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
Disbursements (amount) 23,456 1,128 1,055 1,247 1,338
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
Disbursements (amount) 59,006 2,575 2,399 3,294 4,061
ADF Loans (amount) 32,663 1,379 1,242 1,362 1,279
Number of Loans 1,145 47 47 40 45
Disbursements (amount) 23,441 1,128 1,055 1,247 1,338
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
Disbursements (amount) 1,804 113 109 204 358
OCR Loans (amount) 2,580 d 167 93 d 513 d 425 f
Number of Loans 98 d 4 4d 6d 7
Disbursements (amount) 1,790 113 109 204 358
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

ADB President Haruhiko Kuroda visits Phu Chan Lower Secondary
School in Tu Son District, Bac Ninh Province, Viet Nam. The school is
being supported by ADB’s Lower Secondary Education Development
Project, which is assisting the Viet Nam Government improve lower
secondary education
promote growth through collective action. In an
increasingly interdependent world, the new strategy
will enable ADB to move beyond the stand-alone
subregional programs of the past to a more strategic
approach to cooperation and integration.
One area where the world’s interdependence is
painfully obvious is that of greenhouse gas emissions and
climate change. As Asian economies continue their rapid
economic growth, their energy needs are rising sharply.
This is particularly true of the People’s Republic of China
and India. In 2006, ADB retained a focus on its clean
energy and environment program, promoting investments
in energy efficiency and further developing a carbon
market initiative to provide up-front financing and techni-
cal support to clean development mechanism projects.
To disseminate knowledge on these important issues, ADB
joined government and nongovernment development
partners in Asia to establish regional knowledge hubs.
ADB worked with other multilateral development
banks to organize an International Financial Institutions
Anti-Corruption Task Force that established a consistent
and harmonized approach to combat corruption in
the activities and operations of the institutions. This
initiative led to standardized definitions of fraudulent
and corrupt practices and common principles and
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
in 2004. Moving forward, we will continue to fight
poverty and inequity, promote inclusive development,
and contribute to building an Asia and Pacific region
where all have access to the essentials of life—education,
health, safe drinking water, and proper sanitation.
For 40 years, ADB has been a steadfast partner
in the region’s development process. Our institution
is proud to be a part of the amazing economic and
social progress that has lifted hundreds of millions of
people out of poverty. We look forward to working
with all our members and shareholders as we take
the next steps on this journey toward greater and
more widely shared peace, security, and prosperity.
HARUHIKO KURODA
President and Chairman
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
in multitranche financing facilities
DIRECTORS
BOARD OF
that will give rise to future loans
for increased development
a wide variety of developing countries. Weakly performing
countries have particular needs for policy advice, knowl-
edge products, and institutional capacity building. Board
members stressed throughout the year the importance of
technical assistance in delivering knowledge and skills and
in strengthening capacity. Board members asked ADB to
intensify efforts to coordinate the work of the knowledge
departments and expressed increasing concern about
pressure on technical assistance resources, including as a
result of adopting new policies and priorities.
A review of ADB’s long-term strategic framework
commenced, with an Eminent Persons Group established
to provide inputs. The Board welcomed the opportunity
to meet with the group and to discuss related issues at
the Board’s annual retreat in October. The review of the
framework is a key means of helping ADB become as effec-
tive as possible. The Board looks forward to contributing
to the strategic choices that will be made as a result.
SCALING UP
ADB’s approach to support middle-income countries
encompasses measures already taken under the innova-
tion and efficiency initiative to scale up operations and
better meet the needs of these countries. These meas-
ures include new mechanisms such as the multitranche
financing facility. Board approvals totaled $3.8 billion in
Board members visit a solar/wind hybrid electricity system in
Afghanistan
8
multitranche financing facilities that will give rise to future
loans for increased development. Optimal governance
arrangements are still being developed to ensure that
new instruments such as the multitranche financing facil-
ity, subsovereign lending, and greater use of guarantees
not only provide more money more conveniently but also
deliver demonstrably stronger development outcomes.
COUNTRY PARTNERSHIP STRATEGIES
The Board discusses every country partnership strategy
(formerly the country strategy and program) that ADB
negotiates with its developing member countries. Board
discussion of a strategy guides its implementation. The
Board paid particular attention to responding to country
demands, strengthening the strategies’ results orientation,
and promoting greater focus and selectivity in the country
programs.
RISK MANAGEMENT
While considering the middle-income country strategy, the
Board debated the trend toward increased use of country
systems. Many members saw it as potentially positive, where
adequate capacity and transparency could be demonstrated,
but also as creating areas of vulnerability and risk that need to
be carefully managed. In discussions on credit enhancement
and in the Audit Committee, Board members welcomed
the evolution of ADB’s risk management architecture but
pressed for a more comprehensive approach to identifying
and mitigating major risks facing the institution. They also
called for a strengthening of staff and managerial skills in risk
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
work through the issue to deliver better outcomes for all
stakeholders.

