
statement will be effective for financial statements to be the beginning and end of each month was 5.22% (4.25%
issued after 31 December 2007. – 2005).
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This NOTE D—UNDISBURSED COMMITMENTS
statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable Total undisbursed commitments are denominated in
option to carry the vast majority of financial assets and United States dollars and represent effective grant for
liabilities at fair value, with changes in fair value recorded projects, which have not been disbursed. The fair value
in earnings. This statement will be effective for financial of undisbursed commitments approximates the amounts
statements to be issued after 31 December 2007. outstanding, because ADB expects that disbursements will
substantially be made for all the projects/programs covered
Statement of Cash Flows by the commitments.
For the purposes of the Statement of Cash Flows, PEF NOTE E—CONTRIBUTIONS AND
considers that its cash and cash equivalents are limited to UNCOMMITTED BALANCES
"DUE FROM BANKS."
In November 2005, ADB transferred $80,000,000 from
NOTE C—INVESTMENTS OCR Surplus to the PEF. In addition, Finland committed
contributions equivalent to $5,379,000.
The main investment management objective is to maintain In 2006, Finland made another commitment
security and liquidity. Subject to these parameters, ADB seeks of 5,500,000 ($6,882,000 equivalent), while the Govern-
116
PEF-4
ment of Australia committed A$20,000,000 ($15,036,000 NOTE F—FAIR VALUE OF FINANCIAL INSTRUMENTS
equivalent). During the same year, the Government of Norway
deposited an Instrument of Contribution, which undertakes Fair value of a financial instrument is defined as the amount
to make contributions to the PEF a maximum amount of at which the instrument could be exchanged in a current
$20,000,000, through a debt-for-development swap ar- transaction between willing parties, other than in a forced
rangement with Pakistan. Under this arrangement, Pakistan or liquidation sale.
shall match the value of debt and debt service cancellation See Notes C and D for discussions relating to invest-
with an equivalent amount in Pakistan rupees, which shall be ments and undisbursed commitments. In all other cases,
transferred to the Fund as Norway’s contribution. Based on the carrying amount of PEF’s assets, liabilities and uncom-
the Memorandum of Understanding, Norway’s contribution mitted balances are considered to approximate fair values
shall be limited to the actual amount received by ADB. The for all significant financial instruments.
contribution is expected to be made in four equal install-
ments of $5,000,000 from 30 November 2006 to 31 May NOTE G—FUND ADMINISTRATION
2008. In 2006, ADB received $5,000,000 equivalent from
this arrangement. The Ordinary Capital Resources (OCR) and special fund
Of the total amounts committed, A$9,300,000 resources are at all times used, committed, and invested
($7,333,000 equivalent) and 3,000,000 ($3,960,000 equiva- entirely separate from each other. The Board of Governors
lent) have not yet been received as of 31 December 2006 may approve allocation of the net income of OCR to special
from Australia and Finland, respectively. These are reported funds, based on the funding and operational requirements
in the balance sheet as “Due from Contributors.” of the funds. The administrative and operational expenses
Uncommitted balances comprised of amounts which have pertaining to the PEF are settled on a regular basis between
not been committed by PEF as at end of year. These balances OCR and PEF.
include approved grants that are not yet effective.
117
STATISTICAL
ANNEX
STATISTICAL ANNEXES
Every effort has been made to ensure the

accuracy of the data used in this publication.
However, source and interpretation of the data
may vary among ADB’s publications. ADB,
therefore accepts no responsibility whatsoever
from any consequence of their use.
118
Statistical Annex 1
SOVEREIGN AND NONSOVEREIGN LOAN APPROVALS BY COUNTRY, 2006
($ million)
Total Date
OCR ADF Total Project Costa Approved
SOVEREIGN
Afghanistan
North–South Corridor – 78.20 78.20 140.90 26 Sep
Subtotal – 78.20 78.20 140.90
Bangladesh
Improvement of Capital Market and Insurance Governance – 3.00 3.00 4.00 09 Mar
Second Rural Infrastructure Improvement – 96.10 96.10 260.50 18 Aug
Secondary Towns Water Supply and Sanitation Sector – 41.00 41.00 71.10 16 Oct
Secondary Education Sector Development Program
STATISTICAL ANNEXES
– Project Loan – 85.00 85.00 113.33 26 Oct
– Program Loan – 30.00 30.00 30.00 26 Oct
Subtotal – 255.10 255.10 478.93
Bhutan
Urban Infrastructure Development – 24.60 24.60 30.75 27 Sep
Financial Sector Development Program
– Program Loan – 11.00 11.00 11.00 07 Dec
– Project Loan – 2.00 2.00 2.50 07 Dec
Subtotal – 37.60 37.60 44.25
Cambodia
Second Power Transmission and Distribution – 20.00 20.00 52.36 04 Oct
Greater Mekong Subregion: Rehabilitation of the Railway
in Cambodia – 42.00 42.00 73.00 13 Dec
Subtotal – 62.00 62.00 125.36
China, People’s Republic of

Shandong Hai River Basin Pollution Control 80.00 – 80.00 160.36 21 Jun
Guangxi Nanning Urban Environmental Upgrading 100.00 – 100.00 262.70 26 Jun
Wuhan Wastewater and Stormwater Management 100.00 – 100.00 266.40 26 Jun
Hunan Flood Management Sector 200.00 – 200.00 497.40 29 Jun
Heilongjiang Road Network Development 200.00 – 200.00 524.55 26 Jul
Inner Mongolia Autonomous Region Environment Improvement 120.00 – 120.00 330.40 29 Sep
Taiyuan–Zhongwei Railway 300.00 – 300.00 3,752.90 23 Nov
Southern Gansu Roads Development 300.00 – 300.00 1,660.00 18 Dec
Erlongshan Hydropower (Subproject 1) 22.00 – 22.00 49.09 18 Dec
Nanjing Qinhuai River Environmental Improvement 100.00 – 100.00 236.10 18 Dec
Subtotal 1,522.00 – 1,522.00 7,739.90
India
Rural Roads Sector II Investment Program (Subproject 1) 180.00 – 180.00 236.00 31 Jul
Rural Cooperative Credit Restructuring and Development Program 1,000.00 – 1,000.00 1,000.00 08 Dec
Kolkata Environmental Improvement (Supplementary) 80.00 – 80.00 113.60 14 Dec
Subtotal 1,260.00 – 1,260.00 1,349.60
Indonesia
Infrastructure Reform Sector Development Program (Subprogram I)
– Program Loan 400.00 – 400.00 400.00 21 Nov
– Project Loan – 26.50 26.50 38.76 21 Nov
Sustainable Aquaculture Development for Food Security and
Poverty Reduction – 33.30 33.30 44.52 12 Dec
Madrasah Education Development – 50.00 50.00 71.43 15 Dec
Second Development Policy Support Program (Subprogram I) 200.00 – 200.00 200.00 20 Dec
Subtotal 600.00 109.80 709.80 754.71

a Total project cost includes financing by ADB, governments, beneficiaries, and subborrowers; cofinancing from official, export credit, and commercial sources; equity
sponsors; and local participating private companies and financial institutions.
119
CONTINUED
Total Date
Lao People’s Democratic Republic

Forest Plantations Development – 7.00 7.00 15.35 16 Jan
Rural Finance Sector Development Program
– Program Loan – 7.68 7.68 7.68 17 Aug
– Project Loan – 2.32 2.32 3.36 17 Aug
Northern Region Sustainable Livelihoods through
Livestock Development – 9.30 9.30 18.40 29 Sep
Basic Education Sector Development Program – 8.90 8.90 8.90 20 Dec
Subtotal – 35.20 35.20 53.69
Mongolia
STATISTICAL ANNEXES
Third Education Development – 13.00 13.00 16.38 21 Jun

Urban Development Sector – 28.20 28.20 37.60 19 Dec
Customs Modernization – 5.00 5.00 6.76 20 Dec
Subtotal – 46.20 46.20 60.74
Nepal
Rural Finance Sector Development Cluster Program (Subprogram I) – 56.00 56.00 64.70 26 Oct
Education Sector Program (Subprogram I) – 30.00 30.00 32.00 01 Dec
Subtotal – 86.00 86.00 96.70
Pakistan
Mega City Development – 10.00 10.00 13.33 02 Feb
Rural Enterprise Modernization – 5.00 5.00 6.50 07 Feb
National Highway Development Sector Investment Program
(Subproject 1) 180.00 – 180.00 220.30 15 Feb
Federally Administered Tribal Areas Rural Development – 42.00 42.00 60.40 25 Apr
Private Participation in Infrastructure Program (Subprogram I) 400.00 – 400.00 400.00 31 Oct
Renewable Energy Development Sector Investment Program
(Subproject 1) 105.00 10.00 115.00 145.00 13 Dec
Power Transmission Enhancement Investment Program
(Subproject 1) 226.00 10.00 236.00 294.50 13 Dec
Improving Access to Financial Services (Phase I) Program 300.00 20.00 320.00 320.00 14 Dec
Punjab Irrigated Agriculture Investment Program 217.80 10.00 227.80 281.38 18 Dec
Subtotal 1,428.80 107.00 1,535.80 1,741.41
Papua New Guinea

Road Maintenance and Upgrading (Sector) (Supplementary) 35.00 18.00 53.00 78.07 29 Jun
Subtotal 35.00 18.00 53.00 78.07
Philippines
Financial Market Regulation and Intermediation Program
(Subprogram I) 200.00 – 200.00 200.00 06 Dec
Power Sector Development Program (Subprogram I) 450.00 – 450.00 450.00 08 Dec
Subtotal 650.00 – 650.00 650.00
Sri Lanka
Secondary Towns and Rural Community-Based Water Supply
and Sanitation (Supplementary) 13.50 46.50 60.00 93.20 29 Nov
Subtotal 13.50 46.50 60.00 93.20
Tajikistan
Sustainable Cotton Subsector – 5.50 5.50 15.29 03 Nov
Subtotal – 5.50 5.50 15.29

120
Total Date
Uzbekistan
Land Improvement 32.60 27.60 60.20 76.18 24 Jul
Subtotal 32.60 27.60 60.20 76.18
Viet Nam
Support the Implementation of the Poverty Reduction Program III – 15.00 15.00 15.00 05 Oct
Forests for Livelihood Improvement in the Central Highlands Sector – 45.00 45.00 90.66 26 Oct
Central Region Small and Medium Towns Development – 53.22 53.22 66.72 17 Nov
Emergency Rehabilitation of Calamity Damage – 50.97 50.97 59.89 21 Nov
Agriculture Science and Technology – 30.00 30.00 40.00 11 Dec
Small and Medium Enterprise Development Program (Subprogram II) – 20.00 20.00 20.00 12 Dec
STATISTICAL ANNEXES
Upper Secondary and Professional Teacher Development – 34.00 34.00 43.18 18 Dec
Greater Mekong Subregion Kunming–Hai Phong Transport Corridor:
Yen Vien–Lao Cai Railway Upgrading – 60.00 60.00 160.00 19 Dec
Subtotal – 308.19 308.19 495.45
Regional
Regional Power Transmission Interconnection
– Afghanistan – 35.00 35.00 55.50 19 Dec
– Tajikistan – 21.50 21.50 54.00 19 Dec
Subtotal – 56.50 56.50 109.50
Total Sovereign 5,541.90 1,279.39 6,821.29 14,103.93
NONSOVEREIGN
Afghanistan
Roshan Phase II Expansion 40.00 – 40.00 210.20 29 Jun
Subtotal 40.00 – 40.00 210.20
Azerbaijan
Private Banks and Leasing Companies in Azerbaijan 10.00 – 10.00 15.00 30 Mar
Subtotal 10.00 – 10.00 15.00

Municipal Natural Gas Infrastructure Development 50.00 – 50.00 1,157.00 30 Aug
Subtotal 50.00 – 50.00 1,157.00

India
NTPC Capacity Expansion Financing Facility 75.00 – 75.00 4,000.00 27 Jul
SREI Infrastructure Finance Limited, India 50.00 – 50.00 50.00 27 Jul
Dahej Liquefied Natural Gas Terminal Expansion 150.00 – 150.00 336.04 30 Aug
Subtotal 275.00 – 275.00 4,386.04
Indonesia
South Sumatra to West Java Phase II Gas Pipeline 75.00 – 75.00 652.50 10 Aug
Subtotal 75.00 – 75.00 652.50
Kazakhstan
JSC Alliance Bank 50.00 – 50.00 50.00 15 Jun
Bank TuranAlem JSC 75.00 – 75.00 75.00 15 Jun
Subtotal 125.00 – 125.00 125.00
Total Nonsovereign 575.00 – 575.00 6,545.74
TOTAL 6,116.90 1,279.39 7,396.29 20,649.67
– = nil, ADF = Asian Development Fund, NTPC = National Thermal Power Corporation Limited, OCR = ordinary capital resources.
121
Statistical Annex 2
SPECIAL FUNDS GRANT-FINANCED PROJECTS, 2006
Date
$ Million Approved
ASIAN DEVELOPMENT FUND (ADF IX)

Afghanistan
North–South Corridora 40.00 26 Sep
Private Sector and Financial Market Development Program–Program Granta 56.00 14 Dec
Supporting Private Sector and Financial Market Reforms–Capacity Building Granta 4.00 14 Dec
Subtotal 100.00
Cambodia
Commune Council Development 2 7.80 12 Dec
Subtotal 7.80
STATISTICAL ANNEXES
Forest Plantations Developmenta 3.00 16 Jan

Northern Region Sustainable Livelihoods through Livestock Developmenta 0.70 29 Sep
Basic Education Sector Development Program–Project Granta 12.66 20 Dec
Subtotal 16.36
Nepal
Road Connectivity Sector I 55.20 10 Aug
Rural Finance Sector Development Cluster Programa 8.70 26 Oct
Commercial Agriculture Development 18.00 16 Nov
Education Sector Program I–Capacity Developmenta 2.00 1 Dec
Subtotal 83.90
Papua New Guinea
HIV/AIDS Prevention and Control in Rural Development Enclaves 15.00 25 Apr
Subtotal 15.00
Solomon Islands
Road Improvement (Sector) 0.35 8 Aug
Subtotal 0.35
Tajikistan
Sustainable Cotton Subsectora 6.50 3 Nov
Subtotal 6.50
Viet Nam
HIV/AIDS Prevention among Youth 20.00 30 Jun
Subtotal 20.00
Regional
Prevention and Control of Avian Influenza in Asia and the Pacific 25.00 14 Mar
Subtotal 25.00
Total ADF IX 274.91
ASIAN TSUNAMI FUND (ATF)
Indonesia
Earthquake and Tsunami Emergency Support (Supplementary) 1.00 30 Oct
Total ATF 1.00
PAKISTAN EARTHQUAKE FUND (PEF)
Pakistan
Earthquake Emergency Assistance (Supplementary) 27.50 8 Dec
Total PEF 27.50
TOTAL 303.41
a Grant component of the loan project.
122
Statistical Annex 3
LOAN APPROVALS BY SECTOR: THREE YEAR MOVING AVERAGES, 1968-1970–2004-2006
Law, Water
Health, Economic Transport Supply,
Total Agriculture Nutrition, Management, and Sanitation,
Lending and Natural and Social Industry and Public Commu- and Waste Multi-
($ million) Resources Education Energy Finance Protection and Trade Policy nications Management sector
Average during (percent of total lending)
1968–1970 128.44 18.32 0.78 11.98 14.27 – 24.92 – 24.03 5.32 0.38
1969–1971 199.25 19.16 0.50 25.38 13.45 – 15.89 – 21.68 3.70 0.24
1970–1972 271.92 13.86 0.82 33.06 10.71 – 9.95 – 21.48 9.93 0.18
1971–1973 330.53 12.72 1.02 32.18 11.29 – 7.68 – 23.88 11.23 –

1972–1974 428.42 14.17 0.79 26.71 12.73 – 8.46 – 21.32 13.33 2.49
STATISTICAL ANNEXES
1973–1975 543.15 16.57 1.28 23.03 13.35 – 16.03 – 17.68 9.16 2.89
1974–1976 661.29 17.48 0.73 20.74 14.67 – 14.53 – 16.61 9.06 6.18
1975–1977 774.22 17.85 1.49 21.50 13.09 – 12.17 – 16.97 8.43 8.51
1976–1978 940.36 17.56 2.95 21.11 11.01 1.36 10.16 – 15.98 8.97 10.90
1977–1979 1,098.92 19.65 5.13 22.84 9.54 1.17 9.55 – 12.10 8.71 11.31
1978–1980 1,282.01 22.81 5.56 23.74 7.71 1.41 8.42 – 12.39 8.05 9.93
1979–1981 1,454.96 24.70 5.35 26.21 7.29 1.72 9.21 – 9.41 7.67 8.45
1980–1982 1,598.97 29.52 4.41 27.61 6.04 2.01 7.43 – 11.53 5.87 5.59
1981–1983 1,751.46 31.78 5.19 26.60 6.61 2.91 8.00 – 7.52 6.87 4.52
1982–1984 1,937.03 34.36 5.34 28.98 4.09 1.88 4.05 – 12.12 5.94 3.25
1983–1985 1,978.52 31.63 5.27 24.63 4.48 2.42 3.75 – 12.75 8.36 6.71
1984–1986 2,013.77 32.17 4.95 25.26 3.82 2.02 2.23 – 14.40 6.02 9.11
1985–1987 2,081.84 27.37 3.97 17.47 7.80 2.19 7.53 – 20.54 4.75 8.38
1986–1988 2,512.17 22.78 5.20 18.76 8.07 1.60 12.68 – 23.12 1.47 6.32
1987–1989 3,053.72 19.80 4.97 16.07 12.25 1.91 12.47 – 23.47 3.42 5.65
1988–1990 3,564.93 22.53 6.33 20.48 10.96 1.35 7.57 – 20.68 3.38 6.71
1989–1991 4,115.49 22.51 5.25 25.79 9.43 1.43 6.79 – 17.93 3.09 7.77
1990–1992 4,610.39 18.03 5.00 28.91 7.96 1.14 6.40 – 20.60 2.04 9.91
1991–1993 5,022.89 11.37 5.18 31.01 6.60 1.26 8.48 0.09 23.46 3.07 9.47
1992–1994 4,665.65 9.19 4.90 29.63 6.11 1.56 5.08 0.09 29.31 4.43 9.70
1993–1995 4,791.51 10.83 5.74 31.66 5.61 1.13 3.58 0.09 26.79 6.34 8.22
1994–1996 4,806.49 14.06 5.64 27.54 6.15 1.65 1.52 1.77 25.64 5.63 10.39
1995–1997 6,718.17 10.34 6.71 18.66 30.05 1.70 1.31 1.84 16.33 5.21 7.85
1996–1998 6,883.72 7.34 5.46 11.67 34.77 5.50 1.21 2.02 18.49 3.87 9.67
1997–1999 6,776.72 5.50 4.64 9.76 34.13 6.76 2.00 4.38 16.84 4.92 11.08
1998–2000 5,499.56 7.77 4.01 13.94 12.54 8.09 4.64 5.30 23.49 4.64 15.58
1999–2001 5,284.95 10.68 4.96 15.92 3.60 3.58 5.02 10.96 23.99 4.22 17.07
2000–2002 5,526.40 10.94 5.35 17.02 8.60 1.58 3.83 9.51 27.04 2.98 13.15
2001–2003 5,693.81 9.03 4.10 14.27 7.44 1.35 2.61 10.40 33.23 5.33 12.24
2002–2004 5,593.92 6.53 4.29 14.79 7.63 2.65 3.03 8.65 37.43 4.99 10.01
2003–2005 5,628.15 5.28 2.93 15.03 3.83 2.74 2.30 9.84 37.50 7.49 13.05
2004–2006 6,065.31 7.18 3.23 17.32 12.01 1.82 1.01 8.70 28.51 7.07 13.16
Cumulativea $ Million
(1968-2006) 123,200.53 16,480.53 5,748.83 24,711.35 15,539.20 3,031.57 5,517.54 4,616.94 28,455.68 6,501.90 12,596.98
– = nil.
123
Statistical Annex 4
LOAN APPROVALS BY SECTOR, 2006
$ Million
OCR ADF Total
AGRICULTURE AND NATURAL RESOURCES

