ADB to ask members for capital hike

The president of the Asian Development Bank is urging shareholders to increase its capitalization by a hefty 200 percent, saying the magnitude of the global turmoil requires much more assistance to ensure member countries survive the crisis.

“For us to deliver our mission of poverty reduction in Asia more effectively, ADB needs an immediate and substantial capital increase, and we are asking our shareholders to reach an agreement by the upcoming annual meeting in Bali in May,” ADB president Haruhiko Kuroda said at a forum on the global crisis held the ADB headquarters in Mandaluyong City.

At a news briefing in between sessions of the forum, Kuroda said shareholders of the multilateral agency were being urged to contribute more funds that will result in a 200-percent increase its capitalization.

According to data on its website http://www.adb.org/, the ADB authorized and subscribed capital stock as of end-2007 amounted to $56 billion.

The ADB earlier planned to extend $12 worth of official development assistance to member countries for this year.

But Kuroda said the lending institution was mulling an increase in that amount so that member countries would enjoy more assistance amid the global turmoil.

“We remain deeply concerned about four inter-related impacts of the global economic downturn on Asia,” Kuroda said.

Citing an ADB study, Kuroda said Asian countries are affected by the global crisis on four fronts. These would come through declining exports, the exit of foreign direct investments, tightening credit and reduced remittances.

Although the global turmoil has caused many advanced economies to slip into recession, neither are developing countries in Asia like the Philippines spared from its ill-effects. This is because the United States and Europe, predicted to go deeper into recession this year, are the region’s two main export markets.

The adverse impact of the turmoil on the Philippines’ trade performance showed in a three-percent drop in exports last year. Projections also point to lower export income this year. Michelle V. Remo

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