Board members review a scheme that helps tsunami-hit families in Aceh, Indonesia, start a new life with goat breeding
INSTITUTIONAL MANAGEMENT
AND OVERSIGHT
The year saw increasing calls for managerial changes that
would allow ADB to respond more quickly and effectively to
its clients. These included greater delegation of authority to
managers and staff to make sound professional judgments
and be held responsible for them. The operational role of vice
presidents has become better defined, and accordingly, they
contribute more substantively in steering the institution.
The Board saw some progress in human resources manage-
ment in key areas such as introducing staff assessments that
more clearly distinguish between different levels of perform-
ance, strengthening management training, and designing
a competency framework. However, as the Board observed
during budget discussions, progress needs to become more
consistent and approaches less mechanistic to make the best
use of ADB’s largely talented and committed staff.
The Board sought to play a greater role in the design
and approval of overarching strategies such as the second
medium-term strategy and to become involved earlier and
more deeply in the budget process. Board inputs helped
guide the internal administrative expense budgeting and
work program processes at various stages. The Board’s
discussion in September 2006 on the 3 year work program
and budget framework for 2007–2009 led to the finaliza-
tion of the budget framework by Management, and further
served as policy guidance in finalizing the 2007 budget for
internal administrative expenses, approved by the Board
in December. The Board also gave its policy guidance on
DIRECTORS
BOARD OF
a number of financial issues, most notably by approving
the new asset and liability management statement and the
borrowing program for 2007, as well as recommending
the allocation of net income for various uses.
IMPROVING BOARD EFFECTIVENESS
The Board recognizes that the demands for greater relevance,
responsiveness, and results challenge it to think and rethink
the way it operates and supports the overall reform process.
In doing this, the Board fully respects the provisions in the
Charter on its role, responsibilities, and functions.
The Board bears the ultimate responsibility for
approving the projects and programs funded by ADB. The
Board repeatedly emphasized its role in setting the policy-
level strategic directions for ADB. It has streamlined some
of its procedures to be able to pay more attention to policy
and strategic issues.
The Board proposed a series of initiatives to improve
the quality of efficiency of its working procedures. These
initiatives relate to matters such as strengthening the
In March 2006, a group of five Board
members went to Afghanistan,
Pakistan, and Sri Lanka, and
in September another group
of five Board members visited
Indonesia and the Philippines
9
 feedback to the Board by Management following Board
decisions, and how the Board arranges its formal and
informal meetings, including committee work and plan-
DIRECTORS
BOARD OF
ning the Board agenda.
The Board held 45 formal meetings. It approved or dis-
cussed a number of strategy or policy papers (Appendix 3)
and approved 67 projects and programs. It held 36 infor-
mal seminars or sessions on a variety of sectoral, thematic,
or country-related topics.
Although the Board focuses mainly on strategic and
policy issues, it also tries to stay in close touch with the
operational part of ADB’s work. One means of doing this
is through visits by groups of Board members to develop-
ing member countries, both to have policy discussions
with the country authorities and to get firsthand informa-
tion on the implementation of selected projects through
field visits. Two such Board group visits were arranged.
In March 2006, a group of five Board members went to
Afghanistan, Pakistan, and Sri Lanka, and in September
another group of five Board members visited Indonesia and
the Philippines, ADB’s host country. The Board appreciates
the experience and knowledge gained through such visits
and is grateful for the support of the host country authori-
ties as well as of ADB Management and staff, particularly
in the resident missions.
BOARD COMMITTEES
The Board has standing committees for audit, budget
review, compliance review, and development effectiveness.
In 2006, the Ethics Committee was created. Membership
of the committees is shown in Appendix 6.
Audit Committee. The committee helps the Board
oversee ADB’s financial reporting and audits, including
Board members visit the Day Care Room in a Women’s Resource Center
in Panabo City, Davao del Norte, Philippines, funded by the $1 million
Social Protection for Poor Women Vendors in Mindanao Cities Project
under ADB’s Japan Fund for Poverty Reduction
10
internal controls. The committee operated under terms of
reference that had been expanded in the previous year to
include procurement policies and procedures in its review
of risk management.
The committee was satisfied that all audits were appro-
priate and in accordance with ADB’s approved policies and
applicable auditing standards. The committee reviewed
quarterly financial statements and the annual manage-
ment discussion and analysis, and considered applying
key financial and accounting systems using information
technology.
The committee made several recommendations, includ-
ing to establish an integrated risk management framework;
monitor prepayments and any associated possible impact
on operating income; review progress in implementing cost
accounting systems and cost information systems in ADB;
and continue to periodically monitor the implementation
of accounting standards, including Financial Accounting
Standard 133 covering derivative instruments.
The committee met 10 times.
Budget Review Committee. The committee discussed
the President’s planning directions in preparation for the
work program and budget framework (2007–2009) and
exchanged views with the vice presidents on its key thrusts.
The committee noted that the work program and
budget framework is conceived as a business plan to allow
implementation of the second medium-term strategy,
ADB’s commitments to the Paris Declaration on Aid
Effectiveness, and managing for development results. The
committee further noted ADB’s efforts to scale up devel-
opment effectiveness and improve institutional efficiency.
It reviewed the implementation status of the enhanced
separation program, discussed the sequestration and
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
conceived as a business plan to allow
implementation of the second
medium-term strategy