BAN Second Rural Infrastructure Improvement – 96.10 96.10
INO Sustainable Aquaculture Development for Food Security and Poverty Reduction – 33.30 33.30
LAO Forest Plantations Development – 7.00 7.00
LAO Northern Region Sustainable Livelihoods through Livestock Development – 9.30 9.30
PAK Federally Administered Tribal Areas Rural Development – 42.00 42.00
PAK Punjab Irrigated Agriculture Investment Program 217.80 10.00 227.80
PRC Hunan Flood Management Sector 200.00 – 200.00
TAJ Sustainable Cotton Subsector – 5.50 5.50
UZB Land Improvement 32.60 27.60 60.20
STATISTICAL ANNEXES
VIE Forests for Livelihood Improvement in the Central Highlands Sector – 45.00 45.00
VIE Emergency Rehabilitation of Calamity Damage – 50.97 50.97
VIE Agriculture Science and Technology – 30.00 30.00
Subtotal 450.40 356.77 807.17
EDUCATION
BAN Secondary Education Sector Development Program
– Project Loan – 85.00 85.00
– Program Loan – 30.00 30.00
INO Madrasah Education Development – 50.00 50.00
LAO Basic Education Sector Development Program – 8.90 8.90
MON Third Education Development – 13.00 13.00
NEP Education Sector Program (Subprogram I) – 30.00 30.00
VIE Upper Secondary and Professional Teacher Development – 34.00 34.00
Subtotal – 250.90 250.90
ENERGY
CAM Second Power Transmission and Distribution – 20.00 20.00
IND NTPC Capacity Expansion Financing Facilitya 75.00 – 75.00
IND Dahej Liquefied Natural Gas Terminal Expansiona 150.00 – 150.00
INO South Sumatra to West Java Phase II Gas Pipelinea 75.00 – 75.00
PAK Renewable Energy Development Sector Investment Program (Subproject 1) 105.00 10.00 115.00
PAK Power Transmission Enhancement Investment Program (Subproject 1) 226.00 10.00 236.00
PHI Power Sector Development Program (Subprogram I) 450.00 – 450.00
PRC Municipal Natural Gas Infrastructure Developmenta 50.00 – 50.00
PRC Inner Mongolia Autonomous Region Environment Improvement 120.00 – 120.00
PRC Erlongshan Hydropower (Subproject 1) 22.00 – 22.00
REG Regional Power Transmission Interconnection
– Afghanistan – 35.00 35.00
– Tajikistan – 21.50 21.50
Subtotal 1,273.00 96.50 1,369.50
FINANCE
AZE Private Banks and Leasing Companies in Azerbaijana 10.00 – 10.00
BAN Improvement of Capital Market and Insurance Governance – 3.00 3.00
BHU Financial Sector Development Program
– Program Loan – 11.00 11.00
– Project Loan – 2.00 2.00
IND SREI Infrastructure Finance Limited, Indiaa 50.00 – 50.00
IND Rural Cooperative Credit Restructuring and Development Program 1,000.00 – 1,000.00
KAZ JSC Alliance Banka 50.00 – 50.00
KAZ Bank TuranAlem JSCa 75.00 – 75.00
LAO Rural Finance Sector Development Program
– Program Loan – 7.68 7.68
– Project Loan – 2.32 2.32
– = nil, ADF = Asian Development Fund, AZE = Azerbaijan, BAN = Bangladesh, BHU = Bhutan, CAM = Cambodia, IND = India, INO = Indonesia,
KAZ = Kazakhstan, LAO = Lao People’s Democratic Republic, MON = Mongolia, NEP = Nepal, NTPC = National Thermal Power Corporation Limited, OCR = ordinary capital resources,
PAK = Pakistan, PHI = Philippines, PRC = People’s Republic of China, REG = regional, TAJ = Tajikistan, UZB = Uzbekistan, VIE = Viet Nam.
a Nonsovereign loan.
124
CONTINUED
$ Million
OCR ADF Total
NEP Rural Finance Sector Development Cluster Program (Subprogram I) – 56.00 56.00
PAK Improving Access to Financial Services (Phase I) Program 300.00 20.00 320.00
PHI Financial Market Regulation and Intermediation Program (Subprogram I) 200.00 – 200.00
Subtotal 1,685.00 102.00 1,787.00
INDUSTRY AND TRADE

MON Customs Modernization – 5.00 5.00
PAK Rural Enterprise Modernization – 5.00 5.00
Subtotal – 10.00 10.00
STATISTICAL ANNEXES
LAW, ECONOMIC MANAGEMENT, AND PUBLIC POLICY
INO Second Development Policy Support Program (Subprogram I) 200.00 – 200.00
VIE Small and Medium Enterprise Development Program (Subprogram II) – 20.00 20.00
Subtotal 200.00 20.00 220.00
TRANSPORT AND COMMUNICATIONS

AFG Roshan Phase II Expansiona 40.00 – 40.00
AFG North–South Corridor – 78.20 78.20
CAM Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia – 42.00 42.00
IND Rural Roads Sector II Investment Program (Subproject 1) 180.00 – 180.00
PAK National Highway Development Sector Investment Program (Subproject 1) 180.00 – 180.00
PNG Road Maintenance and Upgrading (Sector) Project (Supplementary) 35.00 18.00 53.00
PRC Heilongjiang Road Network Development 200.00 – 200.00
PRC Taiyuan–Zhongwei Railway 300.00 – 300.00
PRC Southern Gansu Roads Development 300.00 – 300.00
VIE Greater Mekong Subregion Kunming–Hai Phong Transport Corridor:
Yen Vien–Lao Cai Railway Upgrading – 60.00 60.00
Subtotal 1,235.00 198.20 1,433.20
WATER SUPPLY, SANITATION, AND WASTE MANAGEMENT

BAN Secondary Towns Water Supply and Sanitation Sector – 41.00 41.00
BHU Urban Infrastructure Development – 24.60 24.60
IND Kolkata Environmental Improvement (Supplementary) 80.00 – 80.00
PRC Shandong Hai River Basin Pollution Control 80.00 – 80.00
PRC Guangxi Nanning Urban Environmental Upgrading 100.00 – 100.00
PRC Wuhan Wastewater and Stormwater Management 100.00 – 100.00
PRC Nanjing Qinhuai River Environmental Improvement 100.00 – 100.00
SRI Secondary Towns and Rural Community-Based Water Supply and Sanitation (Supplementary) 13.50 46.50 60.00
VIE Central Region Small and Medium Towns Development – 53.22 53.22
Subtotal 473.50 165.32 638.82
MULTISECTOR
INO Infrastructure Reform Sector Development Program (Subprogram 1)
– Program Loan 400.00 – 400.00
– Project Loan – 26.50 26.50
MON Urban Development Sector – 28.20 28.20
PAK Mega City Development – 10.00 10.00
PAK Private Participation in Infrastructure Program (Subprogram I) 400.00 – 400.00
VIE Support the Implementation of the Poverty Reduction Program III – 15.00 15.00
Subtotal 800.00 79.70 879.70
TOTAL 6,116.90 1,279.39 7,396.29
– = nil, ADF = Asian Development Fund, AFG = Afghanistan, BAN = Bangladesh, BHU = Bhutan, CAM = Cambodia, IND = India, INO = Indonesia, MON =
Mongolia, NEP = Nepal, OCR = ordinary capital resources, PAK = Pakistan, PHI = Philippines, PNG = Papua New Guinea, PRC = People’s Republic of China, SRI =
Sri Lanka, VIE = Viet Nam.
a Nonsovereign loans.
125
Statistical Annex 5
SECTORAL DISTRIBUTION OF LOANS,a 2006, 1967–2006
2006 Loans
OCR ADF Total Cumulative as of 2006
No. of No. of No. of No. of
Sector Loans $ Million Loans $ Million Projectsb $ Million Projectsb $ Million %
Agriculture and Natural Resources 3 450.40 11 356.77 12 807.17 443 16,480.53 13.38
Education – – 7 250.90 6 250.90 138 5,748.83 4.67
Energy 9 1,273.00 5 96.50 11 1,369.50 297 24,711.35 20.06
Finance 7 1,685.00 7 102.00 10 1,787.00 164 15,539.20 12.61
Health, Nutrition, and
Social Protection – – – – – – 58 3,031.57 2.46
Industry and Trade – – 2 10.00 2 10.00 149 5,517.54 4.48
Law, Economic Management, and
STATISTICAL ANNEXES
Public Policy 1 200.00 1 20.00 2 220.00 44 4,616.94 3.75

Transport and Communications 7 1,235.00 4 198.20 10 1,433.20 344 28,455.68 23.10
Water Supply, Sanitation, and
Waste Management 6 473.50 4 165.32 9 638.82 146 6,501.90 5.28
Multisector 2 800.00 4 79.70 5 879.70 219 12,596.98 10.22
Totalc 35 6,116.90 45 1,279.39 67 7,396.29 2,002 123,200.53 100.00

– = nil.
ADF = Asian Development Fund, OCR = ordinary capital resources.
SECTORAL DISTRIBUTION OF GRANTS, 2006, 1967–2006 (cont’d.)

2006 Grants
ADF IX ATF/PEF Other Sources Total Cumulative as of 2006
No. of No. of No. of No. of No. of
Sector Grants $ Million Grants $ Million Grants $ Million Projectsd $ Million Projectsd $ Million %
Agriculture and Natural Resources 4 28.20 – – 7 105.40 10 133.60 45 357.17 13.73
Education 2 14.66 – – 4 32.00 6 46.66 21 543.10 20.87
Energy – – – – 2 3.00 2 3.00 8 43.50 1.67
Finance 3 68.70 – – 3 3.35 4 72.05 11 83.81 3.22
Social Protection 3 60.00 – – 5 11.99 6 71.99 32 215.31 8.27
Industry and Trade – – – – 1 0.50 1 0.50 4 3.50 0.13
Law, Economic Management, and
Public Policy 1 7.80 – – 1 0.50 2 8.30 9 87.46 3.36
Transport and Communications 3 95.55 – – 3 35.85 3 131.40 14 216.86 8.33
Waste Management – – – – 1 1.00 1 1.00 9 37.14 1.43
Multisector – – 2 28.50 7 41.40 8 69.90 34 1,014.09 38.97
Totalc 16 274.91 2 28.50 34 234.99 43 538.40 187 2,601.94 100.00

– = nil.
ADF = Asian Development Fund, ATF = Asian Tsunami Fund, PEF = Pakistan Earthquake Fund.
a Includes nonsovereign loans.
b A project with multiple loans is counted as one project.
c Totals may not add up because of rounding.
d A project with multiple grants is counted as one project.
126
Statistical Annex 6
LOAN AND ADF GRANT APPROVALS, BY COUNTRY AND SOURCE OF FUNDS, 2006
ADF
OCR
Loan Loan Grant Total %
Sovereign
Afghanistan – 78.20 100.00 178.20 2.32
Bangladesh – 255.10 – 255.10 3.33
Bhutan – 37.60 – 37.60 0.49
Cambodia – 62.00 7.80 69.80 0.91
China, People’s Republic of 1,522.00 – – 1,522.00 19.84
India 1,260.00 – – 1,260.00 16.43
Indonesia 600.00 109.80 – 709.80 9.25
STATISTICAL ANNEXES
Lao People’s Democratic Republic – 35.20 16.36 51.56 0.67
Mongolia – 46.20 – 46.20 0.60
Nepal – 86.00 83.90 169.90 2.21
Pakistan 1,428.80 107.00 – 1,535.80 20.02
Papua New Guinea 35.00 18.00 15.00 68.00 0.89
Philippines 650.00 – – 650.00 8.47
Solomon Islands – – 0.35 0.35 0.005
Sri Lanka 13.50 46.50 – 60.00 0.78
Tajikistan – 5.50 6.50 12.00 0.16
Uzbekistan 32.60 27.60 – 60.20 0.78
Viet Nam – 308.19 20.00 328.19 4.28
Regional – 56.50 25.00 81.50 1.06
Subtotal 5,541.90 1,279.39 274.91 7,096.20 92.50
Nonsovereign
Afghanistan 40.00 – – 40.00 0.52
Azerbaijan 10.00 – – 10.00 0.13
China, People’s Republic of 50.00 – – 50.00 0.65
India 275.00 – – 275.00 3.58
Indonesia 75.00 – – 75.00 0.98
Kazakhstan 125.00 – – 125.00 1.63
Subtotal 575.00 – – 575.00 7.50
TOTALa 6,116.90 1,279.39 274.91 7,671.20 100.00

– = nil, ADF = Asian Development Fund, OCR - ordinary capital resources.
127
Statistical Annex 7
PROJECTS INVOLVING COFINANCING, 2006a
($ million)
Cofinancing
Official Com- Source of Cofinancing
ADB Grants Loans mercialb
CENTRAL AND WEST ASIA 113.79 13.20 39.00 186.55
DVA cofinancing 13.20 12.50 145.00
Non-DVA cofinancing – 26.50 41.55
Afghanistan
Western Basins Water Resources Managementc 61.80d 13.20e Canadian International Development Agency (CIDA)
Roshan Phase II Expansionf 40.00 30.00e Commercial lenders under ADB “B” loan
15.00e Commercial lenders with ADB political risk guarantee
10.00 German Investment and Development (DEG), Germany
20.00 Netherlands Development Finance Company (FMO)
STATISTICAL ANNEXES
10.00 Societe de Promotion et Participation pour la

Coopération Économique (PROPARCO), France
Kazakhstan
Guarantee for the Diversified Payment Rights
Securitization by Alliance Bank JSCf – 100.00e Commercial lenders with ADB partial credit guarantee
Kyrgyz Republic
Southern Transport Corridor Road Rehabilitationc 4.00e China Development Bank (CDB), People’s Republic of
China (PRC)
Tajikistan
Sustainable Cotton Subsector 11.99 1.55 Private sector
Regional
Regional Power Transmission Interconnection
(Afghanistan and Tajikistan) 16.50 Afghanistan Reconstruction Trust Fund (ARTF)
10.00 Islamic Development Bank (IsDB)
8.50e OPEC Fund for International Development (OFID)
EAST ASIA 1,300.00 1.94 4,027.67

DVA cofinancing 0.50 75.00
Non-DVA cofinancing 1.44 3,952.67

Guangxi Nanning Urban Environmental Upgrading 100.00 11.10 Domestic banks
Heilongjiang Road Network Development 200.00 148.80 CDB, PRC
Inner Mongolia Autonomous Region
Environment Improvement 120.00 34.97 Domestic banks
Nanjing Qinhuai River Environmental Improvement 100.00 54.90 CDB, PRC
Southern Gansu Roads Development 300.00 712.60 CDB, PRC
Taiyuan–Zhongwei Railway 300.00 532.20 China Construction Bank
1,606.30 CDB, PRC
Wuhan Wastewater and Stormwater Management 100.00 94.14 Domestic banks
Municipal Natural Gas Infrastructure Developmentf 75.00 75.00e Commercial lenders under ADB “B” loan
668.00 Domestic banks
89.00 International banks
Mongolia
Customs Modernization 5.00 0.50e e-Asia and Knowledge Partnership Fund
Urban Development Sector 1.20 German Development Service, Germany
0.66 Domestic banks, Mongolia
0.24 Gessellschaft für Technische Zusammenarbeit (GTZ),
Germany

a List excludes technical assistance projects.
b Comprising debt cofinancing (e.g., syndicated loans, bonds, and floating rate notes) from commercial/market sources and guarantees.
c Anchor loan was approved in prior years with cofinancing arranged this year.
d Funding includes a loan from the Asian Development Fund loan and a grant package.
e These are non-ADB funds generated by ADB’s financing partnership operations for ADB projects including loans, credit enhancements, grants, and/or technical
assistance fully or partially administered by ADB, and/or cofinancing arranged this year.
f Nonsovereign private sector loan.
128
CONTINUED
Cofinancing
Amount Grants Loans merciala
PACIFIC 375.00 31.35 – –

DVA cofinancing 31.35 – –
Non-DVA cofinancing – – –
Papua New Guinea

HIV/AIDS Prevention and Control in Rural
Development Enclaves 15.00 3.50c Australian Agency for International Development
(AusAID), Australia
3.50c New Zealand Agency for International Development
(NZAID), New Zealand
Solomon Islands
STATISTICAL ANNEXES
Post-Conflict Emergency Rehabilitation
(Supplementary)b 10.00 2.00c AusAID
6.50c NZAID
Road Improvement (Sector) 350.00 6.10c AusAID
9.75c NZAID
SOUTH ASIA 1,482.30 103.44 170.80 424.00

Non–DVA cofinancing 29.40 – 124.00
Bangladesh
Second Rural Infrastructure Improvement 96.10 56.70c Department for International Development (DFID),
United Kingdom
4.20 DFID
3.60 GTZ
21.60 Kreditanstalt für Wiederaufbau (KfW), Germany
Secondary Towns Water Supply and Sanitation Sector 41.00 9.00c OFID
India
Rural Cooperative Credit Restructuring and
Development Program 1,000.00 151.80c KfW
Dahej Liquefied Natural Gas Terminal
Expansion Financingd 150.00 124.00 Indian commercial banks
75.00c KfW
NTPC Capacity Expansion Financing Facilitye 75.00 225.00c Commercial lenders under ADB “B” loan
Nepal
Road Connectivity Sector 55.20 10.00c OFID
Sri Lanka
Conflict-Affected Areas 50.00 8.60c Norway
Rehabilitationb
Tsunami-Affected Areas Rebuilding 15.00 8.74c The Netherlands
Projectb
SOUTHEAST ASIA 787.18 128.11 622.37 134.80

Non–DVA cofinancing 81.05 236.50 –
Cambodia
GMS: Rehabilitation of the Railway in Cambodia 42.00 13.00c OFID
2.80 Malaysia
Second Power Transmission and Distribution 20.00 22.30c Japan Bank for International Cooperation (JBIC) official
development assistance (ODA)
– = nil.
DVA = direct value added, GMS = Greater Mekong Subregion, NTPC = National Thermal Power Corporation Limited.
a Comprising debt cofinancing (e.g., syndicated loans, bonds, and floating rate notes) from commercial/market sources and guarantee.
b Anchor loan was approved in prior years with cofinancing arranged this year.
c These are non-ADB funds generated by ADB’s financing partnership operations for ADB projects including loans, credit enhancement, grants, and/or technical
d Net ADB amount is $75 million as KfW will risk-participate in $75 million out of the total approved loan of $150 million.
e Nonsovereign public sector loan.
129
CONTINUED
Cofinancing
Amount Grants Loans merciala
Indonesia
Decentralized Basic Educationb 13.51 28.00d The Netherlands
Infrastructure Project Development Facility 26.50 7.56d The Netherlands
Acquisition and Securitization of Motor Loan
Portfolios by Deutsche Bank AGf 0.20 9.80c Commercial lenders with ADB partial credit guarantee
South Sumatra to West Java Phase II Gas Pipelinec 75.00 125.00c Commercial lenders under ADB “B” loan
75.00 IsDB
Forest Plantations Development 10.00 0.65 Malaysia
Northern Region Sustainable Livelihoods through
c
Livestock Development 9.97 3.00 International Fund for Agricultural Development
STATISTICAL ANNEXES
3.50c Swiss Agency for Development and Cooperation

Philippines
Power Sector Development Program (Subprogram 1) 450.00 300.00c JBIC (non-ODA)
Viet Nam
Forests for Livelihood Improvement in the Central
Highlands Sector 45.00 8.00c Trust Fund for Forests (Finland, the Netherlands, Sweden,
and Switzerland)
Small and Medium Enterprise Development Program –
Subprogram II 20.00 16.40 Agence Française de Développement (AFD), France
7.57c KfW
Support to Implementation of Poverty Reduction
Program III 15.00 7.40 AusAID
3.60 Canadian International Development Agency
10.40 Danish International Development Agency
37.00 DFID
11.60 European Commission
100.00 International Development Agency
3.80 Ireland
7.60 KfW
3.80 Spain
GMS: Kunming–Haiphong Transport Corridor:
Yen Vien–Lao Cai Railway Upgrading 60.00 40.00c AFD
37.50 Treasury and Economic Policy General Directorate of
the French Ministry of Finance, France
Total DVA cofinancing 166.15 569.17 654.80
Total Non-DVA cofinancing 111.89 263.00 4,118.21
DVA = direct value added, GMS = Greater Mekong Subregion, NTPC = National Thermal Power Corporation Limited.
a Comprising debt cofinancing (e.g., syndicated loans, bonds, and floating rate notes) from commercial/market sources and guarantee.
b Anchor loan was approved in prior years with cofinancing arranged this year.
c These are non-ADB funds generated by ADB’s financing partnership operations for ADB projects including loans, credit enhancement, grants, and/or technical
d Net ADB amount is $75 million as KfW will risk participate in $75 million out of the total approved loan of $150 million.
e Nonsovereign public sector loan.
f Nonsovereign private sector loan.
130
Statistical Annex 8
LOAN DISBURSEMENTS, 2005 and 2006
(amounts in $ thousand)
2005
% of % of % of
Total Total Total
OCR OCR ADF ADF Total Disbursements
a
Project
Nondevelopment Finance Institution 1,416,233 40 761,893 61 2,178,126 46
Development Finance Institution 66,515 2 – – 66,515 1
Total Project Loans 1,482,748 42 761,893 61 2,244,641 47

b
Program 1,500,094 43 308,580 25 1,808,674 38
Sectorc 311,096 9 176,332 14 487,428 10
STATISTICAL ANNEXES
Private Sectord 204,449 6 – – 204,449 4
TOTALe 3,498,387 100 1,246,805 100 4,745,192 100
2006
% Change
% of % of % of
(2006/2005)
Total Total Total
OCR OCR ADF ADF Total Disbursements OCR ADF Total
Projecta
Nondevelopment Finance Institution 1,579,908 36 863,541 65 2,443,449 42 12 13 12

Development Finance Institution 42,757 1 – – 42,757 1 (36) – (36)
Total Project Loans 1,622,665 37 863,541 65 2,486,206 43 9 13 11

b
Program 1,892,832 43 292,995 22 2,185,827 38 26 (5) 21
Sectorc 545,873 12 181,835 14 727,708 13 75 3 49
Private Sectord 358,771 8 – – 358,771 6 75 – 75
TOTAL 4,420,141 100 1,338,371 100 5,758,512 100 26 7 21
– = nil, ( ) negative, ADF = Asian Development Fund, OCR = ordinary capital resources.
a A project loan is a loan provided to finance specific projects. ADB uses development finance institutions in its developing member countries (DMCs) as vehicles to
finance small and medium-sized projects in the private sector.
b A program loan is a loan provided to support DMCs’ efforts to improve the policy, institutional, and investment environment of sector development. It helps meet
short-term costs that policy adjustments entail.
c A sector loan is a loan provided to develop a specific sector or subsector. It finances a large number of subprojects in a single sector or subsector.
d Excludes equity investments.
e Totals may not add up because of rounding.
131
Statistical Annex 9a
PROGRAM LOAN DISBURSEMENTS, 2006
($ million)
Country OCR ADF Total
Afghanistan – 26.27 26.27

Bangladesh – 30.78 30.78
Cambodia – 15.60 15.60
India 18.00 – 18.00
Indonesia 600.00 – 600.00
Kyrgyz Republic – 8.00 8.00
Lao People’s Democratic Republic – 5.80 5.80
Mongolia – 5.15 5.15
Nepal – 50.78 50.78
Pakistan 489.83 81.69 571.52
STATISTICAL ANNEXES
Philippines 750.00 – 750.00

Sri Lanka 35.00 – 35.00
Tajikistan – 1.86 1.86
Viet Nam – 67.07 67.07
TOTAL 1,892.83 293.00 2,185.83
Statistical Annex 9b
TRENDS IN PROGRAM LENDING, 1997–2006
Program Loans and ADF Granta Project Loans and ADF Grants Total
Year $ Million % $ Million % $ Million
1997 4,877.00 51.81 4,537.04 48.19 9,414.04

1998 2,627.50 43.92 3,355.04 56.08 5,982.54
1999 1,694.00 34.34 3,239.57 65.66 4,933.57
2000 1,102.00 19.74 4,480.59 80.26 5,582.59
2001 1,583.00 29.65 3,755.69 70.35 5,338.69
2002 1,702.18 30.08 3,955.75 69.92 5,657.93
2003 1,139.50 18.73 4,945.31 81.27 6,084.81
2004 1,121.40 22.25 3,917.64 77.75 5,039.04
2005 1,143.50 19.04 4,863.75 80.96 6,007.25
2006a 3,204.58 41.77 4,466.62 58.23 7,671.20
ADF = Asian Development Fund.
a A program grant was approved in 2006 for Afghanistan (Private Sector and Financial Market Development Program).
132
Statistical Annex 10
NONSOVEREIGN APPROVALS AND TOTAL PROJECT COSTS BY COUNTRY, 2006
($ million)
Complementary
Loan/Political
Equity Total Risk Guarantee Partial Political Swap Total Total
Invest- ADB Coguarantor Credit Risk with ADB Project
Project Loan ment Funds Program Guarantee Guarantee DMCs Approvals Cost
Afghanistan
Roshan Phase II Expansion 40.00 – 40.00 30.00 – 15.00 – 85.00 210.20
Azerbaijan
Bank and Leasing Support Package 10.00 5.00 15.00 – – – – 15.00 15.00

Hangzhou City Commercial Bank – 30.00 30.00 – – – – 30.00 30.00
STATISTICAL ANNEXES
Municipal Natural Gas Development 50.00 25.00 75.00 75.00 – – – 150.00 1,157.00
India
Equity Investment – Urban Clean Fuels – 2.60 2.60 – – – – 2.60 71.10
IDFC Private Equity Fund II – 45.00 45.00 – – – – 45.00 300.000
Blue River Capital – 25.00 25.00 – – – – 25.00 100.00
Loans to SREI International
Finance Ltd. 50.00 – 50.00 – – – – 50.00 50.00
NTPC Capacity Expansion 75.00 – 75.00 225.00 – – – 300.00 4,000.00
Dahej LNG Terminal Expansion 150.00 – 150.00 – – – – 150.00 336.04
Indonesia
Motor Loan Portfolio by
Deutsche Bank – 0.20 0.20 – 9.800 – – 10.00 64.00
SSWJ Phase 2 Gas Pipeline 75.00 – 75.00 125.00 – – – 200.00 652.50
Kazakhstan
Private Banks in Kazakhstan 125.00 – 125.00 – – – – 125.00 125.00
Guarantee for DPR Securitization
by ALB – – – – 100.000 – – 100.00 200.00
Regional
ADM Maculus Fund II – 25.20 25.20 – – – – 25.20 330.00
AIF Capital Asia III – 30.00 30.00 – – – – 30.00 300.00
Mekong Enterprise Fund II – 10.00 10.00 – – – – 10.00 50.00
East West Capital Partners – Asia
Healthcare Fund – 20.00 20.00 – – – – 20.00 200.00
Aureos South Asia Fund – 17.50 17.50 – – – – 17.50 70.00
Kula Fund II – 5.00 5.00 – – – – 5.00 5.00
Darby Asia Mezzanine Fund II – 20.00 20.00 – – – – 20.00 300.00
TOTAL 575.00 260.50 835.50 455.00 109.80 15.00 – 1,415.30 8,585.84
– = nil, DMC = developing member country.
NONSOVEREIGN APPROVALS AND TOTAL PROJECT COSTS BY SECTOR, 2006
($ million)
Complementary
Loan/Political
Total Risk Guarantee Partial Pollitical Swap Total Total
Equity ADB Coguarantor Credit Risk with ADB Project
Sector Loan Investment Funds Program Guarantee Guarantee DMCs Approvals Cost
Infrastructure 390.00 27.60 417.60 455.00 – 15.00 – 887.60 6,426.84

Investment Funds and
Financial Institutions 185.00 232.90 417.90 – 109.80 – – 527.70 2,159.00
Others – – – – – – – – –
TOTAL 575.00 260.50 835.50 455.00 109.80 15.00 – 1,415.30 8,585.84
– = nil.
DMC = developing member country.
133
NONSOVEREIGN LOAN AND EQUITY INVESTMENT APPROVALS BY YEAR, 1983–2006
Complementary
Loan/Political
Total Risk Guarantee Partial Political Swap Total Total
No. of Equity ADB Coguarantor Credit Risk with ADB Project
Year Projectsa Loan Investmentb Funds Program Guarantee Guarantee DMCs Approvalsa Cost
1983 2 – 2.96 2.96 – – – – 2.96 36.00

1984 1 – 0.42 0.42 – – – – 0.42 2.80
1985 5 – 3.40 3.40 – – – – 3.40 39.68
1986 5 6.46 6.01 12.47 – – – – 12.47 42.72
1987 8 20.50 27.61 48.11 5.00 – – – 53.11 524.34
1988 12 58.00 35.67 93.67 – – – – 93.67 524.24
STATISTICAL ANNEXES
1989 16 95.70 67.59 163.29 51.10 – – – 214.39 1,178.55

1990 17 78.85 35.94 114.79 24.00 – – – 138.79 2,051.63
1991 10 156.80 20.52 177.32 – – – – 177.32 1,330.07
1992 4 50.00 5.42 55.42 81.50 – – – 136.92 409.39
1993 9 182.10 20.70 202.80 19.30 – – – 222.10 1,513.70
1994 9 – 48.70 48.70 – – – – 48.70 919.20
1995 8 68.00 99.41 167.41 5.83 – – – 173.24 1,050.32
1996 8 98.50 80.15 178.65 91.50 – – – 270.15 1,788.77
1997 5 45.00 49.50 94.50 – 50.00 – – 144.50 1,239.69
1998 6 136.12 39.44 175.56 151.08 65.00 – – 391.64 1,152.70
1999 3 101.50 7.40 108.90 61.50 – – – 170.40 847.70
2000 11 152.00 77.65 229.65 45.00 – 101.00 – 375.65 1,629.84
2001 6 37.50 30.36 67.86 – – – – 67.86 648.00
2002 7 110.00 35.53 145.53 – – 60.00 – 205.53 1,176.60
2003 7 167.00 35.65 202.65 170.00 170.00 – – 542.65 2,300.00
2004 14 92.50 164.40 256.90 – – 10.00 – 266.90 2,227.70
2005 14 513.02 196.50 709.52 – 18.40 50.00 – 777.92 8,776.42
2006 21 575.00 260.50 835.50 455.00 109.80 15.00 – 1,415.30 8,585.84
TOTAL 208 2,744.55 1,351.43 4,095.98 1,160.81 413.20 236.00 – 5,905.99 39,995.90
– = nil, DMC = developing member country.

a Net of full cancellations prior to effectivity.
b Also includes lines of equity and equity underwriting.
134
NONSOVEREIGN LOAN AND EQUITY INVESTMENT APPROVALS BY COUNTRY, 1983–2006
Complementary
Loan/Political
Equity Total Risk Guarantee Partial Political Swap Total Total
No. of Invest- ADB Coguarantor Credit Risk with ADB Project
Country Projectsa Loan mentb Funds Program Guarantee Guarantee DMCs Approvalsa Cost
Afghanistan 5 75.00 8.10 83.10 30.00 – 25.00 – 138.10 475.70

Azerbaijan 1 10.00 5.00 15.00 – – – – 15.00 15.00
Bangladesh 8 137.20 14.98 152.18 20.00 – 70.00 – 242.18 890.36
Bhutan 1 – 0.53 0.53 – – – – 0.53 0.79
China, People’s Rep. of 16 187.22 332.30 519.52 246.50 – – – 766.02 4,122.52
India 37 562.70 233.72 796.45 230.00 – – – 1,026.45 8,566.00
STATISTICAL ANNEXES
Indonesia 15 507.00 23.85 530.86 188.50 9.80 – – 729.16 7,733.72
Kazakhstan 2 125.00 – 125.00 – 100.00 – – 225.00 325.00
Korea, Rep. of 5 – 8.96 8.96 – – – – 8.96 292.23
Lao People’s
Democratic Rep. 1 50.00 – 50.00 – – 50.00 – 100.00 1,450.00
Malaysia 1 – 2.00 2.00 – – – – 2.00 3.64
Mongolia 1 4.50 1.60 6.10 – – – – 6.10 40.00
Nepal 4 49.55 3.26 52.81 5.83 – – – 58.64 218.03
Pakistan 29 279.10 30.63 309.73 129.90 65.00 – – 504.63 1,960.19
Philippines 22 275.32 40.85 316.17 113.58 18.40 – – 448.15 2,698.72
Samoa 1 – 0.40 0.40 – – – – 0.40 1.60
Sri Lanka 9 72.00 13.58 85.58 – 115.00 31.00 – 231.58 519.73
Thailand 10 71.46 77.07 148.53 170.00 – – – 318.53 3,071.80
Viet Nam 6 168.50 – 168.50 26.50 – 60.00 – 255.00 1,470.00
Regional 34 170.00 554.57 724.57 – 105.00 – – 829.57 6,140.87
TOTAL 208 2,744.55 1,351.43 4,095.98 1,160.81 413.20 236.00 – 5,905.99 39,995.90
– = Data not applicable, DMC = developing member country.

a Net of full cancellations prior to effectivity.
b Also includes lines of equity and equity underwriting.
135
NUMBER OF LOANS AND PROJECTS APPROVED AND UNDER ADMINISTRATION, PROJECT COMPLETION
REPORTS (PCRs) CIRCULATED, PROJECTS COMPLETED, LOANS CLOSED, AND PROJECT/PROGRAM
PERFORMANCE EVALUATION REPORTS (PPERs) CIRCULATED
Cumulative Cumulative Cumulative Cumulative Cumulative Cumulative

No. of No. of No. of No. of No. of No. of
Loans Effective Projects Blended Supplementary Cofinanced
Country Approveda Loans Approvedb Loans Loans Projectsc
Afghanistan 22 19 20 1 1 4
Azerbaijan 6 6 4 2 – –
Bangladesh 176 173 159 11 5 24
Bhutan 23 20 21 1 – –
Cambodia 38 36 30 2 1 7
China, People’s Republic of 130 118 128 – – 15
STATISTICAL ANNEXES
Cook Islands 13 13 13 – – –
Fiji Islands 16 16 16 – – 1
Hong Kong, China 5 5 5 – – –
India 100 93 86 3 1 10
Indonesia 285 281 252 24 2 26
Kazakhstan 14 14 9 2 – 1
Kiribati 6 6 6 – – –
Korea, Republic of 81 81 80 – – –
Kyrgyz Republic 25 25 19 – – 4
Lao People’s Democratic Republic 69 64 61 1 3 9
Malaysia 76 76 74 1 1 –
Maldives 15 14 15 – – 2
Marshall Islands 12 12 11 1 – –
Micronesia, Federated States of 8 8 6 1 – –
Mongolia 40 37 34 – – 2
Myanmar 32 32 28 2 2 6
Nauru 1 1 1 – – –
Nepal 116 115 104 2 9 20
Pakistan 263 252 200 40 5 37
Papua New Guinea 59 59 46 11 2 7
Philippines 196 196 166 18 4 32
Samoa 31 30 27 – 4 2
Singapore 14 14 14 – – –
Solomon Islands 16 16 15 – – 3
Sri Lanka 135 132 115 11 6 27
Taipei,China 12 12 12 – – –
Tajikistan 20 17 15 3 – 2
Thailand 84 84 80 2 2 7
Timor-Leste – – – – – –
Tonga 15 14 15 – – 1
Turkmenistan – – – – – –
Tuvalu 3 3 2 – 1 –
Uzbekistan 23 19 19 3 – 2
Vanuatu 9 9 8 – 1 –
Viet Nam 81 70 72 3 – 12
Regional 6 6 14f 1 – 2
TOTAL 2,276 2,198 2,002 146 50 265

– = 0.
a Includes special implementation assistance loans, special assistance, and nonsovereign loans; excludes loans withdrawn by borrowers.
b A project with multiple loans is counted as one project. Supplementary loans, special implementation assistance loans, and subprogram loans of program loan
clusters are not counted as separate projects.
c These are non-ADB funds generated by ADB’s financing partnership operations including loans, credit enhancements, and grants, fully or partially administered by
ADB, and/or confinanced under cooperation/sector-wide approach arrangements.
d Includes projects/loans which have been approved but still awaiting effectivity, inactive loans, fully disbursed nonsovereign loans, but still under administration;
excludes projects/loans exclusively financed from other sources.
136
No. of No. of No. of No. of
No. of No. of Cumulative Projects Loans PCRs PPERs
Loans Under Projects Under No. of PCRs Completed Closed Circulated Circulated
Administrationd Administrationa,d Circulated in 2006e in 2006 in 2006 in 2006 Country
13 12 – – – – – Afghanistan
6 4 – – – – – Azerbaijan
44 36 116 2 3 2 1 Bangladesh
6 5 13 1 2 2 – Bhutan
21 18 11 2 4 2 – Cambodia
51 51 76 6 3 6 5 China, People’s Republic of
STATISTICAL ANNEXES
1 1 12 – – – – Cook Islands
4 4 10 – – – – Fiji Islands
– – 5 – – – – Hong Kong, China
41 37 42 3 3 1 2 India
39 32 187 6 7 9 3 Indonesia
6 5 6 2 – – – Kazakhstan
1 1 4 1 – – – Kiribati
– – 61 – – – – Korea, Republic of
10 10 12 1 1 1 – Kyrgyz Republic
26 24 35 3 3 2 2 Lao People’s Democratic Republic
– – 54 – 1 – – Malaysia
7 7 7 1 – – – Maldives
1 1 9 – – 1 – Marshall Islands
5 3 3 – – – – Micronesia, Federated States of
19 16 17 4 – – – Mongolia
– – 26 – – – – Myanmar
– – 1 – – – – Nauru
27 25 77 – 2 3 – Nepal
83 55 126 12 3 – – Pakistan
12 10 34 – – 1 1 Papua New Guinea
25 22 126 4 6 8 1 Philippines
3 3 20 – 2 – – Samoa
– – 7 – – – – Singapore
1 1 14 – – – – Solomon Islands
50 39 75 6 1 5 – Sri Lanka
– – 1 – – – – Taipei,China
12 11 6 1 1 2 – Tajikistan
1 1 59 – 1 1 – Thailand
– – 4 – – – – Timor-Leste
– – 16 – – – 1 Tonga
– – – – – – – Turkmenistan
2 1 1 – – – 1 Tuvalu
17 15 3 3 – 1 1 Uzbekistan
– – 8 – – – – Vanuatu
43 40 24 3 6 4 1 Viet Nam
2 2 4 – – 1 – Regional
579 492 1,312 61 49 52 19 TOTAL

e Projects which were physically completed in 2006.
f Includes the regional projects – Greater Mekong Subregion (GMS): Phnom Penh to Ho Chi Minh City Highway (Cambodia and Viet Nam loan components); GMS:
East–West Corridor (Lao People’s Democratic Republic and Viet Nam loan components); Almaty-Bishkek Regional Road Rehabilitation (Kazakhstan and Kyrgyz Re-
public loan components); GMS: Mekong Tourism Development (Cambodia, Lao PDR, and Viet Nam loan components); Regional Power Transmission Modernization
(Tajikistan and Uzbekistan loan components); Regional Trade Facilitation and Customs Cooperations Program (Kyrgyz Republic and Tajikistan loan components);
Asian Finance and Investment Corporation, Ltd.; Trade Finance Facilitation Program; Establishment of the Pacific Aviation Safety Office Project; and Regional Power
Transmission Interconnection (Afghanistan and Tajikistan loan components).
137
AMOUNT OF LOANS APPROVED, CONTRACTS AWARDED, AND DISBURSEMENTS
($ million; as of 31 December 2006)
Cumulative
Cumulative Loans Cumulative Net Contracts Contracts
Country Approveda Effective Loansb,c Awarded in 2006c,d,e Awardedc,d,e
Afghanistan 892.28 758.98 44.35 402.04

Azerbaijan 114.00 114.00 20.74 22.13
Bangladesh 8,299.79 8,195.79 368.82 5,874.94
Bhutan 176.06 138.46 2.61 104.16
Cambodia 912.24 850.24 39.10 664.01
China, People’s Republic of 17,947.40 16,159.40 726.05 11,119.94
Cook Islands 29.50 29.50 0.01 28.44
STATISTICAL ANNEXES
Fiji Islands 249.90 249.90 9.07 182.60

Hong Kong, China 101.50 101.50 – 94.50
India 16,448.21 14,750.01 1,732.42 10,934.50
Indonesia 21,513.30 21,328.50 784.20 14,860.44
Kazakhstan 626.60 626.60 – 432.67
Kiribati 15.14 15.14 – 14.31
Korea, Republic of 6,338.33 6,338.33 – 5,572.55
Kyrgyz Republic 588.50 588.50 36.88 499.00
Lao People’s Democratic Republic 1,218.34 1,183.14 56.18 1,015.06
Malaysia 1,987.54 1,987.54 – 1,422.40
Maldives 91.48 86.48 7.65 73.79
Marshall Islands 78.13 78.13 – 65.13
Micronesia, Federated States of 75.14 75.14 3.69 43.39
Mongolia 666.54 620.34 51.55 538.39
Myanmar 530.86 530.86 – 418.77
Nauru 5.00 5.00 – 2.30
Nepal 2,300.98 2,270.98 101.79 1,556.79
Pakistan 16,571.04 15,523.04 1,052.65 11,304.50
Papua New Guinea 926.99 926.99 23.07 670.97
Philippines 9,249.03 9,249.03 822.31 6,647.63
Samoa 129.98 123.98 1.74 108.57
Singapore 181.08 181.08 – 130.22
Solomon Islands 79.31 79.31 0.77 64.63
Sri Lanka 3,763.25 3,553.25 138.74 2,790.34
Taipei,China 100.39 100.39 – 90.28
Tajikistan 300.84 253.84 28.28 170.24
Thailand 5,388.07 5,388.07 5.32 4,158.08
Tonga 57.79 52.89 – 58.18
Tuvalu 7.82 7.82 3.18 7.55
Uzbekistan 974.90 819.70 45.83 468.08
Vanuatu 51.25 51.25 – 47.91
Viet Nam 4,040.56 3,645.07 230.92 2,090.11
Regionalg 171.50 171.50 – –
TOTALh 123,200.53 117,209.64 6,337.90 84,749.50

– = nil or data not applicable.
a Includes special assistance loans and nonsovereign loans but excludes loans terminated. The US dollar equivalent is in accordance with the exchange rate prevailing
within ADB at the time of loan approval.
b Net refers to effective loan amounts less cancellations.
c The US dollar equivalent is in accordance with the exchange rate prevailing in ADB on 31 December 2006.
d Excluding nonsovereign loans.
138
% of Cumulative % of Cumulative
Contracts Awarded Disbursements
to Cumulative Net Disbursements Cumulative to Cumulative Net
Effective Loansc in 2006 Disbursementsf Effective Loans Country
52.97 80.61 367.26 48.39 Afghanistan