Board members tour projects in Colombo Port, Sri Lanka
of new policies, strategies, and initiatives; and the budget
carryover concept for implementation, beginning from the
2007 budget.
The committee discussed the draft 2007 budget and
noted the need to provide an appropriate level of staff
and budgetary resources to support ADB’s priorities. The
committee made recommendations to ensure the effective
use of budgetary resources through strengthened linkage
between performance and budgetary allocations. The com-
mittee recommended approval of ADB’s 2007 budgets for
internal administrative expenses and annual capital expen-
ditures as well as the 2007 budget of the ADB Institute.
The committee met seven times.
Compliance Review Committee. The committee,
set up under the ADB accountability mechanism, clears the
Compliance Review Panel’s proposed terms of reference
and time frame for conducting compliance reviews, and
reviews the panel’s draft monitoring reports on implemen-
tation of remedial actions approved by the Board before
the panel finalizes them.
The committee discussed the panel’s draft monitoring
reports on the implementation of the Board-approved
remedial actions in the Southern Transport Development
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-
menting the remedial actions. The committee checked on
the status of implementation as reported by the panel in its
monitoring reports and discussed whether Management’s
actions had brought the project into compliance.
The committee met three times.
Development Effectiveness Committee. The com-
mittee continued to shift the focus of its review work from
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
accepted them. Special attention was paid to monitor-
ing implementation of the action plan to improve loan
and technical assistance portfolio performance that
Management had initiated at the end of 2005 in response
to the committee’s recommendation. The committee en-
couraged the Operations Evaluation Department to make
findings more accessible and to disseminate them more
widely. The committee continued to search for additional
ways of strengthening Board–Management dialogue on
portfolio performance and quality assurance.
The committee met 11 times.
Ethics Committee. The Board established the com-
mittee to address matters of ethics that may arise under
the Code of Conduct adopted by the Board in September
2006. The code provisions apply to all Board members
(directors, alternate directors, and temporary alternate
directors) and to the President.
The committee is responsible for advising directors, alter-
nate directors, or the President when they request guidance
on actual or potential conflicts of interest or other ethical
issues concerning themselves. The committee also considers
any allegations of misconduct against directors, alternate
directors, or the President that relate to the performance of
their duties. It recommends appropriate action to the Board.
The committee did not meet in 2006.
The Development Effectiveness
Committee continued to shift
the focus of its review work from
individual operation evaluations to
broader evaluations at the country,
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,
ADB mobilized additional
resources from bilateral
and other multilateral
institutions.
Cofinancing operations
began to provide
additional resources
for ADB projects and
programs.
ADB’s first bond
issue in Asia—worth
$16.7 million—was made
in Japan. This was the first
time that yen bonds were
sold to the public in Japan
by a foreign entity.
72
Shiro Inoue assumed
the presidency, to be
succeeded by Taroichi
Yoshida in 1976.
Technical assistance
projects emphasized
institution building and
training of local staff.
74
The Asian Development
Fund was established
to provide concessional
lending to ADB’s poorest
members.
78
ADB approved its first
79
ADB approved its
loan in the health sector first program loan for
to Hong Kong, China. industry, for the cement
industry program in
ADB’s annual lending
Myanmar; its first loan
reached the $1 billion
for rural electrification,
mark. At the close of
in Sri Lanka; and its first
the decade, some Asian
multiproject loan, in
economies had improved
Tonga.
considerably and
graduated from ADB’s
regular assistance.
The gradual emergence
of Asian economies
in the 1970s spurred
demand for better
infrastructure to support
economic growth.
ADB focused on
improving roads and
providing electricity.