19.41 8.08 8.58 7.52 Azerbaijan
71.68 321.73 5,894.37 71.92 Bangladesh
75.23 4.60 103.42 74.69 Bhutan
78.10 54.55 619.14 72.82 Cambodia
68.81 987.97 10,908.23 67.50 China, People’s Republic of
96.41 0.33 26.48 89.75 Cook Islands
STATISTICAL ANNEXES
73.07 9.68 170.24 68.12 Fiji Islands
93.11 – 94.50 93.11 Hong Kong, China
74.13 711.92 8,856.54 60.04 India
69.67 1,025.88 16,138.83 75.67 Indonesia
69.05 127.42 560.00 89.37 Kazakstan
94.50 0.15 13.70 90.50 Kiribati
87.92 – 5,560.32 87.73 Korea, Republic of
84.79 42.82 495.23 84.15 Kyrgyz Republic
85.79 84.77 990.53 83.72 Lao People’s Democratic Republic
71.57 0.70 1,403.98 70.64 Malaysia
85.33 4.93 62.18 71.90 Maldives
83.36 0.10 64.09 82.04 Marshall Islands
57.74 2.46 39.24 52.22 Micronesia, Federated States of
86.79 28.59 520.57 83.92 Mongolia
78.88 – 411.83 77.58 Myanmar
46.00 – 2.30 46.00 Nauru
68.55 108.01 1,545.20 68.04 Nepal
72.82 790.19 11,320.88 72.93 Pakistan
72.38 29.28 663.30 71.55 Papua New Guinea
71.87 836.63 7,116.92 76.95 Philippines
87.57 1.63 104.29 84.12 Samoa
71.91 – 144.44 79.77 Singapore
81.49 4.09 62.00 78.17 Solomon Islands
78.53 180.42 2,754.33 77.52 Sri Lanka
89.93 – 91.14 90.78 Taipei,China
67.07 35.17 134.75 53.09 Tajikistan
77.17 21.60 4,204.65 78.04 Thailand
110.01 – 52.26 98.83 Tonga
96.56 1.18 5.44 69.55 Tuvalu
57.10 59.31 433.61 52.90 Uzbekistan
93.48 – 48.99 95.59 Vanuatu
57.34 184.07 2,139.23 58.69 Viet Nam
– 9.65 120.23 70.10 Regional
72.31 5,758.51 84,253.20 71.88 TOTAL

e Contracts awarded for development finance institutions/credit loans are based on the amount of subloan disbursements.
f The cumulative disbursements may exceed the cumulative contracts awarded due to disbursed amount without procurement contract summary sheet, e.g., interest
during construction, contingencies, and private sector loans which do not require procurement.
g Regional loan on Establishment of the Pacific Aviation Safety Office and private sector loans to Asian Finance and Investment Corporation Ltd., and Trade Finance
Facilitation Program.
h Totals may not add up because of rounding.
139
TECHNICAL ASSISTANCE GRANTS BY COUNTRY AND REGIONAL ACTIVITIES,a 1967–2006, 2005, 2006
1 9 6 7 – 2 0 0 6b 2 0 0 5
TASF JSF ATF Other
Country No. Amount % No. Financing Financing Financing Sources Total %
Afghanistan 55 58,192.70 1.93 11 8,295.00 – – 190.00 8,485.00 4.27

Armenia 2 300.00 0.01 1 150.00 – – – 150.00 0.08
Azerbaijan 20 10,972.00 0.36 5 1,050.00 1,040.00 – 850.00 2,940.00 1.48
Bangladesh 318 170,948.33 5.66 13 2,520.00 3,700.00 – 1,230.00 7,450.00 3.75
Bhutan 99 37,275.15 1.23 5 1,400.00 300.00 – – 1,700.00 0.86

Cambodia 141 91,379.60 3.02 14 1,650.00 2,200.00 – 3,765.00 7,615.00 3.84
China, People’s Republic of 505 270,389.65 8.95 34 14,840.00 – – 3,494.60 18,334.60 9.24
STATISTICAL ANNEXES
Cook Islands 27 8,945.00 0.30 1 600.00 – – – 600.00 0.30

Fiji Islands 80 26,974.80 0.89 3 1,000.00 600.00 – – 1,600.00 0.81
India 220 144,409.86 4.78 9 2,368.00 – – 3,960.00 6,328.00 3.19

Indonesia 484 247,499.17 8.19 6 3,700.00 600.00 – 6,030.00 10,330.00 5.20
Kazakhstan 58 26,967.00 0.89 3 – 1,300.00 – – 1,300.00 0.65
Kiribati 35 12,040.70 0.40 – – – – – – –
Korea, Republic of 33 5,010.15 0.17 – – – – – – –

Kyrgyz Republic 65 38,001.40 1.26 4 900.00 900.00 – – 1,800.00 0.91
Lao People’s
Democratic Republic 222 108,842.08 3.60 7 550.00 1,500.00 – 974.30 3,024.30 1.52
Malaysia 93 25,352.30 0.84 – – – – – – –

Maldives 56 19,525.00 0.65 6 1,100.00 40.00 – 777.00 1,917.00 0.97
Marshall Islands 46 18,757.00 0.62 1 – – – 300.00 300.00 0.15
Micronesia, Federated States of 40 23,278.00 0.77 – – – – – – –

Mongolia 125 61,320.65 2.03 3 500.00 900.00 – 250.00 1,650.00 0.83
Myanmar 38 10,716.00 0.35 – –
Nauru 6 1,721.812 0.06 2 – – – 477.81 477.81 0.24

Nepal 260 120,373.70 3.98 4 1,320.00 – – 835.00 2,155.00 1.09
Pakistan 308 159,816.13 5.29 24 7,929.00 1,545.00 – 5,452.00 14,926.00 7.52
Papua New Guinea 130 49,752.60 1.65 3 1,150.00 1,000.00 – – 2,150.00 1.08
Philippines 320 146,204.25 4.84 7 3,720.00 500.00 – 400.00 4,620.00 2.33
Samoa 82 23,426.50 0.78 2 350.00 300.00 – – 650.00 0.33
Singapore 2 577.420 0.02 – – – – – – –

Solomon Islands 56 13,845.24 0.46 2 895.00 – – 200.00 1,095.00 0.55
Sri Lanka 223 93,898.10 3.11 8 2,062.50 550.00 – 500.00 3,112.50 1.57
Taipei,China 1 100.00 – – – – – – – –
Tajikistan 53 29,735.00 0.98 6 1,400.00 500.00 – 2,100.00 4,000.00 2.01
Thailand 153 56,529.60 1.87 7 1,045.00 – 2,000.00 300.00 3,345.00 1.68
Timor-Leste 27 12,250.90 0.41 2 600.00 600.00 – – 1,200.00 0.60

Tonga 54 15,351.50 0.51 1 – 700.00 – – 700.00 0.35
Turkmenistan 3 565.00 0.02 – – – – – – –
Tuvalu 19 4,787.00 0.16 – – – – – – –
Uzbekistan 67 34,130.00 1.13 5 600.00 1,400.00 – 300.00 2,300.00 1.16

Vanuatu 54 15,764.76 0.52 – – – – – – –
Viet Nam 203 138,274.46 4.58 20 1,850.00 3,725.00 – 6,675.00 12,250.00 6.17
All DMCs 4,783 2,334,200.51 77.27 219 63,544.50 23,900.00 2,000.00 39,060.71 128,505.21 64.73
Regional 1,370 686,822.07 22.73 80 25,765.00 4,450.00 – 39,800.75 70,015.75 35.27
TOTAL 6,153 3,021,022.57 100.00 299 89,309.50 28,350.00 2,000.00 78,861.47 198,520.97 100.00
– = nil, ATF = Asian Tsunami Fund, DMC = developing member country, JSF = Japan Special Fund, TASF = Technical Assistance Special Fund.
a Excludes technical assistance financed under loans that are included in ADB’s loan data.
b Cumulative data are adjusted to exclude technical assistance projects withdrawn by governments.
140
2006
TASF JSF Other
No. Financing Financing Sources Total % Country
5 6,950.00 – 1,000.00 7,950.00 3.29 Afghanistan

1 150.00 – – 150.00 0.06 Armenia
1 430.00 – – 430.00 0.18 Azerbaijan
7 2,000.00 3,450.00 260.00 5,710.00 2.36 Bangladesh
5 1,100.00 500.00 300.00 1,900.00 0.79 Bhutan

8 1,800.00 3,150.00 1,300.00 6,250.00 2.59 Cambodia
27 12,655.00 – 925.00 13,580.00 5.62 China, People’s Republic of
STATISTICAL ANNEXES
– – – – – – Cook Islands
3 800.00 700.00 – 1,500.00 0.62 Fiji Islands
12 6,000.00 2,300.00 22,270.00 30,570.00 12.65 India

7 5,270.00 1,480.00 300.00 7,050.00 2.92 Indonesia
1 – 600.00 – 600.00 0.25 Kazakhstan
1 – 630.00 – 630.00 0.26 Kiribati
– – – – – – Korea, Republic of
3 – 400.00 430.00 830.00 0.34 Kyrgyz Republic
Lao People’s
8 2,750.00 1,300.00 590.00 4,640.00 1.92 Democratic Republic
1 150.00 – – 150.00 0.06 Malaysia

1 400.00 – – 400.00 0.17 Maldives
2 250.00 – 150.00 400.00 0.17 Marshall Islands
1 600.00 – – 600.00 0.25 Micronesia, Federated States of

4 950.00 1,000.00 500.00 2,450.00 1.01 Mongolia
– – – – – – Myanmar
– – – – – – Nauru
13 1,300.00 2,450.00 2,630.00 6,380.00 2.64 Nepal
11 2,200.73 5,400.00 – 7,600.73 3.15 Pakistan
4 150.00 2,000.00 2,089.00 4,239.00 1.75 Papua New Guinea

5 2,550.00 1,600.00 500.00 4,650.00 1.92 Philippines
1 450.00 – 300.00 750.00 0.31 Samoa
– – – – – – Singapore
– – – – – – Solomon Islands
4 – 1,550.00 760.00 2,310.00 0.96 Sri Lanka
– – – – – – Taipei,China
6 900.00 2,150.00 1,400.00 4,450.00 1.84 Tajikistan
4 1,531.00 – – 1,531.00 0.63 Thailand
1 – 1,000.00 – 1,000.00 0.41 Timor-Leste

2 510.00 400.00 – 910.00 0.38 Tonga
– – – – – – Turkmenistan
1 – 300.00 – 300.00 0.12 Tuvalu
5 350.00 1,200.00 600.00 2,150.00 0.89 Uzbekistan

1 800.00 – – 800.00 0.33 Vanuatu
15 4,034.00 4,000.00 8,490.00 16,524.00 6.84 Viet Nam
171 57,030.73 37,560.00 44,794.00 139,384.73 57.69 All DMCs

89 35,265.00 19,027.50 47,949.30 102,241.80 42.31 Regional
260 92,295.73 56,587.50 92,743.30 241,626.53 100.00 TOTAL
141
TECHNICAL ASSISTANCE GRANTS, 2006 ($ thousand)
TA
Type Sector TASF JSF Others Source Total
Afghanistan
Road Rehabilitation and Capacity Building Cluster PP TC 2,700.00 – – 2,700.00
Preparing the Herat–Bala Murghab Road PP TC 150.00 – – 150.00
Support to the Afghanistan National
Development Strategy AD LW 1,700.00 – 1,000.00 GCF/ 2,700.00
MfDRCF
Capacity Building for Customs and Trade Facilitation AD IN 1,200.00 – – 1,200.00
Improving the Capacity of the Afghanistan Electricity
Authority AD EN 1,200.00 – – 1,200.00
STATISTICAL ANNEXES
Subtotal 6,950.00 – 1,000.00 7,950.00
Armenia
Rural Roads Rehabilitation Project 1 PP TC 150.00 – – 150.00
Subtotal 150.00 – – 150.00
Azerbaijan
Southern Road Corridor Improvement (Supplementary) PP TC 430.00 – – 430.00
Subtotal 430.00 – – 430.00
Bangladesh
Dhaka Water Supply (Supplementary) PP WS – – 160.00 CFWS 160.00
Skills Development PP ED – 500.00 – 500.00
Development of Transport Corridors for
Trade Facilitation PP TC – 950.00 – 950.00
Institutional Support for Railway Reforms AD TC 2,000.00 – – 2,000.00
Second Urban Governance and Infrastructure
Improvement (Sector) PP WS – 600.00 100.00 CFWS 700.00
Strengthening Results-Based Monitoring and Evaluation AD LW – 800.00 – 800.00
Promotion of Private Sector Participation in the
Power Sector AD EN – 600.00 – 600.00
Subtotal 2,000.00 3,450.00 260.00 5,710.00
Bhutan
Accelerated Rural Electrification AD EN 400.00 – 300.00 Finland 700.00
SME/Microenterprise Development
Program: Financing Component PP FI – 500.00 – 500.00
Capacity Building in Urban Infrastructure Planning
and Management AD WS 250.00 – – 250.00
Capacity Building of the Department of Aid and Debt
Management’s Debt Management Unit AD FI 200.00 – – 200.00
Institutionalizing Skills and Capacity Development AD FI 250.00 – – 250.00
Subtotal 1,100.00 500.00 300.00 1,900.00
Cambodia
Dormitories and Learning Centers for Secondary
Schoolgirls AD ED – – 800.00 PRF 800.00
Capacity Building for SME Development–Phase II AD IN 800.00 – – 800.00
Education Quality Improvement PP ED – 500.00 – 500.00
Implementation of Telecommunications Sector Policy
Reforms and Capacity Building AD TC – 1,000.00 – 1,000.00
– = nil, AD = advisory, CFWS = Cooperation Fund for the Water Sector, ED = education, EN = energy, FI = finance, GCF = Governance Cooperation Fund, IN = industry and trade,
JSF = Japan Special Fund, LW = law, economic management, and public policy, MfDRCF = Cooperation Fund in Support of Managing for Development Results, PP = project preparatory,
PRF = Poverty Reduction Cooperation Fund, SME = small and medium-sized enterprises, TA = technical assistance, TASF = Technical Assistance Special Fund,
TC = transport and communications, WS = water supply, sanitation, and waste management.
142
CONTINUED
TA
Financial Sector Development Program PP FI – 650.00 – 650.00

Water Resources Management (Sector) PP AG 1,000.00 – 300.00 AFD 1,300.00
Capacity Development of Female Commune
Council Networks AD LW – – 200.00 GDCF 200.00
Institutional Strengthening of the Cambodian
National Petroleum Authority AD EN – 1,000.00 – 1,000.00
Subtotal 1,800.00 3,150.00 1,300.00 6,250.00

Songhua River Water Quality and Pollution
Management (Supplementary) AD AG 5.00 – – 5.00
STATISTICAL ANNEXES
Dryland Farming in the Northern Region
(Supplementary) PP AG 150.00 – – 150.00
Xinjiang Regional Road Improvement PP TC 600.00 – – 600.00
Central Yunnan Roads Development PP TC 500.00 – – 500.00
Gansu Heihe Hydropower Development PP EN 500.00 – – 500.00
Facility for Reform Support and Capacity Building AD MS 500.00 – – 500.00
Guangxi Longlin–Baise Expressway PP TC 500.00 – – 500.00
Jilin Urban Infrastructure PP WS 500.00 – – 500.00
Xinjiang Municipal Infrastructure and Environmental
Improvement PP MS 800.00 – – 800.00
Sustainable Rural Transport Services AD TC 400.00 – – 400.00
Kunming Qingshuihai Water Supply PP WS 600.00 – – 600.00
National Strategy for Rural Biomass Renewable
Energy Development AD MS 400.00 – – 400.00
Establishment of the Clean Development Mechanism
Fund AD EN 600.00 – – 600.00
Strengthening Flood Management Sustainability in
Hunan Province AD AG – – 500.00 Spain 500.00
Gansu Baiyin Urban Development PP MS 500.00 – – 500.00
Energy Conservation and Resource Management PP EN 300.00 – – 300.00
Strengthening the Legal and Implementation
Framework for Anti-Money Laundering AD LW 400.00 – – 400.00
Henan Ecological Agriculture and Rural Productivity
Improvement Project and the Central and Southern
Shanxi Integrated Agricultural Development PP AG 1,000.00 – – 1,000.00
Lanzhou–Chongqing Railway Development PP TC 500.00 – – 500.00
Coal Mine Safety Study AD EN 600.00 – – 600.00
Employment Services for Migrant Workers AD ED 300.00 – – 300.00
Managing Railway Passenger Operations More Efficiently AD TC 600.00 – – 600.00
Preparing the Qingdao Water Resources Management PP AG 600.00 – – 600.00
Technical and Vocational Education and Training
Development AD ED 600.00 – – 600.00
Logistics Development and Capacity Building in
Xinjiang Uygur Autonomous Region AD IN – – 425.00 Spain 425.00
Resource Optimization in the Road Sector AD TC 400.00 – – 400.00
Resource Optimization in the Road Sector
(Supplementary) AD TC 200.00 – – 200.00
Strengthening Water Resources Management in
Guiyang AD AG 600.00 – – 600.00
Subtotal 12,655.00 – 925.00 13,580.00
– = nil, AD = advisory, AFD = Agence Française de Développement, AG = agriculture and natural resources, ED = education, EN = energy, FI = finance, GDCF =
Gender and Development Cooperation Fund, IN = industry and trade, JSF = Japan Special Fund, LW = law, economic management, and public policy, MS = multisector,
PP = project preparatory, TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, WS = water supply, sanitation,
and waste management.
143
CONTINUED
TA
Fiji Islands
Preparing the Renewable Power Sector Development PP EN 650.00 – – 650.00
Preparing Economic Restructuring Program Loan PP LW 150.00 – – 150.00
Improving Infrastructure Services AD MS – 700.00 – 700.00
Subtotal 800.00 700.00 – 1,500.00
India
Chharttisgarh State Roads Sector Development
(Supplementary) PP TC – – 1,600.00 UK 1,600.00
Support for the Jawaharlal Nehru National Urban
Renewal Mission AD MS 2,000.00 – – 2,000.00
STATISTICAL ANNEXES
Project Implementation and Urban Management

Improvement in the North Eastern Region (Phase 1) AD MS 1,400.00 – 120.00 CFWS 1,520.00
Knowledge Management and Capacity Building AD MS – – 2,000.00 UK 2,000.00
Project Processing and Capacity Development
(TA Cluster) PP MS – – 15,000.00 UK 15,000.00
Preparing the Orissa Integrated Irrigated Agriculture
and Water Management PP AG – – 700.00 UK/CFWS 700.00
Urban Transport Strategy AD TC 1,000.00 – – 1,000.00
Assam Governance and Public Resource Management
Subprogram II PP LW – 500.00 – 500.00
Capacity Building for Rural Cooperative Credit
Structure Reform AD FI – – 2,000.00 UK 2,000.00
Strengthening Urban Project Management in Jammu
and Kashmir AD MS 400.00 – – 400.00
Mainstreaming Public–Private Partnership at State Level AD LW 1,200.00 1,800.00 – 3,000.00
North Eastern Integrated Flood and Riverbank Erosion
Management Project (Assam) PP AG – – 850.00 UK/CFWS 850.00
Subtotal 6,000.00 2,300.00 22,270.00 30,570.00
Indonesia
Urban Air Quality Improvement Sector Development
Program (Supplementary) PP MS – 280.00 – 280.00
Integrated Citarum Water Resources Management
(Supplementary) PP AG 275.00 – – 275.00
Water Supply and Sanitation (Supplementary) PP WS 200.00 – – 200.00
Pro-Poor Planning and Budgeting AD LW 1,800.00 – 300.00 UK 2,100.00
Metropolitan Sanitation Management and Health PP WS – 1,200.00 – 1,200.00
Enhancing Private Sector Participation in Infrastructure
Provision AD MS 2,000.00 – – 2,000.00
Madrasah Education Development AD ED 995.00 – – 995.00
Subtotal 5,270.00 1,480.00 300.00 7,050.00
Kazakhstan
KazPost Financial Strengthening and Modernization PP MS – 600.00 – 600.00
Subtotal – 600.00 – 600.00
Kiribati
Integrated Land and Population Development Program
on Kiritimati Island AD MS 630.00 – 630.00
Subtotal – 630.00 – 630.00
– = nil, AD = advisory, AG = agriculture and natural resources, CFWS = Cooperation Fund for the Water Sector, ED = education, EN = en-
ergy, FI = finance, JSF = Japan Special Fund, LW = law, economic management, and public policy, MS = multisector, PP = project preparatory,
TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, UK = United Kingdom, WS = water supply, sanitation,
and waste management .
144
CONTINUED
TA
Kyrgyz Republic
A Study of the Impact of Land Reform on Agriculture,
Poverty Reduction, and Environment (Supplementary) AD AG – 130.00 PRF 130.00
Second Community-Based Early Childhood Development PP HL – 400.00 – 400.00
Development of a Monitoring and Evaluation System
at Oblast Level AD LW – 300.00 MfDRCF 300.00
Subtotal – 400.00 430.00 830.00

Promoting Governance in Financial Transactions AD LW 500.00 – 150.00 LUX 650.00
Revitalizing Community Demand for Immunization AD HL – – 140.00 PRF 140.00
STATISTICAL ANNEXES
Greater Mekong Subregion Northern Power Transmission PP EN – 800.00 – 800.00
Institutional Strengthening for Rural Finance AD FI 400.00 – 300.00 DEN 700.00
Agriculture and Natural Resources Sector Needs
Assessment AD AG 750.00 – – 750.00
Small Towns Water Supply and Sanitation Sector PP WS 500.00 – 500.00
Sector-Wide Approach in Education Sector Development AD ED 500.00 – – 500.00
Preparing the Greater Mekong Subregion
Louangphrabang Airport Improvement PP TC 600.00 – – 600.00
Subtotal 2,750.00 1,300.00 590.00 4,640.00

Malaysia
Support of Improved Economic Modeling AD LW 150.00 – – 150.00
Subtotal 150.00 – – 150.00
Maldives
Restructuring and Privatization of State-Owned
Enterprises AD LW 400.00 – – 400.00
Subtotal 400.00 – – 400.00
Marshall Islands
Pilot Collaborative Public Services Delivery AD ED 250.00 – – 250.00
Building Capacity for Independent CPS and CPA Results
Management—A Pacific Pilot AD LW – 150.00 MfDRCF 150.00
Subtotal 250.00 – 150.00 400.00
Microneisa, Federated States of

Implementation of the Public Sector Capacity Building
Road Map AD LW 600.00 – – 600.00
Subtotal 600.00 – – 600.00
Mongolia
Western Regional Road Development PP TC 650.00 – – 650.00
Development of a Sector-Wide Approach (SWAp) in
Education AD ED 150.00 – – 150.00
Agriculture and Rural Development PP AG – 1,000.00 – 1,000.00
Strengthening the Pension System AD FI 150.00 – 500.00 LUX 650.00
Subtotal 950.00 1,000.00 500.00 2,450.00
– = nil, AD = advisory, AG = agriculture and natural resources, CPA = country performance assessment, CPS = country partnership strategy,
DEN = Denmark, ED = education, EN = energy, FI = finance, HL = health, nutrition, and social protection, JSF = Japan Special Fund, LUX = Luxembourg,
LW = law, economic management, and public policy, MfDRCF = Cooperation Fund in Support of Managing for Development Results, PP = project preparatory, PRF =
Poverty Reduction Cooperation Fund, TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, WS = water supply,
sanitation, and waste management.
145
CONTINUED
TA
Nepal
Enhancing Poverty Reduction Impact of Road Projects AD TC – – 350.00 PRF 350.00
Operationalization of Managing for Development Results AD MS – – 400.00 MfDRCF 400.00
Capacity Building for Gender Equality and
Empowerment of Women AD MS – – 300.00 GDCF 300.00
Preparation of Civil Aviation Sector Strategy AD TC 150.00 – – 150.00
Economic and Social Inclusion of the Disadvantaged
Poor Through Livelihood Enhancement with
Micro-irrigation AD AG – – 450.00 PRF 450.00
Enabling the Private Sector to Undertake
Poverty-Focused Water Distribution and
STATISTICAL ANNEXES
Strengthening of Institutional Reforms in

Kathmandu Valley AD WS 150.00 – 570.00 PRF 720.00
Capacity Building in Road Feasibility Study and
Construction and Contract Management AD TC 300.00 – – 300.00
Information and Communications Technology
Development PP TC – 600.00 – 600.00
Governance Reforms and Decentralization Cluster
Program I PP LW – 500.00 – 500.00
North–South Fast Track Roads PP TC – 850.00 – 850.00
Capacity Building in Rural Finance Institutions AD FI – 500.00 – 500.00
Kathmandu Valley Water Distribution, Sewerage, and
Urban Development PP WS 400.00 – 560.00 DEN/CFWS 960.00
Supporting Preparation of the 3-Year Interim
Development Plan AD LW 300.00 – – 300.00
Subtotal 1,300.00 2,450.00 2,630.00 6,380.00

Pakistan
Capacity Building for Rural Development of Federally
Administered Tribal Areas (Supplementary) AD MS 20.73 – – 20.73
Bahawalpur Rural Development Project – Phase II
(Supplementary) PP MS 180.00 – – 180.00
National Agriculture Sector Strategy (Supplementary) AD AG 100.00 – – 100.00
Community Water Storage and Irrigated Agriculture
Development PP AG – 900.00 – 900.00
Second Sindh Devolved Social Services Program PP MS – 600.00 – 600.00
Formulation of Strategy for Development and Utilization
of Coal Reserves at Thar and Badin AD EN 150.00 – – 150.00
Supporting the Private Participation in Infrastructure
Program AD MS – 1,000.00 – 1,000.00
Establishment and Commencement of Operations for
the Central Power Purchasing Authority AD EN 950.00 – – 950.00
Power Distribution Enhancement Multitranche
Financing Facility PP EN – 900.00 – 900.00
Renewable Energy Policy Formulation and Capacity
Development of the Alternative Energy Development
Board AD EN 800.00 – 800.00
Improving Access to Financial Services AD FI 2,000.00 – 2,000.00
Subtotal 2,200.73 5,400.00 – 7,600.73
– = nil, AD = advisory, AG = agriculture and natural resources, CFWS = Cooperation Fund for Water Sector, DEN = Denmark, EN = energy, FI = finance,
GDCF = Gender and Development Cooperation Fund, JSF = Japan Special Fund, LW = law, economic management, and public policy, MfDRCF = Cooperation Fund
in Support of Managing for Development Results, MS = multisector, PP = project preparatory, PRF = Poverty Reduction Cooperation Fund, TA = technical assistance,
TASF = Technical Assistance Special Fund, TC = transport and communications, WS = water supply, sanitation, and waste management.
146
CONTINUED
TA
Papua New Guinea

Lae Port Development Project – Tidal Basin Phase I PP TC – 900.00 – 900.00
Demographic and Health Survey in Papua New Guinea AD HL – 250.00 1,982.00 AUS/NZ 2,232.00
Demographic and Health Survey in Papua New Guinea
(Supplementary) AD HL – – 107.00 UNFPA 107.00
Preparing Supplementary Financing for the Financial
Management PP LW 150.00 – – 150.00
Health Sector Support AD HL – 850.00 – 850.00
Subtotal 150.00 2,000.00 2,089.00 4,239.00
Philippines
STATISTICAL ANNEXES
Metro Manila Urban Services for the Poor
(Supplementary) PP MS – – 500.00 CA 500.00
Local Governance and Fiscal Management AD LW 1,800.00 – – 1,800.00
Government-Owned and -Controlled Corporations
Reform AD LW 750.00 – – 750.00
Enhancing the Autonomy, Accountability, and Efficiency
of the Judiciary, and Improving the Administration
of Justice AD LW – 800.00 – 800.00
Strengthening Regulation and Governance AD FI – 800.00 – 800.00
Subtotal 2,550.00 1,600.00 500.00 4,650.00
Samoa
Preparing the Power Sector Expansion Program PP EN 450.00 – 300.00 AUS 750.00
Subtotal 450.00 – 300.00 750.00
Sri Lanka
Strengthening the Regulatory Framework for Water
Supply and Sanitation (Supplementary) AD WS – – 40.00 CFWS 40.00
Microinsurance Sector Development AD FI – – 600.00 PRF 600.00
Agribusiness Development PP AG – 800.00 – 800.00
Small Towns Rural Arid Areas Water Supply and
Sanitation PP WS – 750.00 120.00 CFWS 870.00
Subtotal – 1,550.00 760.00 2,310.00
Tajikistan
Farm Analysis and Awareness-Raising for Debt
Resolution (Supplementary) AD AG – – 500.00 Canada 500.00
Dushanbe–Kyrgyz Border Road Rehabilitation, Phase III PP TC – 650.00 – 650.00
Second Education Sector Reform PP ED 400.00 – – 400.00
Khatlon Province Flood Management PP AG 500.00 – – 500.00
Strengthening Results Management in Support of
Poverty Reduction in Tajikistan AD MS – – 900.00 MfDRCF; 900.00
Sweden
Strengthening Corporate Management of Barki Tajik AD EN – 1,500.00 – 1,500.00
Subtotal 900.00 2,150.00 1,400.00 4,450.00
– = nil, AD = advisory, AG = agriculture and natural resources, AUS = Australia, CA = Cities Alliance, CFWS = Cooperation Fund for the Water Sector,
ED = education, EN = energy, FI = finance, HL = health, nutrition, and social protection, JSF = Japan Special Fund, LW = law, economic management, and public policy,
MfDRCF = Cooperation Fund in Support of Managing for Development Results, MS = multisector, NZ = New Zealand, PP = project preparatory, PRF = Poverty Reduction
Cooperation Fund, TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, UNFPA = United Nations Population
Fund, WS = water supply, sanitation, and waste management.
147
CONTINUED
TA
Thailand
Infrastructure Investment Advisory Assistance to the
Public Debt Management Office of Thailand
(Supplementary) AD MS 131.00 – – 131.00
Supporting the Implementation of the Capital Market
Development Master Plan AD FI 750.00 – – 750.00
Capacity Building for the Neighbouring Countries
Economic Development Cooperation Agency AD LW 200.00 – – 200.00
Infrastructure Investment Advisory Assistance (Phase II) AD TC 450.00 – – 450.00
Subtotal 1,531.00 – – 1,531.00

STATISTICAL ANNEXES
Timor-Leste
Dili Water Supply Performance Improvement AD WS – 1,000.00 – 1,000.00
Subtotal – 1,000.00 – 1,000.00
Tonga
Support for the Implementation of the Strategic
Development Plan 2006/07–2008/09 AD LW 510.00 – – 510.00
Rationalization of Public Enterprises, Phase III AD LW – 400.00 – 400.00
Subtotal 510.00 400.00 910.00
Tuvalu
Capacity Building for Taxation Reforms AD LW – 300.00 – 300.00
Subtotal – 300.00 – 300.00
Uzbekistan
Djizzak and Surkhandarya Rural Water Supply and
Sanitation Sector PP WS – 400.00 – 400.00
Implementation and Monitoring of Policy Reforms in
the Agriculture Sector AD AG 200.00 – 600.00 PRF 800.00
Support Banking Sector Development PP FI 150.00 – – 150.00
Rural Basic Education PP ED – 500.00 – 500.00
Regional Infrastructure (Roads) Project PP TC – 300.00 – 300.00
Subtotal 350.00 1,200.00 600.00 2,150.00
Vanuatu
Financial Services Commission on Institutional and
Legal Reforms AD FI 800.00 – – 800.00
Subtotal 800.00 – – 800.00

Viet Nam
Capacity Building for Water Resources Management
(Supplementary) AD AG – – 150.00 CFWS 150.00
Central Region Water Resources Sector (Supplementary) PP AG 79.00 – – 79.00
Central Region Water Resources Sector
(2nd Supplementary in 2006) PP AG 35.00 – – 35.00
Power Market Design AD EN 500.00 – – 500.00
Support Implementation of Public Administration
Reform Master Program (Subprogram II) PP LW 450.00 – – 450.00
Small and Medium-Sized Enterprise
Development Program – Subprogram II PP IN 600.00 – – 600.00
– = nil, AD = advisory, AG = agriculture and natural resources, CFWS = Cooperation Fund for the Water Sector, ED = education, EN = energy, FI = finance, IN
= industry and trade, JSF = Japan Special Fund, LW = law, economic management, and public policy, MS = multisector, PP = project preparatory, PRF = Poverty
Reduction Cooperation Fund, TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, WS = water supply, sanita-
tion, and waste management.
148
CONTINUED
TA
Capacity Strengthening of Viet Nam’s Regional

Cooperation Coordination and Public Investment
Planning AD LW 430.00 – – 430.00
Phu My Bridge Approach Roads AD TC 230.00 – – 230.00
Secondary Education for the Most Disadvantaged
Regions PP ED – 600.00 – 600.00
Support for Public–Private Development
of the O Mon Thermal Power Complex PP EN – 1,700.00 – 1,700.00
Health Care in the South Central Coast Region PP HL 450.00 – – 450.00
Capacity Building for Forests Livelihood Improvement in
the Central Highlands AD AG 250.00 – 7,570.00 TFF 7,820.00
STATISTICAL ANNEXES
Ho Chi Minh City Metro Rail System PP TC – 1,700.00 – 1,700.00
Hanoi Metro Rail System PP TC 400.00 – – 400.00
Viet Nam Water Sector Review AD MS 310.00 – 270.00 AUS, DEN, 580.00
NET
Preparing the State-Owned Enterprise Reform and
Corporate Governance Facilitation PP LW 300.00 – 500.00 LUX 800.00
Subtotal 4,034.00 4,000.00 8,490.00 16,524.00
TOTAL 57,030.73 37,560.00 44,794.00 139,384.73
– = nil, AD = advisory, AG = agriculture and natural resources, AUS = Australia, DEN = Denmark, ED = education, EN = energy, JSF = Japan Special Fund, HL = health, nutrition, and
social protection, IN = industry and trade, LUX = Luxembourg, LW = law, economic management, and public policy, MS = multisector, NET = The Netherlands, PP = project preparatory,
TA = technical assistance, TASF = Technical Assistance Special Fund, TC = transport and communications, TFF = Trust Fund for Forests.
149
TECHNICAL ASSISTANCE GRANTS BY SECTORa, 1967–2006, 2005, 2006
1967–2006b 2005 2006

Sector No. $ Thousand % No. $ Thousand % No. $ Thousand %
Agriculture and
Natural Resources 1066 513,315.02 21.99 37 21,041.60 16.37 23 19,994.00 14.34
Education 286 137,153.72 5.88 10 9,330.00 7.26 12 6,095.00 4.37
Energy 487 226,084.05 9.69 23 14,420.00 11.22 18 14,200.00 10.19
Finance 435 204,850.72 8.78 20 11,052.81 8.60 14 10,550.00 7.57
Social Protection 170 79,954.90 3.43 7 3,335.00 2.60 5 4,179.00 3.00
Industry and Trade 262 107,830.00 4.62 3 1,550.00 1.21 4 3,025.00 2.17
Law, Economic
STATISTICAL ANNEXES
Management, and
Public Policy 895 434,514.55 18.62 49 26,116.00 20.32 27 19,490.00 13.98
Transport and
Communications 616 295,790.45 12.67 28 17,124.00 13.33 30 21,810.00 15.65
Waste Management 250 109,183.45 4.68 12 5,110.00 3.98 14 8,100.00 5.81
Multisector 316 225,523.65 9.66 30 19,425.80 15.12 24 31,941.73 22.92
TOTAL 4,783 2,334,200.51 100.00 219 128,505.21 100.00 171 139,384.73 100.00
a Excludes loan-financed technical assistance (which are included in the loan data) and regional activities.
b Cumulative data adjusted to exclude technical assistance grants withdrawn by governments.
TECHNICAL ASSISTANCE LOANS AND GRANTS BY SECTOR, 2006
Sector Loan Granta Totalb %
Agriculture and Natural Resources 47.71 19.99 67.70 21.13

Education 9.77 6.10 15.86 4.95
Energy 32.59 14.20 46.79 14.60
Finance 3.73 10.55 14.28 4.46
Health, Nutrition, and Social Protection – 4.18 4.18 1.30
Industry and Trade 1.32 3.03 4.35 1.36
Law, Economic Management, and Public Policy – 19.49 19.49 6.08
Transport and Communications 30.94 21.81 52.75 16.46
Water Supply, Sanitation, and Waste Management 22.90 8.10 31.00 9.68
Multisector 32.04 31.94 63.98 19.97
TOTALb 181.01 139.38 320.39 100.00
– = nil.
a Excludes regional technical assistance grants.
b Totals may not add up because of rounding.
150
REGIONAL TECHNICAL ASSISTANCE ACTIVITIES, 2006
TASF JSF Others Source Total
CONFERENCE
Regional Workshops in Preparation for the Second
High Level Forum on Harmonization and Alignment for
Aid Effectiveness (Supplementary) – – 30.00 WB 30.00
Energy Efficiency Initiative Consultation Workshop
(Supplementary) – – 300.00 UK 300.00
Establishment of the CAREC Members Electricity Regulators
Forum (Supplementary) – – 242.80 PPIAF 242.80
International Conference on “Asia 2015: Promoting Growth,
Ending Poverty” (Supplementary) 150.00 – – 150.00
STATISTICAL ANNEXES
Promoting Best Practices in Private Sector Participation in
Urban Infrastructure in South Asia 500.00 – – 500.00
Third International Roundtable on Managing for Development Results 150.00 – – 150.00
Sixteenth Tax Conference – 150.00 – 150.00
Public Sector Accounting Standards (Third Phase) 245.00 – 245.00
Support Preparations for the CAREC Business Development
Forum – – 200.00 PRC RPRF 200.00
Capacity Development of Selected Developing Member
Countries on the Implementation of the Trade Facilitation
Agreement of the World Trade Organization – 450.00 – 450.00
Improving Administrative Data Sources for the Monitoring of
the Millennium Development Goal Indicators 500.00 – – 500.00
Asia Pacific Sustainable Development Summit 2007 600.00 – – 600.00
Supporting the Boao Forum for Asia in Promoting
Regional Cooperation and Integration in Asia 100.00 – – 100.00
Second ASEAN+3 Seminar on Poverty Reduction – 70.00 PRC RPRF 70.00
Subtotal 2,245.00 600.00 842.80 3,687.80
RESEARCH
Support to Trade Facilitation and Capacity Building in the GMS 650.00 – 650.00 PRC RPRF 1,300.00
Asian Development Outlook 2007 380.00 – – 380.00
Measurement and Policy Analysis for Poverty Reduction 330.00 – – 330.00
Eleventh Agriculture and Natural Resources Research at
International Agricultural Research Centers 1,000.00 – – 1,000.00
Subtotal 2,360.00 – 650.00 3,010.00
STUDY
ASEAN + 3 Regional Guarantee Mechanism (Supplementary) – – 35.00 PRC 35.00
GMS Southern Coastal Corridor (Supplementary) – 75.00 – 75.00
Scaling Up of the Social Protection Index for Committed
Poverty Reduction – – 900.00 PRF 900.00
Development Study of the North South Economic Corridor 200.00 – 400.00 PRC RPRF 600.00
Selected Evaluation Studies for 2006 1,400.00 – – 1,400.00
Remittances and Poverty in Central Asia and South Caucasus 300.00 – 1,000.00 PRF 1,300.00
Energy Sector Strategy and Development 1,000.00 – – 1,000.00
BIMSTEC Transport Infrastructure Logistics Study 960.00 – – 960.00
Minimizing Foreign Exchange Settlement Risk in the
ASEAN+3 Region – 700.00 – 700.00
– = nil, ASEAN = Association of Southeast Asian Nations, BIMSTEC = Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation, CAREC = Central
Asia Regional Economic Cooperation Program, GMS = Greater Mekong Subregion, JSF = Japan Special Fund, PPIAF = Public–Private Infrastructure Advisory Facility,
PRC = People’s Republic of China, PRC RPRF = People’s Republic of China Regional Cooperation and Poverty Reduction Fund, PRF = Poverty Reduction Cooperation
Fund; TASF = Technical Assistance Special Fund, UK = United Kingdom, WB = World Bank.
151
CONTINUED
Partnership on Persistent Organic Pollutants Pesticides Management

for Agricultural Production in Central Asian Countries – – 400.00 PRC RPRF 400.00
ASEAN + 3 Regional Basket Currency Bonds – 650.00 – 650.00
CAREC: Transport Sector Strategy Study 950.00 – – 950.00
Free Trade Agreements in Asia: The Way Ahead – 600.00 – 600.00
Sustainable Urban Transport 1,000.00 – – 1,000.00
Managing Hazardous Wastes 400.00 – – 400.00
South Asia Subregional Economic Cooperation
Tourism Development – 950.00 – 950.00
Sesan, Sre Pok, and Sekong River Basins Development Study in
Kingdom of Cambodia, Lao People’s Democratic Republic,
and Socialist Republic of Viet Nam 980.00 – – 980.00
STATISTICAL ANNEXES
Development of Regional Cooperation Programs for Mongolia