Subscribed capital $8.9 billion Presidents Shiro Inoue (1972–1976), Taroichi Yoshida (1976–1981)
Members 43 Regional 29 Nonregional 14
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
ADB President in 1981,
to be succeeded by
KimimasaTarumizu in
1989.
In the wake of the second
oil crisis, ADB continued its
support to infrastructure
development, particularly
energy projects.
82
To bring operations
closer to their intended
beneficiaries, ADB opened
its first resident office, in
Dhaka, Bangladesh.
83
Private sector development
was deemed crucial to
economic growth, leading
ADB to make its first direct
equity investment in a
private sector project to a
development investment
corporation in the Republic
of Korea.
84
ADB opened its first
regional office in the Pacific
in Port Vila, Vanuatu.
85
The Board of Directors
took action to include
women more effectively in
the development process,
approving a policy on
the role of women in
development.

86 87 88
ADB increased its support
to social infrastructure,
including gender, micro-

A pool-based variable
lending rate system was
introduced at a time of
increasing globalization
and deregulation.
The Board of Directors
approved a policy
supporting collaboration
with nongovernment
organizations (NGOs) to
The first loan for primary
education was approved
for Pakistan.

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
regional cooperation, to expand its reach into
forging close ties among homes and offices, ADB
neighboring countries set up its website (www.
through an economic adb.org).
cooperation program
ADB became the first
in the Greater Mekong
multilateral organization
Subregion.
to have a Board-approved
governance policy to
ensure that development
96
ADB established its
representative offices in
Europe and Japan.
97
Following the end of
the cold war, the former
Soviet republics of Central
Asia, in transition from
centrally planned to
market economies, joined
ADB and the Central
Asia Regional Economic
Cooperation program
formed by ADB and other
99
ADB adopted poverty
reduction as its
overarching goal and
approved several vital
policies relating to
indigenous peoples,
cooperation with NGOs,
and anticorruption
efforts.

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)

Members 66 Regional 47 Nonregional 19
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