and the People’s Republic of China 800.00 – – 800.00
Mitigation of Transboundary Air Pollution from Coal-Fired
Power Plants in North-East Asia 900.00 – – 900.00
ASEAN+3 Regional Guarantee and Investment Mechanism
Phase 2 200.00 – 300.00 PRC RPRF 500.00
Emerging Asian Regionalism: Ten Years after the Crisis – 980.00 – 980.00
Natural Resources Sector Studies 150.00 – – 150.00
Subtotal 9,240.00 3,955.00 3,035.00 16,230.00
TRAINING
GMS Phnom Penh Plan for Development Management Phase II
(Supplementary) – – 500.00 New Zealand 500.00
Workshop on Proposed South Asian Association for
Regional Cooperation Development Fund 150.000 – – 150.00
Regional Seminars on Anticorruption 2006–2007 300.00 – – 300.00
Pilot Strengthening of Civil Society Participation in Development
in the Pacific 500.00 – – 500.00
Support for APEC Fiscal and Financial Initiatives 800.00 – – 800.00
Support for Strengthening the Tsunami Development
Assistance Database 800.00 – – 800.00
Technical Training and Capacity Building for Selected ASEAN+3
Countries on Regional Economic and Financial Monitoring – 400.00 500.00 PRC RPRF 900.00
Seminars on Business Opportunities in 2006–2009 400.00 – – 400.00
Developing National Consultants in Developing Member
Countries 400.00 – – 400.00
Capacity Building for Designing, Negotiating, and Implementing
Free Trade Agreements in Selected Asian Developing
Member Countries – – 500.00 PRC RPRF 500.00
Disbursement Training Seminars for DMCs, 2007–2008 150.00 – – 150.00
Loan Products Workshops in DMCs in 2007–2009 150.00 – – 150.00
Capacity Building and Regional Cooperation of Selected Credit
Rating Agencies in Asia – 600.00 – 600.00
Central Asia Regional Economic Cooperation: Capacity Development
for Regional Cooperation in CAREC Participating Countries, Phase I 490.00 – 500.00 PRC RPRF 990.00
Supporting Strengthened Regional Cooperation among Pacific
Developing Member Countries – 1,000.00 – 1,000.00
Debt Management Products Training Sessions and Workshops
in DMCs in 2007–2009 150.00 – – 150.00
Subtotal 4,290.00 2,000.00 2,000.00 8,290.00
– = nil, APEC = Asia–Pacific Economic Cooperation, ASEAN = Association of Southeast Asian Nations, CAREC = Central Asia Regional Economic Cooperation, DMC
= developing member country, GMS = Greater Mekong Subregion, JSF = Japan Special Fund, PRC RPRF = People’s Republic of China Regional Cooperation and
Poverty Reduction Fund, TASF = Technical Assistance Special Fund.
152
CONTINUED
OTHERS
Rolling Out Air Quality Management in Asia (Supplementary) – – 2,430.00 Sweden 2,430.00
Subregional Economic Cooperation in South and Central Asia 950.00 – – 950.00
Developing the Greater Mekong Subregion Energy Sector
Strategy 900.00 – – 900.00
GMS Regional Power Trade Coordination and Development – – 1,200.00 AFD 1,200.00
Strengthening Epidemiological Surveillance and Response for
Communicable Diseases in Indonesia, Malaysia, and
Philippines 1,200.00 – – 1,200.00
Mainstreaming Managing for Development Results in Support of
Poverty Reduction in South Asia – – 1,800.00 PRF 1,800.00
Mainstreaming Managing for Development Results in Support of
STATISTICAL ANNEXES
Poverty Reduction in South Asia (Supplementary) – – 500.00 MfDRCF 500.00
Implementation of the GMS Cross-Border Transport Agreement 400.00 – 400.00 PRC RPRF 800.00
Implementation of the GMS Cross-Border Transport Agreement
(Supplementary) – – 1,000.00 Australia 1,000.00
Maintenance of Regional Road Transport Corridors – 500.00 – 500.00
The Asia Regional Information Center 780.00 – – 780.00
Asian Development Community Broadcasting Initiative – – 150.00 PRF 150.00
Supporting the Use of Country Procurement Systems 600.00 – – 600.00
Civil Society Initiatives on Anti-Corruption 150.00 – – 150.00
Fighting HIV/AIDS in Asia and the Pacific – – 8,670.00 HIV 8,670.00
External Advisory Panel on the Future of the Asia and
Pacific Region 700.00 – – 700.00
Expansion of Subregional Cooperation in Agriculture in the GMS 400.00 – 600.00 PRC RPRF 1,000.00
Promoting Effective Water Management Policies and Procedures
(Phase 5) 200.00 – 3,000.00 CFWS 3,200.00
External Forums for Selected Sectors and Thematic Priorities
at the ADB 400.00 – – 400.00
Capacity Building for Financial Institutions 1,350.00 – – 1,350.00
Statistical Capacity Building in the Asia and Pacific Region 600.00 – – 600.00
Kyoto Annual Meeting Pre-Event: Asian and Pacific Youth
Forum on Sustainable Development – 150.00 – 150.00
Development Partnership Program for South Asia – – 8,500.00 AASADPF 8,500.00
Supporting the Inception of the Energy Efficiency Initiative in
Developing Member Countries 600.00 – – 600.00
Process Development for Preparing and Implementing Integrated
Water Resources Management Plans – – 1,000.00 The Netherlands 1,000.00
Enhancement of Subregional Cooperation in BIMP-EAGA
and IMT-GT 750.00 – 250.00 PRC RPRF 1,000.00
Private Sector Development Initiative 1,100.00 – 7,600.00 Australia 8,700.00
Central Asian Countries Initiative for Land Management
Multicountry Partnership Framework Support 800.00 – 3,225.00 IFAD/GEF 4,025.00
Preparing the Energy Sector Dialogue and South Asian
Association for Regional Cooperation Energy Center
Capacity Development 1,000.00 – – 1,000.00
South Asia Subregional Economic Cooperation
Information Highway – – 500.00 Korea, Republic of 500.00
Strengthening Governance and Accountability in Pacific
Island Countries – 982.50 596.50 Australia 1,579.00
– = nil, AASADPF = Australia–ADB South Asia Development Partnership Facility, AFD = Agence Française de Developpement, BIMP-EAGA = Brunei Darussalam–Indonesia–
Malaysia–Philippines East Asean Growth Area, CFWS = Cooperation Fund for the Water Sector, GEF = Global Environment Facility, GMS = Greater Mekong Subregion, HIV/AIDSCF
= Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific, IFAD = International Fund for Agricultural Development, IMT–GT = Indonesia–Malaysia–Thailand Growth Triangle,
JSF = Japan Special Fund, MfDRCF = Cooperation Fund in Support of Managing for Development Results, PRC RPRF = People’s Republic of China Regional Coopera-
tion and Poverty Reduction Fund, PRF = Poverty Reduction Cooperation Fund, TASF = Technical Assistance Special Fund.
153
CONTINUED
Preparing Clean Energy Projects Eligible for the Clean

Development Mechanism – 840.00 – 840.00
Access to Justice for the Urban Poor 500.00 – – 500.00
Community of Practice on Managing for Development Results -
Phase II 750.00 – – 750.00
Prevention and Control of Avian Influenza in Asia and the
Pacific 3,000.00 10,000.00 – 13,000.00
Subtotal 17,130.00 12,472.50 41,421.50 71,024.00
TOTAL 35,265.00 19,027.50 47,949.30 102,241.80

STATISTICAL ANNEXES
– = nil, JSF = Japan Special Fund, TASF = Technical Assistance Special Fund.
154
NET TRANSFER OF RESOURCES
(ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND),a,b 2004–2006
($ million)
OCR ADF
Country 2004 2005 2006 2004 2005 2006
Afghanistan 1.65 33.51 9.54 40.48 20.66 63.62

Azerbaijan – – 3.92 – 0.50 4.03
Bangladesh 89.61 93.38 53.00 (70.07) (12.21) 53.65
Bhutan (0.07) (0.14) (1.90) 5.35 10.48 2.37
Cambodia – 70.87 76.73 45.06
China, People’s Republic of 0.49 544.64 517.25 – – –
Cook Islands – – – 1.14 0.53 (0.34)
STATISTICAL ANNEXES
Fiji Islands 4.11 8.30 2.62 – – –
Hong Kong, China – – – – – –
India (1,036.01) 457.20 264.28 – – –
Indonesia (282.67) 105.23 12.15 28.93 37.58 67.44
Kazakhstan (85.67) (153.38) 118.29 0.22 (0.47) (1.51)
Kiribati – – – 2.32 1.36 (0.10)
Korea, Republic of (66.84) (1,756.33) (19.32) – – –
Kyrgyz Republic – – – 50.36 25.10 35.76
Lao People’s Democratic Republic – 25.07 11.49 31.00 47.78 49.21
Malaysia (59.48) (66.85) – – – –
Maldives – – – 0.94 3.66 3.63
Marshall Islands (0.34) (0.21) (0.22) 0.74 (0.05) (0.51)
Micronesia, Federated States of – – – 0.63 1.24 1.94
Mongolia 6.00 (0.57) (5.00) 32.54 21.13 18.36
Myanmar – – – – – –
Nauru – – – – – –
Nepal (6.01) (5.71) (5.99) (17.34) 2.92 62.45
Pakistan (922.29) 150.45 404.94 59.31 92.46 56.07
Papua New Guinea (14.57) (4.78) (38.76) (0.10) (4.75) 3.31
Philippines (194.47) (89.81) 302.15 (24.07) (29.13) (33.70)
Samoa – – – (0.17) (0.35) (1.99)
Singapore – – – – – –
Solomon Islands – – – (0.71) 1.16 2.35
Sri Lanka 36.64 21.16 6.99 79.66 101.54 66.39
Taipei,China – – – – – –
Tajikistan – – – 19.00 25.22 34.05
Thailand (98.67) (390.98) (117.43) (3.55) (3.44) (3.35)
Tonga – – – (1.26) (1.37) (1.46)
Tuvalu – – – 0.01 0.06 1.14
Uzbekistan 68.39 69.70 27.59 2.43 (0.21) (0.05)
Vanuatu – – – (0.92) (0.93) (1.08)
Viet Nam 6.79 (13.39) (7.31) 160.80 195.02 139.44
Regional (6.32) (27.65) 14.20 – – 0.15
TOTALc (2,559.73) (987.32) 1,485.65 468.54 612.24 666.33
– = nil, ( ) = negative, ADF = Asian Development Fund, OCR = ordinary capital resources.
a Net transfer of resources for OCR defined as loan disbursements less principal repayments/prepayments and interest/charges received. Includes nonsovereign loans
and net equity investments.
b Net transfer of resources for ADF defined as loan disbursements less principal repayments and interest/charges received.
c Totals may not add up because of rounding.
155
NET TRANSFER OF RESOURCES
(ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND),a 1997–2006
($ million)
1997–2001
Country Average 2002 2003 2004 2005 2006
Afghanistan – 82.99 54.54 42.13 54.17 73.16

Azerbaijan – – – – 0.50 7.95
Bangladesh 141.59 71.96 67.88 19.54 81.17 106.65
Bhutan 4.54 12.71 3.28 5.28 10.34 0.47

Cambodia 31.75 76.40 68.40 70.87 76.73 45.06
China, People’s Republic of 458.19 (246.41) (1,977.89) 0.49 544.64 517.25
Cook Islands 0.96 (0.33) (0.02) 1.14 0.53 (0.34)

Fiji Islands (4.05) (2.98) 0.92 4.11 8.30 2.62
STATISTICAL ANNEXES
Hong Kong, China – – – – – –
India 103.74 (122.96) (1,197.14) (1,036.01) 457.20 264.28

Indonesia 226.13 115.78 (402.07) (253.74) 142.80 79.59
Kazakhstan 32.64 (26.50) (19.57) (85.45) (153.85) 116.78
Kiribati 0.41 0.72 2.27 2.32 1.36 (0.10)

Korea, Republic of 512.71 (136.36) (2,122.84) (66.84) (1,756.33) (19.32)
Kyrgyz Republic 49.20 24.17 22.18 50.36 25.10 35.76
Lao People’s Democratic Republic 51.14 37.65 40.53 31.00 72.84 60.70
Malaysia (31.32) (49.42) (69.04) (59.48) (52.99) (66.85)
Maldives 1.05 5.59 3.91 0.94 3.66 3.63
Marshall Islands 7.74 7.59 4.20 0.40 (0.26) (0.73)

Micronesia, Federated States of 5.72 1.08 2.42 0.63 1.24 1.94
Mongolia 39.54 22.67 34.52 38.54 20.56 13.36
Myanmar (3.51) – (1.44) – – –

Nauru 0.42 – – – – –
Nepal 64.94 (9.26) (6.51) (23.35) (2.79) 56.46
Pakistan 86.15 58.21 (3.32) (862.98) 242.91 461.01

Papua New Guinea (0.17) (16.95) (17.72) (14.67) (9.52) (35.45)
Philippines (109.35) (196.71) (72.25) (218.54) (118.94) 268.45
Samoa (0.33) (1.22) (0.81) (0.17) (0.35) (1.99)

Singapore – – – – – –
Solomon Islands 2.17 – (2.98) (0.71) 1.16 2.35
Sri Lanka 69.14 125.26 165.74 116.30 122.70 73.38

Taipei,China – – – – – –
Tajikistan 4.95 13.81 14.24 19.00 25.22 34.05
Thailand 79.10 (1,462.42) (226.78) (102.22) (394.42) (120.78)

Tonga 1.79 4.14 5.02 (1.26) (1.37) (1.46)
Tuvalu 0.78 (0.04) 0.09 0.01 0.06 1.14
Uzbekistan 20.91 16.35 32.23 70.82 69.49 27.54
Vanuatu 5.79 (0.24) (0.84) (0.92) (0.93) (1.08)

Viet Nam 170.19 223.03 280.31 167.59 181.62 132.13
Regional 10.02 (8.23) (2.58) (6.32) (27.65) 14.35
TOTALb 2,034.68 (1,379.92) (5,321.09) (2,091.18) (375.08) 2,151.98

– = nil, ( ) = negative.
a Net transfer of resources defined as loan disbursements less principal repayments/prepayments and interest/charges received. Includes nonsovereign loans and net
equity investments.
156
ASIAN DEVELOPMENT FUND RESOURCES AND COMMITMENT AUTHORITY
ADF-CONTRIBUTED RESOURCES
Change in 2006
Valued as of Exchange Rate Net Valued as of
31 December 2005 Addition Adjustment Change 31 December 2006
Country ($ equivalent) ($ equivalent) ($ equivalent) ($ equivalent) ($ equivalent) (SDR equivalenta)
Australia 1,243.20 51.20 99.29 150.49 1,393.69 926.41
Austria 200.76 5.86 23.26 29.12 229.88 152.81
Belgium 175.74 10.57 20.84 31.41 207.15 137.70
Canada 1,569.21 44.17 (9.18) 34.99 1,604.20 1,066.34
China, People’s Republic of 7.00 7.00 – 7.00 14.00 9.31
Denmark 201.21 7.36 23.59 30.95 232.16 154.32
Finland 111.64 4.15 13.02 17.17 128.81 85.62
STATISTICAL ANNEXES
France 1,010.28 70.60 120.53 191.13 1,201.41 798.60
Germany 1,543.21 39.06 179.34 218.40 1,761.61 1,170.97
Hong Kong, China 41.03 4.48 – 4.48 45.51 30.25
Indonesia 14.96 – – – 14.96 9.94
Italy 676.46 – 77.74 77.74 754.20 501.33
Japan 11,338.94 253.24 (134.17) 119.07 11,458.01 7,616.33
Korea, Republic of 188.89 32.30 14.88 47.18 236.07 156.92
Luxembourg 37.04 1.73 4.33 6.06 43.10 28.65
Malaysia 7.92 1.21 0.61 1.82 9.74 6.47
Nauru 1.93 – – – 1.93 1.28
The Netherlands 606.00 23.91 70.40 94.31 700.31 465.51
New Zealand 100.89 – 3.25 3.25 104.14 69.22
Norway 167.02 8.30 13.67 21.97 188.99 125.62
Portugal 60.61 9.59 7.58 17.17 77.78 51.70
Singapore 5.01 1.01 0.44 1.45 6.46 4.29
Spain 276.42 14.12 33.38 47.50 323.92 215.32
Sweden 241.28 11.42 39.04 50.46 291.74 193.92
Switzerland 330.23 10.01 26.12 36.13 366.36 243.53
Taipei,China 47.50 4.40 – 4.40 51.90 34.50
Thailand 5.61 0.73 0.93 1.66 7.27 4.83
Turkey 105.43 – – – 105.43 70.08
United Kingdom 854.27 98.62 122.82 221.44 1,075.71 715.04
United States 3,234.79 92.41 – 92.41 3,327.20 2,211.65
TOTAL 24,404.47 807.42 751.76 1,559.18 25,963.65 17,258.46
ADF COMMITMENT AUTHORITY

2005 2006
Carryover from ADF VIII 114.90 120.94b

ADF IX Contributions 497.60 1,292.91c
ADF VII and VIII Contributions 151.77 157.81
OCR Net Income Transfer 40.00 80.00
Loans Savings and Cancellation 316.54
Expanded Advance Commitment Authority 899.34 1,893.23
Less: Provision for Disbursement Risk 44.81 120.07
Total ADF Commitment Authority 1,658.80 3,741.36d
Less: Loans and Grants Committed 1,619.03 3,240.27e
Carryover of Conditional Loans Committed
ADF Commitment Authority Available for Future Commitments 39.77 501.09
– = Data not applicable, ADF = Asian Development Fund, OCR = ordinary capital resources.
a Refers to special drawing rights (SDR) valued at the rate of $1.5044 per SDR as of 31 December 2006.
b The US dollar equivalent of SDR80.39 million at each year-end exchange rates.
c Contributions received to finance forgone interest of grants are excluded as they have been incorporated in the computation of the Expanded Advance Commitment
Authority.
d Includes resources made available under the ADF IX period (starting 1 January 2005).
e Loans and grants approved from 1 January 2005 to 31 December 2006.
157
TECHNICAL ASSISTANCE SPECIAL FUND
($ thousand; as of 31 December 2006)
Total Amount
Contributions Utilized
Direct Voluntary Contributions

Australia 2,484 2,484
Austria 159 159
Bangladesh 47 47
Belgium 1,394 1,394

Canada 3,346 3,346
China, People’s Republic of 1,600 1,600
Denmark 1,963 1,963

STATISTICAL ANNEXES
Finland 237 237

France 1,697 1,697
Germany 3,315 3,315

Hong Kong, China 100 100
India 3,008 3,008
Indonesia 250 250

Italy 774 774
Japan 47,710 47,710
Korea, Republic of 1,900 1,900

Malaysia 909 909
Nauru – –
The Netherlands 1,338 1,338

New Zealand 1,096 1,096
Norway 3,279 3,279
Pakistan 1,666 1,666

Singapore 1,100 1,100
Spain 190 190
Sri Lanka 6 6
Sweden 862 862
Switzerland 1,035 1,035
Taipei,China 200 200

Turkey – –
United Kingdom 5,617 5,617
United States 1,500 1,500
Subtotal 88,782 88,782
Regularized Replenishment Contributionsa 425,668 311,879
Transfer to Asian Development Fund (3,472) (3,472)
Allocation from OCR Net Incomeb 835,882 729,138
Subtotal 1,258,078 1,037,545
Total 1,346,860 1,126,327
– = Data not applicable, ( ) = negative, OCR = ordinary capital resources.

a Represents Technical Assistance Special Fund (TASF) portion of contributions to the replenishment of the Asian Development Fund and the TASF authorized by
Governors’ Resolution Nos. 182, 214, and 300 at historical values.
b Includes income, repayments, and reimbursements to the TASF since 1980, including investment holding gains (losses).
158
JAPAN SPECIAL FUND—Regular and Supplementary Contributions
Statement of Activities and Change in Net Assets
($ million)
1988–2000a 2001 2002 2003 2004 2005 2006 Total
Contributions Committed 782.6 30.9 22.5 16.7 24.2 27.3 24.5 928.7
Revenue 108.9 14.2 5.9 3.3 4.3 7.1 10.7 154.4
Total 891.5 45.1 28.4 20.0 28.5 34.4 35.2 1,083.1
Transfer to Cooperation Fund for

Regional Trade and Financial
Security Initiative – – – – (1.0) – – (1.0)
Expenses 665.4 65.9 35.9 39.6 19.7 35.9 51.1 913.5
STATISTICAL ANNEXES
Exchange Gain (Loss) (23.6) (1.0) (0.6) (0.3) 1.2 (0.8) (0.1) (25.2)
Translation Adjustments (12.5) – – – – – – (12.5)
Change in Net Assets 190.0 (21.8) (8.1) (19.9) 9.0 (2.3) (16.0) 130.9
a Prior years’ amounts have been restated to conform with the 1995 presentation.
JAPAN SPECIAL FUND—Asian Currency Crisis Support Facility
Statement of Activities and Change in Net Assets
($ million)
1999-2001 2002 2003 2004 2005 2006 Total
Contributions Committed 241.0a – – – – – 241.0

Revenue 0.7 1.4 0.7 0.5 1.1 1.7 6.1
Total 241.7 1.4 0.7 0.5 1.1 1.7 247.1
Transfer to Japan Fund for Poverty Reduction – (90.0) – – – – (90.0)

Interest Payment Assistance Written Back – 33.2 – – – – 33.2
Expenses 114.1 16.2 1.2 (0.9) (0.8) (0.4) 129.4
Exchange Gain (Loss) (0.2) (1.5) – – – – (1.7)
Translation Adjustments (27.5) 1.2 – – – – (26.3)
Change in Net Assets 99.9 (71.9) (0.5) 1.4 1.9 2.1 32.9
a A guarantee facility is provided under the Asian Currency Crisis Support Facility for which the Government of Japan has made available noninterest-bearing, non-
negotiable notes in the amount of 360 billion yen, encashable by ADB at any time to meet a call on any guarantee. In the absence of any concluded guarantee,
the note was returned to the Government of Japan on 25 March 2002.
159
JAPAN FUND FOR POVERTY REDUCTION, 2006
$ Thousand
Afghanistan
North–South Corridor 20,000
Rural Business Support 18,000
Azerbaijan
Affordable Services and Water Conservation for the Urban Poor 1,000
Bhutan
Rural Electricians Training Program 1,000
India
Restoration and Diversification of Livelihoods for Tsunami-Affected Poor and
STATISTICAL ANNEXES
Marginalized People in the States of Tamil Nadu and Kerala 5,000
Indonesia
Supporting Community Health Care Initiatives in Nanggroe Aceh Darussalam 2,000a

Catalyzing Microfinance for the Poor 1,980
Mongolia
Nonformal Skills Training for Unemployed Youth and Adults 1,000
Nepal
Improving the Livelihoods of Poor Farmers and Disadvantaged Groups in the Eastern Development Region 1,000
Pakistan
Immediate Support to Poor and Vulnerable Households in Inaccessible Areas Devastated by the 2005 Earthquake 5,000
Iron and Folic Acid Fortification in Small-Scale Milling to Improve the Lives of the Poor, especially Women and Children 1,998
Philippines
Developing Financial Cooperatives 900
Southern Leyte Landslide Disaster Assistance 3,000
Tajikistan
Community-Based Rural Power Supply 2,000
Uzbekistan
Basic Education for Children with Special Needs 1,500
Viet Nam
Nutritious Food for 6–24-Month Old Children Vulnerable to Malnutrition in Poor Areas 1,995
Expansion of Learning Opportunities for Ethnic Minority Youth 1,500
Improving Vitamin A Nutrition and Deworming for Poor and Vulnerable Children 1,000
Total 69,873b
a Project was approved in January but was cancelled in December 2007.

b At the end of the year, total was $67.87 million due to the cancellation of INO: Supporting Community Health Care Initiatives in Nanggroe Aceh Darussalam.
160
PROJECTS WITH ADB-ADMINISTERED GRANT FINANCING, 2006 APPROVALS
Amount ($ thousand)
Project Name Technical Soft Loan

Assistance Components
BILATERAL TRUST FUNDS
Australia
REG Implementation of the GMS Cross-Border Transport Agreement (Supplementary) 1,000.0
REG Development Partnership Program for South Asia 8,500.0
REG Private Sector Development Initiative 7,600.0
REG Strengthening Governance and Accountability in Pacific Island Countries 596.5
PNG Demographic and Health Survey 1,320.0
PNG HIV/AIDS Prevention and Control in Rural Development Enclaves 3,500.0
SAM Preparing the Power Sector Expansion Program 300.0
STATISTICAL ANNEXES
SOL Post-Conflict Emergency Rehabilitation 2,000.0
SOL Road Improvement (Sector) 6,100.0
VIE Water Sector Review 60.0
Subtotal 19,376.5 11,600.0
Canada
TAJ Farm Analysis and Awareness-Raising for Debt Resolution 500.0
AFG Western Basins Water Resources Management Project 13,200.0
Subtotal 500.0 13,200.0

REG ASEAN+3 Regional Guarantee Mechanism (Supplementary) 35.0
Subtotal 35.0
PRC Poverty Reduction and Regional Cooperation Fund

REG Second ASEAN+3 Seminar on Poverty Reduction 70.0
REG Implementation of the GMS Cross-Border Transport Agreement 400.0
REG Development Study of the North South Economic Corridor 400.0
REG Expansion of Subregional Cooperation in the Agriculture Sector in the GMS 600.0
REG Support to Trade Facilitation and Capacity Building in the GMS 650.0
REG Partnership on Persistent Organic Pollutants Pesticides Management for Agricultural Production in
Central Asian Countries 400.0
REG Support Preparations for CAREC Business Development Forum 200.0
REG Technical Training and Capacity Building for Selected ASEAN+3 Countries on Regional Economic and
Financial Monitoring 500.0
REG Capacity Building for Designing, Negotiating, and Implementing Free Trade Agreements in
Selected Asian Developing Member Countries 500.0
REG Enhancement of Subregional Cooperation in BIMP-EAGA and IMT-GT 250.0
REG ASEAN+3 Regional Guarantee and Investment Mechanism Phase 2 300.0
REG Central Asia Regional Economic Cooperation: Capacity Development for Regional Cooperation in
CAREC Participating Countries, Phase I 500.0
Subtotal 4,770.0
Denmark
LAO Institutional Strengthening for Rural Finance 300.0
NEP Kathmandu Valley Water Distribution, Sewerage, and Urban Development 400.0
Subtotal 750.0
Finland
BHU Accelerated Rural Electrification 300.0
Subtotal 300.0
ADB = Asian Development Bank, AFG = Afghanistan, ASEAN = Association of Southeast Asian Nations, BHU = Bhutan, BIMP-EAGA = Brunei Darussalam–
Indonesia–Malaysia–Philippines East Asean Growth Area, CAREC = Central Asia Regional Economic Cooperation, DMC = developing member country,
GMS = Greater Mekong Subregion, IMT–GT = Indonesia–Malaysia–Thailand Growth Triangle, LAO = Lao People’s Democratic Republic, NEP = Nepal, PNG = Papua
New Guinea, PRC = People’s Republic of China, REG = regional, SAM = Samoa, SOL = Solomon Islands, TAJ = Tajikistan, VIE = Viet Nam.
161
CONTINUED
Amount ($ thousand)

France
Agence Française de Dévelloppement (AFD)

REG GMS Regional Power Trade Coordination and Development 1,200.0
Subtotal 1,200.0
France-AFD Cooperation Fund for Project Preparation in the GMS
CAM Water Resources Management (Sector) 300.0
Subtotal 300.0
STATISTICAL ANNEXES
Japan Fund for Information and Communication Technology

LAO Upgrading of ICT and MIS at the Agriculture Promotion Bank 472.0
PHI Supporting Information Sharing and Exchange among Civil Servants 500.0
Subtotal 972.0
Republic of Korea e-Asia and Knowledge Partnership Fund

REG South Asia Subregional Economic Cooperation (SASEC) Information Highway 500.0
MON Institutional Strengthening for Customs Modernization 500.0
Subtotal 500.0 500.0
Luxembourg
LAO Promoting Governance in Financial Transactions 150.0
Subtotal 150.0
The Netherlands
INO Decentralized Basic Education 28,000.0
INO Infrastructure Reform Sector Development Program 7,560.0
REG Process Development for Preparing and Implementing Integrated Water Resources Management Plans 1,000.0
SRI Tsunami-Affected Areas Rebuilding Project 8,735.0
Subtotal 1,160.0 44,294.9
Norway
SRI Conflict-Affected Areas Rehabilitation 8,600.0
Subtotal 8,600.0
New Zealand
PNG Demographic and Health Survey 662.0
PNG HIV/AIDS Prevention and Control in Rural Development Enclaves 3,500.0
REG GMS Phnom Penh Plan for Development Management Phase II (Supplementary) 500.0
SOL Post-Conflict Emergency Rehabilitation 6,500.0
SOL Road Improvement (Sector) 9,750.0
Subtotal 1,162.0 19,750.0
Spain
PRC Strengthening Flood Management Sustainability in Hunan Province (Hunan Flood Management Sector) 500.0
PRC Logistics Development and Capacity Building in Xinjiang Uygur Autonomous Region 425.0
Subtotal 925.0
Sweden
REG Rolling Out Air Quality Management in Asia 2,430.0
TAJ Strengthening Results Management in Support of Poverty Reduction in Tajikistan 500.0
Subtotal 2,930.0
CAM = Cambodia, DMC = developing member country, GMS = Greater Mekong Subregion, INO = Indonesia, LAO = Lao People’s Democratic Republic, MON =
Mongolia, PHI = Philippines, PNG = Papua New Guinea, PRC = People’s Republic of China, REG = regional, SOL = Solomon Island, SRI = Sri Lanka, TAJ = Tajikistan,
VIE = Viet Nam.
162
Amount ($ thousand)

Switzerland
LAO Northern Region Sustainable Livelihoods through Livestock Development 3,500.0
Subtotal 3,500.0
United Kingdom
BAN Second Rural Infrastructure Improvement 56,700.0
INO Pro-poor Planning and Budgeting 300.0
REG Energy Efficiency Initiative Consultation Workshop (Supplementary) 300.0
Subtotal 600.0 56,700.0
STATISTICAL ANNEXES
MULTIDONOR COOPERATION FUNDS/PARTNERSHIP
Cities Alliance
PHI Metro Manila Urban Services for the Poor Project 500.0
Subtotal 500.0
Cooperation Fund for the Water Sector

BAN Second Urban Governance and Infrastructure Improvement (Sector) 100.0
BAN Dhaka Water Supply 160.0
IND Project Implementation and Urban Management Improvement in the North Eastern Region (Phase I) 120.0
IND Preparing the Orissa Integrated Irrigated Agriculture and Water Management 110.0
IND North Eastern Integrated Flood and Riverbank Erosion Management (Assam) 50.0
NEP Kathmandu Valley Water Distribution, Sewerage, and Urban Development 160.0
REG Promoting Effective Water Management Policies and Practices (Phase 5) 3,000.0
SRI Strengthening the Regulatory Framework for Water Supply and Sanitation (Supplementary) 40.0
SRI Small Towns Rural Arid Areas Water and Sanitation 120.0
VIE Capacity Building for Water Resources Management (TA Cluster) 150.0
Subtotal 4,010.0
Financial Sector Development Partnership Fund

MON Strengthening the Pension System 500.0
VIE State-Owned Enterprise Reform and Corporate Governance Facilitation 500.0
Subtotal 1,000.0
Global Environment Facility

REG Central Asian Countries Initiative for Land Management Multicountry Partnership Framework Support 3,025.0
Subtotal 3,025.0
Gender and Development Cooperation Fund

CAM Capacity Development of Female Commune Council Networks 200.0
NEP Capacity Building for Gender Equality and Empowerment of Women 300.0
Subtotal 500.0
Governance Cooperation Fund

AFG Support to the Afghanistan National Development Strategy 600.0
Subtotal 600.0
Cooperation Fund for Fighting HIV-AIDS in Asia and the Pacific

REG Fighting HIV/AIDS in Asia and the Pacific 8,670.0
Subtotal 8,670.0
International Fund for Agricultural Development

REG Central Asian Countries Initiative for Land Management Multicountry Partnership Framework Support 200.0
Subtotal 200.0
AFG = Afghanistan, BAN = Bangladesh, CAM = Cambodia, DMC = developing member country, IND = India, INO = Indonesia, LAO = Lao People’s Democratic
Republic, MON = Mongolia, NEP = Nepal, PHI = Philippines, REG = regional, SRI = Sri Lanka, VIE = Viet Nam.
163
CONTINUED
Amount ($ thousand)
DMC Project Name Technical Soft Loan

Cooperation Fund in Support of Managing for Development Results

NEP Operationalization of Managing for Development Results 400.0
KGZ Development of a Monitoring and Evaluation System at the Oblast Level 300.0
TAJ Strengthening Results Management in Support of Poverty Reduction in Tajikistan 400.0
RMI Building Capacity for Independent Country Partnership Strategy and Country Performance
Assessment Results Management – A Pacific Pilot 150.0
AFG Support to the Afghanistan National Development Strategy 400.0
REG Mainstreaming Managing for Development Results in Support of Poverty Reduction in South Asia 500.0
Subtotal 2,150.0
STATISTICAL ANNEXES
Public–Private Infrastructure Advisory Facility

REG Establishment of the CAREC Members Electricity Regulators Forum (Supplementary) 242.8
Subtotal 242.8
Poverty Reduction Cooperation Fund

CAM Dormitories and Learning Centers for Secondary Schoolgirls 800.0
KGZ A Study of the Impact of Land Reform on Agriculture, Poverty Reduction, and Environment 130.0
LAO Revitalizing Community Demand for Immunization Project 140.0
NEP Enhancing Poverty Reduction Impact of Road Projects 350.0
NEP Economic and Social Inclusion of the Disadvantaged Poor through Livelihood Enhancement
with Micro-Irrigation 450.0
NEP Enabling the Private Sector to Undertake Poverty-Focused Water Distribution and Strengthening of
Institutional Reforms in Kathmandu Valley 570.0
REG Mainstreaming Managing for Development Results in Support of Poverty Reduction in South Asia 1,800.0
REG Scaling Up the Social Protection Index for Committed Poverty Reduction 900.0
REG Remittances and Poverty in Central Asia and South Caucasus 1,000.0
REG Asian Development Community Broadcasting Initiative 150.0
SRI Microinsurance Sector Development 600.0
UZB Implementation and Monitoring of Policy Reforms in the Agriculture Sector 600.0
Subtotal 7,490.0
Trust Fund for Forests (contributions from Finland, the Netherlands, Sweden, and Switzerland)
VIE Capacity Building for Forests Livelihood Improvement in the Central Highlands 7,570.0
VIE Forests for Livelihood Improvement in the Central Highlands Sector Project 8,000.0
Subtotal 7,570.0 8,000.0
UK–DFID–IND
IND Chharttisgarh State Roads Sector Development 1,600.0
IND Knowledge Management and Capacity Building 2,000.0
IND Project Processing and Capacity Building Development 15,000.0
IND Preparing the Orissa Integrated Irrigated Agriculture and Water Management 590.0
IND Capacity Building for Rural Cooperative Credit Structure Reform 2,000.0
IND North Eastern Integrated Flood and Riverbank Erosion Management (Assam) 800.0
Subtotal 21,990.0
UNFPA
PNG Demographic and Health Survey 107.0
Subtotal 107.0
World Bank
REG Regional Workshops in Preparation for the Second High-Level Forum on Harmonization
and Alignment for Aid Effectiveness 30.0
Subtotal 30.0
TOTAL 93,715.3 166,144.9

AFG = Afghanistan, CAM = Cambodia, CAREC = Central Asia Regional Economic Cooperation, DMC = developing member country, IND = India, KGZ = Kyr-
gyz Republic, LAO = Lao People’s Democratic Republic, NEP = Nepal, PNG = Papua New Guinea, NEP = Nepal, PNG = Papua New Guinea, REG = regional,
RMI = Republic of Marshall Islands, SRI = Sri Lanka, TAJ = Tajikistan, UK–DFID–IND = United Kingdom–Department for International Development–India,
UNFPA = United Nations Population Fund, UZB = Uzbekistan, VIE = Viet Nam.
164
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2006
PROJECT LOANS—ORDINARY CAPITAL RESOURCES (amounts in $ million)
Goods and Total
Related Services, % Consulting % Contracts %
Country and Civil Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.00 0.00 0.00 0.00 0.00 0.00
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 3.48 0.11 6.68 6.00 10.16 0.32
Austria 0.31 0.01 0.00 0.00 0.31 0.01
Azerbaijan 0.00 0.00 0.00 0.00 0.00 0.00
Bangladesh 12.68 0.41 2.27 2.04 14.95 0.47
Belgium 0.00 0.00 0.00 0.00 0.00 0.00
Bhutan 0.00 0.00 0.00 0.00 0.00 0.00
Brunei Darussalam 0.00 0.00 0.00 0.00 0.00 0.00
Cambodia 0.00 0.00 0.00 0.00 0.00 0.00
Canada 1.73 0.06 3.48 3.12 5.21 0.16
China, People’s Republic of 776.11 25.27 1.21 1.08 777.32 24.42
Cook Islands 0.00 0.00 0.00 0.00 0.00 0.00
STATISTICAL ANNEXES
Denmark 2.65 0.09 0.00 0.00 2.65 0.08
Fiji Islands 9.07 0.30 0.00 0.00 9.07 0.28
Finland 3.78 0.12 0.00 0.00 3.78 0.12
France 1.67 0.05 2.51 2.25 4.18 0.13
Germany 7.20 0.23 9.42 8.46 16.62 0.52
Hong Kong, China 1.44 0.05 0.29 0.26 1.73 0.05
India 1,551.81 50.53 33.29 29.90 1,585.11 49.81
Indonesia 73.25 2.38 10.85 9.75 84.10 2.64
Ireland 0.00 0.00 0.00 0.00 0.00 0.00
Italy 2.19 0.07 0.00 0.00 2.19 0.07
Japan 1.02 0.03 7.89 7.09 8.91 0.28
Kazakhstan 0.00 0.00 0.00 0.00 0.00 0.00
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Kyrgyz Republic 0.00 0.00 0.00 0.00 0.00 0.00
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 29.93 0.97 8.02 7.22 37.97 1.19
Maldives 0.00 0.00 0.00 0.00 0.00 0.00
Marshall Islands 0.00 0.00 0.00 0.00 0.00 0.00
Mongolia 0.00 0.00 0.00 0.00 0.00 0.00
Myanmar 0.00 0.00 0.00 0.00 0.00 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 0.00 0.00 0.00 0.00 0.00 0.00
The Netherlands 2.08 0.07 0.86 0.77 2.94 0.09
New Zealand 0.00 0.00 0.37 0.33 0.37 0.01
Norway 0.00 0.00 0.00 0.00 0.00 0.00
Pakistan 200.90 6.54 2.16 1.94 203.06 6.38
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 4.00 0.13 0.00 0.00 4.00 0.13
Philippines 47.74 1.55 0.56 0.50 48.30 1.52
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.00 0.00 0.00 0.00 0.00 0.00
Singapore 10.25 0.33 0.00 0.00 10.25 0.32
Solomon Islands 0.00 0.00 0.00 0.00 0.00 0.00
Spain 0.00 0.00 0.00 0.00 0.00 0.00
Sri Lanka 0.00 0.00 0.00 0.00 0.00 0.00
Sweden 2.96 0.10 0.00 0.00 2.96 0.09
Switzerland 0.66 0.02 7.21 6.48 7.87 0.25
Taipei,China 32.86 1.07 0.00 0.00 32.86 1.03
Tajikistan 0.00 0.00 0.00 0.00 0.00 0.00
Thailand 5.32 0.17 0.00 0.00 5.32 0.17
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 30.88 1.01 0.00 0.00 30.88 0.97
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 1.03 0.03 2.10 1.88 3.13 0.10
United States 51.09 1.66 11.83 10.62 62.92 1.98
Uzbekistan 28.42 0.93 0.23 0.21 28.65 0.90
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 41.81 1.36 0.10 0.09 41.91 1.32
Regional 0.00 0.03 0.00 0.01 0.00 0.00
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00
TOTALb 3,071.26 100.00 111.36 100.00 3,182.62 100.00
0.00 = data negligible.
a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
165
PROJECT LOANS—ASIAN DEVELOPMENT FUND (amounts in $ million)
Goods and Related Total
Services, and Civil % Consulting % Contracts %
Country Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.05 0.01 0.00 0.00 0.05 0.01
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 11.72 1.33 6.20 6.77 17.92 1.85
Austria 18.88 2.15 0.00 0.00 18.88 1.95
Azerbaijan 17.78 2.02 0.00 0.00 17.78 1.83
Bangladesh 175.23 19.94 13.20 14.42 188.43 19.42
Belgium 0.09 0.01 0.00 0.00 0.09 0.01
Bhutan 0.50 0.06 0.29 0.31 0.79 0.08
Cambodia 19.89 2.26 1.39 1.52 21.28 2.19
Canada 0.04 0.00 4.96 5.42 5.00 0.52
Cook Islands 0.00 0.00 0.01 0.01 0.01 0.00
Denmark 0.19 0.02 0.00 0.00 0.19 0.02
STATISTICAL ANNEXES
Fiji Islands 2.34 0.27 0.00 0.00 2.34 0.24

Finland 0.87 0.10 2.22 2.42 3.09 0.32
France 0.37 0.04 0.30 0.33 0.68 0.06
Germany 1.41 0.16 1.46 1.59 2.87 0.30
Hong Kong, China 4.09 0.47 0.00 0.00 4.09 0.42
India 4.53 0.52 4.68 5.11 9.21 0.95
Indonesia 77.30 8.80 10.42 11.38 87.72 9.04
Ireland 0.00 0.00 0.00 0.00 0.00 0.00
Italy 1.42 0.16 2.17 2.37 3.59 0.37
Japan 11.12 1.27 1.60 1.75 12.72 1.31
Kazakhstan 0.01 0.00 0.00 0.00 0.01 0.00
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Kyrgyz Republic 10.52 1.20 0.76 0.83 11.27 1.16
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 3.39 0.39 0.00 0.00 3.39 0.35
Maldives 3.92 0.45 0.00 0.00 3.92 0.40
Mongolia 22.96 2.61 0.51 0.55 23.47 2.42
Myanmar 0.00 0.00 0.02 0.02 0.02 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 38.25 4.35 4.18 4.57 42.44 4.37
The Netherlands 0.00 0.00 0.51 0.55 0.51 0.05
New Zealand 0.52 0.06 3.49 3.81 4.01 0.41
Norway 0.00 0.00 0.00 0.00 0.00 0.00
Pakistan 154.24 17.56 9.23 10.07 163.46 16.85
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 1.21 0.14 0.32 0.35 1.53 0.16
Philippines 1.21 0.14 0.55 0.60 1.77 0.18
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.42 0.05 0.00 0.00 0.42 0.04
Singapore 5.34 0.61 0.00 0.00 5.35 0.55
Solomon Islands 0.24 0.03 0.00 0.00 0.24 0.03
Spain 3.29 0.37 0.00 0.00 3.29 0.34
Sri Lanka 58.85 6.70 1.66 1.82 60.52 6.24
Sweden 0.05 0.01 0.00 0.00 0.05 0.00
Switzerland 0.69 0.08 0.64 0.70 1.34 0.14
Taipei,China 0.66 0.07 0.00 0.00 0.66 0.07
Tajikistan 21.59 2.46 0.02 0.02 21.61 2.23
Thailand 9.71 1.11 0.03 0.03 9.74 1.00
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 0.00 0.00 0.00 0.00 0.00 0.00
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.85 0.10 0.00 0.00 0.85 0.09
United Kingdom 4.51 0.51 7.34 8.02 11.85 1.22
United States 7.41 0.84 8.59 9.37 15.99 1.65
Uzbekistan 0.00 0.00 0.00 0.00 0.00 0.00
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 74.79 8.51 4.43 4.84 79.22 8.17
Regional 0.00 0.00 0.00 0.00 0.00 0.00
TOTALb 878.58 100.00 91.57 100.00 970.15 100.00