OVERVIEW
POLICY
The second medium-term strategy (2006–2008) aims to strengthen the
poverty reduction impact of ADB’s assistance programs
region, and to build new alliances to fight poverty in Asia.
More specifically, ADB took joint action with other multi-
lateral development banks to promote better governance
and combat corruption, promote clean energy, and reduce
vulnerability to the avian influenza pandemic. Together
with other development partners, ADB helped establish
an International Financial Institutions Anti-Corruption Task
Force, which developed a uniform framework for prevent-
ing and combating fraud and corruption. Jointly with other
multilateral development banks, ADB has helped develop a
joint investment framework for clean energy and development,
with a progress report discussed at the September meeting of
the Development Effectiveness Committee. ADB has taken
the lead in energy efficiency in the transport sector under this
framework.
The development of the second medium-term strat-
egy, which was finalized after discussion by the Board of
Governors at the 2006 Annual Meeting in Hyderabad,
India, marked a milestone in taking forward the internal
reform agenda. The strategy was prepared to guide
ADB’s operations for 3 years, from 2006 to 2008. This is
a transitional period during which the long-term strategic
framework will be reviewed, and a new long-term strategic
direction established to respond to the emerging challenges
22
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
themes were further elaborated in separate papers.
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-
ment of ADF resources (ADF IX) in eligible ADF recipient
countries, which was discussed with representatives of ADF
donor countries in Frankfurt, Germany, on 4–5 December
2006; and the development of a coherent framework of
initiatives for enhancing ADB support to middle-income
countries and OCR borrowers.
The second medium-term strategy recommends several
adjustments in ADB’s operational model. These include
greater sector focus and selectivity; product and process
innovations to enhance ADB’s responsiveness, flexibility,
and efficiency; and greater emphasis on portfolio perform-
ance, development effectiveness, and results. Most of the
innovations were introduced in the context of the innova-
tion and efficiency initiative. ADB pays greater attention to
the readiness and implementation of current projects and
is streamlining managing for development results into the
entire project cycle, from development of results-based
country partnership strategies to systematic application
ADB took joint action with other
multilateral development banks to
promote better governance and
combat corruption, promote clean
energy, and reduce vulnerability
to the avian influenza pandemic
of results-monitoring frameworks in projects and internal
processes at all levels.
PRIORITIES UNDER THE SECOND
MEDIUM-TERM STRATEGY
The second medium-term strategy strengthens the poverty
reduction impact of ADB’s assistance and helps developing
member countries meet their Millennium Development
Goals. The strategy has five priorities: catalyzing investment,
strengthening inclusiveness, promoting regional cooperation
and integration, managing the environment, and improving
governance and preventing corruption. In many respects, they
reflect themes already identified under the first medium-term
strategy and carry forward its unfinished agenda.
CATALYZING INVESTMENT
The sharp reduction in income poverty in the region in
recent years is primarily attributable to high growth.
However, there is a risk that growth may falter because
of the poor investment climate. The second medium-term
strategy emphasizes the need to help developing member
countries improve the investment climate by supporting
policy and institutional reforms, infrastructure develop-
ment, and the development of quality human resources
through investments in education and health. ADB will also
seek to use its wide range of products to leverage cofinanc-
ing with public and private sector partners. ADB’s revised
strategic framework for private sector development (adopted
in February 2006) provides greater strategic clarity on private
sector development at the corporate level. The new strategic
framework aims to create an enabling environment for
private sector development, mobilize additional finance, and
develop ways of financing public goods and services. ADB’s
new financing partnership strategy (adopted in July 2006)
will also facilitate the implementation of this framework. This
ADB’s revised strategic framework
for private sector development aims
to create an enabling environment
for private sector development,
mobilize additional finance,
and develop ways of financing
public goods and services
The second medium-term strategy
strengthens the poverty reduction
impact of ADB’s assistance and helps
developing member countries meet
their Millennium Development Goals
OVERVIEW
POLICY
strategy enables ADB to be a more proactive and effective
financing partner by shifting the focus from reactive and in-
put-oriented cofinancing toward proactive and value-added
financing partnerships, improving client orientation and
selectivity, deepening and expanding the range of financing
partnerships, ensuring relevance of products and services,
improving access to knowledge, and fostering innovation in
ADB, and introducing new approaches and changes in the
business model in a phased manner.
STRENGTHENING INCLUSIVENESS
Although growth has helped reduce poverty, the benefits
have not been evenly distributed. To strengthen inclusive-
ness, the second medium-term strategy underlines the
importance of expanding productive employment in rural
areas and generating higher productivity and wage incomes
in the informal urban sector, combined with measures to
address the non-income dimensions of poverty.
ADB helps its developing member countries strengthen
inclusiveness to ensure equitable and sustainable develop-
ment. Through its policy of inclusiveness, ADB encourages
greater equity in access to services, resources, and oppor-
tunities; the active participation of poor and marginalized
groups in social, economic, and political life; and house-
hold-level security to cope with chronic or sudden risks,
especially among poor and marginalized groups.
The second medium-term strategy lays fresh emphasis
on investing in key social development interventions to
promote gender equality by supporting education for
girls, better health for girls and women, and microfinance
projects that help women.
PROMOTING REGIONAL
COOPERATION AND INTEGRATION
Regional cooperation and integration strengthens the
growth potential of individual countries, thereby strength-
ening their capacity to reduce poverty. Integration helps link
and better align growth in the smaller and less-developed
countries with the faster-growing economies. Regional
23
 cooperation and integration also serve as a platform for
regional initiatives to manage cross-border environmental
and health risks. The second medium-term strategy main-
streams regional cooperation and integration as a means
to reinforce country-level efforts to reduce poverty by
supporting cross-border infrastructure to strengthen con-
nectivity, promoting monetary and financial cooperation,
OVERVIEW
ADB’s regional cooperation and integration strategy,
adopted in July 2006, lays out in greater detail how ADB
plans to intensify its support in this area. It lists four ways
by which ADB can support and promote cooperation and
integration in the Asia and Pacific region: provide financial
resources for regional cooperation and integration projects
and programs, provide related technical assistance, and