a Represents the country of origin where the goods are mined, produced, grown, and manufactured, based on US dollar value equivalent of contract.
166
PROJECT LOANS—ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND COMBINED
Goods and Related Total
Services, and Civil % Consulting % Contracts %
Country Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.05 0.00 0.00 0.00 0.05 0.00
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 15.20 0.38 12.88 6.35 28.08 0.68
Austria 19.18 0.49 0.00 0.00 19.18 0.46
Azerbaijan 17.78 0.45 0.00 0.00 17.78 0.43
Bangladesh 187.90 4.76 15.47 7.62 203.37 4.90
Belgium 0.09 0.00 0.00 0.00 0.09 0.00
Bhutan 0.50 0.01 0.29 0.14 0.79 0.02
Cambodia 19.89 0.50 1.39 0.69 21.28 0.51
Canada 1.77 0.04 8.44 4.16 10.21 0.25
STATISTICAL ANNEXES
Cook Islands 0.00 0.00 0.01 0.00 0.01 0.00
Denmark 2.84 0.07 0.00 0.00 2.84 0.07
Fiji Islands 11.41 0.29 0.00 0.00 11.41 0.27
Finland 4.65 0.12 2.22 1.09 6.87 0.17
France 1.99 0.05 2.80 1.38 4.79 0.12
Germany 8.61 0.22 10.88 5.36 19.49 0.47
Hong Kong, China 5.53 0.14 0.29 0.14 5.82 0.14
India 1,556.34 39.40 37.98 18.71 1,594.32 38.39
Indonesia 150.55 3.81 21.27 10.48 171.82 4.14
Ireland 0.00 0.00 0.00 0.00 0.00 0.00
Italy 3.61 0.09 2.17 1.07 5.78 0.14
Japan 12.13 0.31 9.49 4.68 21.63 0.52
Kazakhstan 0.01 0.00 0.00 0.00 0.01 0.00
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Kyrgyz Republic 10.52 0.27 0.76 0.37 11.27 0.27
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 33.32 0.84 8.04 3.96 41.36 1.00
Maldives 3.92 0.10 0.00 0.00 3.92 0.09
Mongolia 22.96 0.58 0.51 0.25 23.47 0.57
Myanmar 0.00 0.00 0.02 0.01 0.02 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 38.25 0.97 4.18 2.06 42.44 1.02
The Netherlands 2.08 0.05 1.37 0.67 3.45 0.08
New Zealand 0.52 0.01 3.86 1.90 4.38 0.11
Norway 0.00 0.00 0.00 0.00 0.00 0.00
Pakistan 355.13 8.99 11.39 5.61 366.52 8.83
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 5.21 0.13 0.32 0.16 5.53 0.13
Philippines 48.96 1.24 1.11 0.55 50.07 1.21
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.42 0.01 0.00 0.00 0.42 0.01
Singapore 15.61 0.40 0.00 0.00 15.61 0.38
Solomon Islands 0.24 0.01 0.00 0.00 0.24 0.01
Spain 3.29 0.08 0.00 0.00 3.29 0.08
Sri Lanka 58.85 1.49 1.66 0.82 60.52 1.46
Sweden 3.01 0.08 0.00 0.00 3.01 0.07
Switzerland 1.35 0.03 7.86 3.87 9.21 0.22
Taipei,China 33.52 0.85 0.00 0.00 33.52 0.81
Tajikistan 21.59 0.55 0.02 0.01 21.61 0.52
Thailand 15.03 0.38 0.03 0.01 15.06 0.36
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 30.88 0.78 0.00 0.00 30.88 0.74
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.85 0.02 0.00 0.00 0.85 0.02
United Kingdom 5.54 0.14 9.44 4.65 14.98 0.36
United States 58.50 1.48 20.41 10.06 78.91 1.90
Uzbekistan 28.42 0.72 0.23 0.11 28.65 0.69
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 116.60 2.95 4.53 2.23 121.13 2.92
Regional 0.00 0.00 0.00 0.00 0.00 0.00
TOTALb 3,949.84 100.00 202.93 100.00 4,152.77 100.00
167
ESTIMATES OF PAYMENT TO SUPPLYING COUNTRIES FOR FOREIGN PROCUREMENT
UNDER PROGRAM LENDING,a 2006
Ordinary Capital Resources (OCR) Asian Development Fund (ADF) Combined OCR and ADF
Country $ million % Distribution $ million % Distribution $ million % Distribution
Afghanistan 3.42 0.18 0.25 0.08 3.67 0.17
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 64.86 3.43 7.51 2.57 72.37 3.31
Austria 10.68 0.56 1.30 0.44 11.98 0.55
Azerbaijan 0.03 0.00 0.38 0.13 0.41 0.02
Bangladesh 3.62 0.19 0.35 0.12 3.97 0.18
Belgium 25.76 1.36 5.66 1.94 31.42 1.44
Bhutan 0.01 0.00 0.03 0.01 0.04 0.00
Cambodia 0.05 0.00 7.78 2.66 7.83 0.36
Canada 27.89 1.47 2.19 0.75 30.08 1.38
Cook Islands 0.00 0.00 0.00 0.00 0.00 0.00
Denmark 2.85 0.15 1.00 0.34 3.84 0.18
STATISTICAL ANNEXES
Fiji Islands 0.04 0.00 0.00 0.00 0.04 0.00

Finland 5.88 0.31 0.66 0.23 6.54 0.30
France 19.50 1.03 4.67 1.60 24.18 1.11
Germany 58.04 3.07 8.16 2.79 66.19 3.03
Hong Kong, China 25.74 1.36 9.34 3.19 35.08 1.61
India 45.53 2.41 12.92 4.42 58.45 2.67
Indonesia 16.69 0.88 4.18 1.43 20.88 0.96
Ireland 2.40 0.13 0.17 0.06 2.57 0.12
Italy 19.20 1.01 2.93 1.00 22.12 1.01
Japan 198.76 10.50 17.85 6.11 216.61 9.91
Kazakhstan 0.09 0.00 3.04 1.04 3.13 0.14
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Kyrgyz Republic 0.01 0.00 0.17 0.06 0.18 0.01
Luxembourg 0.19 0.01 0.07 0.02 0.26 0.01
Malaysia 55.40 2.93 3.98 1.36 59.37 2.72
Maldives 0.11 0.01 0.00 0.00 0.11 0.00
Mongolia 0.00 0.00 0.00 0.00 0.00 0.00
Myanmar 1.09 0.06 0.28 0.10 1.37 0.06
Nauru 0.03 0.00 0.00 0.00 0.03 0.00
Nepal 0.12 0.01 10.77 3.68 10.88 0.50
The Netherlands 17.52 0.93 1.59 0.54 19.11 0.87
New Zealand 6.64 0.35 0.25 0.08 6.89 0.32
Norway 1.41 0.07 0.26 0.09 1.67 0.08
Pakistan 55.38 2.93 65.51 22.41 120.89 5.53
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 1.02 0.05 0.05 0.02 1.06 0.05
Philippines 553.98 29.27 0.67 0.23 554.65 25.38
Portugal 0.68 0.04 0.12 0.04 0.80 0.04
Samoa 0.13 0.01 0.00 0.00 0.13 0.01
Singapore 123.83 6.54 25.17 8.61 149.00 6.82
Solomon Islands 0.07 0.00 0.02 0.01 0.09 0.00
Spain 10.98 0.58 1.27 0.43 12.25 0.56
Sri Lanka 2.86 0.15 0.44 0.15 3.30 0.15
Sweden 18.75 0.99 2.00 0.68 20.75 0.95
Switzerland 22.79 1.20 2.40 0.82 25.19 1.15
Taipei,China 32.36 1.71 0.00 0.00 32.36 1.48
Tajikistan 0.08 0.00 0.18 0.06 0.25 0.01
Thailand 52.14 2.75 10.97 3.75 63.10 2.89
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 4.30 0.23 1.94 0.66 6.24 0.29
Turkmenistan 0.33 0.02 1.68 0.58 2.01 0.09
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 40.36 2.13 6.44 2.20 46.80 2.14
United States 158.28 8.36 13.42 4.59 171.70 7.86
Uzbekistan 0.43 0.02 0.78 0.27 1.21 0.06
Vanuatu 0.26 0.01 0.00 0.00 0.26 0.01
Viet Nam 11.01 0.58 0.74 0.25 11.75 0.54
Regional 0.00 0.00 0.00 0.00 0.00 0.00
TOTALb 1,892.83 100.00 292.30 100.00 2,185.13 100.00

a Estimates are based on import data drawn from the latest information available on borrowers’ trade statistics complied by the International Monetary Fund Direction
of Trade Statistics.
168
CUMULATIVE CONTRACTS AWARDED, BY COUNTRY OF ORIGINa
TECHNICAL ASSISTANCE OPERATIONS ($ million; as of 31 December 2006)
ADB’s % Administered % Japan % Total %
Own Distri- Trust Distri- Special Distri- Contracts Distri-
Country Resources bution Fund bution Fund bution Awarded bution
Afghanistan 0.69 0.05 1.05 0.25 0.02 0.00 1.76 0.07
Armenia 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Australia 144.63 12.39 43.37 10.42 109.46 13.14 297.46 12.31
Austria 1.31 0.11 0.00 0.00 0.91 0.10 2.22 0.09
Azerbaijan 0.45 0.03 0.23 0.05 0.02 0.00 0.69 0.02
Bangladesh 12.29 1.05 4.24 1.01 4.41 0.52 20.93 0.86
Belgium 3.73 0.31 1.06 0.25 2.26 0.27 7.05 0.29
Bhutan 0.41 0.03 0.02 0.00 0.06 0.00 0.50 0.02
Brunei Darussalam 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cambodia 1.30 0.11 2.88 0.69 0.43 0.05 4.61 0.19
Canada 84.70 7.25 41.97 10.08 62.67 7.52 189.33 7.83
China, People’s Republic of 13.70 1.17 2.96 0.71 7.67 0.92 24.32 1.00
Cook Islands 0.05 0.00 0.18 0.04 0.00 0.00 0.23 0.00
STATISTICAL ANNEXES
Denmark 12.41 1.06 4.10 0.98 17.05 2.04 33.57 1.38
Fiji Islands 0.87 0.07 0.65 0.15 0.18 0.02 1.70 0.07
Finland 8.99 0.77 5.91 1.42 8.49 1.02 23.39 0.96
France 22.96 1.96 12.42 2.98 21.23 2.54 56.60 2.34
Germany 23.35 2.00 9.52 2.28 34.32 4.12 67.19 2.78
Hong Kong, China 25.64 2.19 5.73 1.37 20.34 2.44 51.72 2.14
India 43.40 3.71 16.01 3.84 15.27 1.83 74.68 3.09
Indonesia 15.54 1.33 5.74 1.37 11.99 1.44 33.26 1.37
Ireland 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Italy 5.00 0.42 0.84 0.20 2.59 0.31 8.43 0.34
Japan 28.21 2.41 11.40 2.73 24.24 2.91 63.84 2.64
Kazakhstan 0.92 0.07 1.42 0.34 0.14 0.01 2.48 0.10
Kiribati 0.01 0.00 0.03 0.00 0.01 0.00 0.04 0.00
Korea, Republic of 4.85 0.41 1.21 0.29 3.93 0.47 9.99 0.41
Kyrgyz Republic 1.23 0.10 0.22 0.05 0.16 0.01 1.60 0.06
Lao People’s Democratic Republic 2.99 0.25 1.86 0.44 0.95 0.11 5.81 0.24
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 11.20 0.95 0.30 0.07 3.20 0.38 14.70 0.60
Maldives 0.11 0.00 0.02 0.00 0.03 0.00 0.16 0.00
Marshall Islands 0.14 0.01 0.11 0.02 0.01 0.00 0.25 0.01
Micronesia, Federated States of 0.01 0.00 0.00 0.00 0.02 0.00 0.03 0.00
Mongolia 1.17 0.10 0.46 0.10 0.63 0.07 2.25 0.09
Myanmar 0.91 0.07 0.52 0.12 0.01 0.00 1.44 0.06
Nauru 0.01 0.00 0.01 0.00 0.00 0.00 0.03 0.00
Nepal 8.25 0.70 3.12 0.75 1.53 0.18 12.90 0.53
The Netherlands 21.99 1.88 19.19 4.61 27.49 3.30 68.67 2.84
New Zealand 63.93 5.47 15.30 3.67 57.83 6.94 137.06 5.67
Norway 5.45 0.46 7.55 1.81 3.36 0.40 16.36 0.67
Pakistan 22.46 1.92 6.71 1.61 3.80 0.45 32.97 1.36
Palau 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 1.24 0.10 0.35 0.08 1.03 0.12 2.61 0.10
Philippines 80.34 6.88 18.30 4.39 30.86 3.70 129.50 5.36
Portugal 0.03 0.00 0.00 0.00 0.09 0.01 0.13 0.00
Samoa 0.85 0.07 0.01 0.00 0.87 0.10 1.73 0.07
Singapore 16.11 1.38 1.33 0.32 10.50 1.26 27.94 1.15
Solomon Islands 0.38 0.03 0.02 0.00 0.22 0.02 0.62 0.02
Spain 3.34 0.28 2.51 0.60 0.90 0.10 6.75 0.27
Sri Lanka 11.95 1.02 3.00 0.72 3.00 0.36 17.95 0.74
Sweden 6.95 0.59 4.17 1.00 7.43 0.89 18.55 0.76
Switzerland 10.61 0.90 7.35 1.76 11.78 1.41 29.73 1.23
Taipei,China 1.08 0.09 0.07 0.01 2.05 0.24 3.19 0.13
Tajikistan 0.28 0.02 0.40 0.09 0.09 0.01 0.77 0.03
Thailand 12.40 1.06 5.16 1.24 11.93 1.43 29.49 1.22
Timor-Leste 0.26 0.02 0.17 0.04 0.13 0.01 0.56 0.02
Tonga 0.28 0.02 0.00 0.00 0.12 0.01 0.39 0.01
Turkey 0.35 0.03 0.14 0.03 0.05 0.00 0.54 0.02
Turkmenistan 0.05 0.00 0.06 0.01 0.00 0.00 0.10 0.00
Tuvalu 0.06 0.00 0.00 0.00 0.00 0.00 0.06 0.00
United Kingdom 163.86 14.03 58.01 13.94 126.00 15.13 347.86 14.39
United States 230.80 19.77 72.54 17.43 167.33 20.09 470.68 19.48
Uzbekistan 0.56 0.04 0.17 0.04 0.21 0.02 0.95 0.03
Vanuatu 0.74 0.06 0.01 0.00 1.20 0.14 1.94 0.08
Viet Nam 3.09 0.26 3.34 0.80 2.12 0.25 8.55 0.35
Regional 3.31 0.28 6.60 1.58 3.29 0.39 13.20 0.54
International Organizations 23.21 1.98 4.07 0.97 4.90 0.58 32.17 1.33
TOTALb 1,167.34 100.00 416.03 100.00 832.78 100.00 2,416.15 100.00
169
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2004–2006
TECHNICAL ASSISTANCE OPERATIONS ($ million; as of 31 December 2006)
2004 2005 2006
Country Value % Value % Value %
Afghanistan 0.27 0.18 0.22 0.14 0.39 0.25

Armenia 0.00 0.00 0.00 0.00 0.30 0.19
Australia 17.42 11.65 22.68 13.91 19.07 12.25
Austria 0.00 0.00 0.12 0.07 1.30 0.83
Azerbaijan 0.11 0.07 0.14 0.09 0.14 0.09
Bangladesh 1.61 1.08 2.84 1.74 2.47 1.59
Belgium 0.30 0.20 0.10 0.06 0.17 0.11
Bhutan 0.09 0.06 0.18 0.11 0.01 0.00
Cambodia 0.56 0.38 0.73 0.45 1.29 0.83
Canada 7.49 5.01 9.72 5.96 10.84 6.96
Cook Islands 0.00 0.00 0.00 0.00 0.01 0.01
STATISTICAL ANNEXES
Denmark 0.24 0.16 2.31 1.42 2.75 1.76

Fiji Islands 0.05 0.03 0.72 0.44 0.09 0.06
Finland 2.39 1.60 0.62 0.38 2.60 1.67
France 3.47 2.32 2.87 1.76 1.09 0.70
Germany 5.09 3.40 5.68 3.48 4.28 2.75
Hong Kong, China 4.43 2.97 4.25 2.60 4.46 2.86
India 10.35 6.92 3.69 2.26 9.80 6.29
Indonesia 1.88 1.26 3.52 2.16 3.82 2.45
Ireland 0.00 0.00 0.00 0.00 0.00 0.00
Italy 0.11 0.08 0.07 0.04 0.07 0.04
Japan 7.83 5.23 6.94 4.26 2.43 1.56
Kazakhstan 0.67 0.45 0.52 0.32 0.38 0.24
Kiribati 0.00 0.00 0.00 0.00 0.01 0.01
Kyrgyz Republic 0.39 0.26 0.16 0.10 0.36 0.23
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 1.29 0.86 0.55 0.34 1.39 0.89
Maldives 0.02 0.02 0.03 0.02 0.03 0.02
Mongolia 0.48 0.32 0.16 0.10 0.25 0.16
Myanmar 0.12 0.08 0.05 0.03 0.01 0.01
Nauru 0.00 0.00 0.03 0.02 0.00 0.00
Nepal 0.96 0.64 1.13 0.69 2.28 1.47
The Netherlands 1.75 1.17 1.02 0.62 2.75 1.76
New Zealand 11.56 7.73 9.29 5.70 8.53 5.48
Norway 4.30 2.88 0.99 0.61 0.89 0.57
Pakistan 4.42 2.95 4.98 3.06 5.44 3.50
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 0.00 0.00 0.03 0.02 0.35 0.23
Philippines 7.49 5.01 10.93 6.70 10.62 6.82
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.10 0.07 0.03 0.02 0.01 0.01
Singapore 1.40 0.94 2.94 1.81 2.65 1.70
Solomon Islands 0.04 0.03 0.01 0.00 0.00 0.00
Spain 1.08 0.72 0.77 0.47 1.36 0.87
Sri Lanka 1.65 1.11 0.68 0.41 0.76 0.49
Sweden 0.68 0.45 1.72 1.06 1.04 0.67
Switzerland 0.42 0.28 1.87 1.15 2.73 1.75
Taipei,China 0.00 0.00 0.01 0.01 0.03 0.02
Tajikistan 0.08 0.05 0.15 0.09 0.30 0.19
Thailand 3.02 2.02 1.70 1.04 1.95 1.25
Timor-Leste 0.02 0.01 0.00 0.00 0.00 0.00
Tonga 0.18 0.12 0.03 0.02 0.01 0.00
Turkey 0.10 0.07 0.04 0.03 0.07 0.04
Turkmenistan 0.00 0.00 0.05 0.03 0.02 0.01
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 18.96 12.68 18.07 11.09 12.51 8.03
United States 18.08 12.09 23.06 14.15 24.95 16.03
Uzbekistan 0.12 0.08 0.10 0.06 0.37 0.24
Vanuatu 0.09 0.06 0.04 0.02 0.00 0.00
Viet Nam 1.42 0.95 1.09 0.67 1.23 0.79
Regional 1.87 1.25 7.68 4.71 0.00 0.00
TOTAL b 149.52 100.00 163.00 100.00 155.70 100.00

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
170
Asian Development Bank
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2006

The ADB Annual Report 2006 comprises two separate volumes:

STRENGTHENING ADB’S STRATEGIC

INSTITUTIONAL MANAGEMENT a number of financial issues, most notably by approving

ning the Board agenda. of risk management.

The committee noted that the work

Subscribed capital $978.0 million President Takeshi Watanabe (1966–1972)

Subscribed capital $53.17 billion President Haruhiko Kuroda (2005–present)

themes were further elaborated in separate papers.

As a result of rapid development in the region, ADB

CATALYZING INVESTMENT STRENGTHENING INCLUSIVENESS

Gender and refine, and implement a detailed gender action plan.

ADB will focus its assistance IMPROVING GOVERNANCE

in sectors and subsectors where ADB is active. ADB

will work closely with other multilateral development

ment with them. ADB’s current approach is based on its

Pathways Out automatically reduces poverty, and that the solution to

TABLE 2 Top Recipients by Approval, 2006

TABLE 3 Operations by Sector, 2005 –2006

TABLE 4a Direct Value-Added Cofinancing Arrangements, 2003–2006

TABLE 4b Direct Value-Added Cofinancing Arrangements, 2003–2006

ADB approved a total of 260 technical assistance projects

structure nonsovereign projects providing $1.4 billion Total 5,906

Table 9 Nonsovereign Operations, 2003–2006 a

A $400 million program loan to Pakistan will establish interventions.

ADB invested substantially in rural finance projects in India

Afghanistan 11 44.35 97.73 67.15 23.91 9.1 –

and ADB actively contributes in this area as a member of

The second medium-term strategy identifies infrastructure as a core

Azerbaijan significantly increased investment in infrastructure and the non-oil economy

ADB is helping rehabilitate the regional road network in the Kyrgyz

Afghanistan’s Cellular encourages international aid agencies and commercial

A $400 million program loan was approved to promote

ADB continues to assist the power sector in Tajikistan

yield good performance in the region. Portfolio quality 10.00

performance was also good, with $1 billion disbursed. 2005 2006

Contract awards were $786.1 million. To improve

200 400 600 800 1,000

good performance in the region

China, People’s Rep. of 47 733.70 1,385.53 984.84 874.77 2.1 –

to construct, upgrade, and improve railways, expressways,

ADB-supported railway projects give inland provinces access to ports

also evolved with client requirements and continues to

the PRC Biofertilizers from biogas digesters are helping

ADB provides a range of services to its 14 Pacific developing member

TABLE 16 Pacific: Portfolio Performance Indicators for Sovereign Lending, 2005–2006

Cook Islands 1 0.01 0.63 0.33 1.17 – –

supported by guarantees by the participating countries. It

Cook Islands 2.83 Cook Islands 1.17

TABLE 18 Pacific: Sovereign Loan Approval, 2006

Papua New Guinea

COUNTRY HIGHLIGHTS Government develop an integrated system of regulations, by-

Executives from Pacific countries share information and experience

in Economic and Development Planning Processes in ADB’s major contribution in Palau

The emergency infrastructure rehabilitation creates jobs and builds roads

TUVALU were approved. An abbreviated public expenditure and finan-