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

ADB works to minimize the adverse impact of growth on the environment
integration; help countries and regional or subregional
bodies build institutional capacity to manage regional
cooperation and integration; and catalyze and coordinate
regional cooperation and integration in Asia.
MANAGING THE ENVIRONMENT
Strong demographic pressures and high growth are both
taking a heavy toll on rural and urban environments. Poor
people typically bear the greatest burden of pollution and
environmental degradation. ADB will focus its assistance
on energy efficiency, urban environment improvement,
and sound natural resources management. As part of
this effort, ADB completed the first phase and began
implementing the second phase of the energy efficiency
initiative, a three-phase program launched in 2005 that
aims to expand ADB’s investments in clean energy projects.
More specifically, the second phase of the initiative will
aim to develop country-level and regional strategies and
action plans to meet the targets already set, explore the
possibility of establishing an Asia-Pacific fund for energy
ADB will focus its assistance
on energy efficiency, urban
environment improvement,
and sound natural resources
management
OVERVIEW
POLICY
efficiency, develop the necessary institutional capacity in
ADB to scale up as well as to monitor and evaluate ac-
tivities implemented under the initiative, and implement
immediate energy efficiency investment opportunities.
ADB’s carbon market initiative was adopted in
November 2006 to respond to issues of energy security
and global climate change. It aims to enhance the viability
of alternative clean energy sources in developing countries
and help developed countries meet their greenhouse gas
emission commitments under the Kyoto Protocol.
ADB has launched three interrelated programs to
fill existing market gaps to help project designers in
its developing member countries positively engage
with the carbon market: the establishment of the Asia-
Pacific Carbon Fund, a dedicated project cofinancing
facility; the provision of specialist technical support for
clean development mechanism developers and projects
through a technical support facility; and the provision
of marketing support services to the project developers
to promote the sale of carbon credits through a credit
marketing facility.
IMPROVING GOVERNANCE
AND PREVENTING CORRUPTION
Good governance is critical for poverty reduction, as
weak governance hurts the poor disproportionately. ADB
recognizes the essential role of governance in develop-
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
improving staff skills in these areas.
MEETING DIVERSE CLIENT NEEDS
As a result of rapid development in the region, ADB deals
with a significantly more diverse set of countries today
than it did a few decades ago. ADB’s support therefore
needs to be highly customized to the development needs
of each group of countries. In parallel to the overall in-
stitutional strategy laid out in the second medium-term
strategy, ADB worked on distinct approaches to deal with
these different groups of countries.
WEAKLY PERFORMING COUNTRIES
Many of the region’s poor people live in developing
member countries with weak governance, ineffective
public administration, and civil unrest. In many of these
countries, large-scale and violent civil conflict has impaired
the government’s ability to guarantee people’s security.
In such a setting, achieving the Millennium Development
Goals is difficult.
The second medium-term strategy calls for a special
approach to dealing with weakly performing countries
and warns of the dangers of a lack of, or limited, engage-
ADB will undertake more focused
governance activities and renew its
commitment to fighting corruption
26
Poor people typically bear the greatest burden of pollution and
environmental degradation
ment with them. ADB’s current approach is based on its
strategic framework and its performance-based allocation
system, which tends to channel more funds to countries
that perform well based on set criteria, including good
governance. However, this could mean that the countries
needing the most assistance in improving governance
and reducing poverty may get less help because of their
poor performance.
Effective assistance programs in weakly performing
countries must be based on country ownership and bol-
stered by systematic capacity development. ADB plans to
respond to the need for capacity building by mobilizing
greater technical assistance and other grant financing
from its partners. ADB operations in weakly performing
countries will involve partnerships at all stages and will
require ADB to pursue cofinancing opportunities. ADB
continues to refine its approach to identifying and defining
weak performance, rethink its operational planning, and
adapt its business processes and instruments to ensure
that its engagement is suitable and effective for individual
weakly performing countries and is consistent with the
Paris Declaration.
A background paper on the subject was prepared and
discussed during the ADF IX midterm review exercise in
Frankfurt, Germany, in December 2006. A Board paper
on ADB’s Approach to Engaging with Weakly Performing
Countries: Achieving Development Effectiveness in Weakly
Performing Countries is expected to be submitted to the
Board of Directors in 2007.
ADF RECIPIENT COUNTRIES, THE
ADF IX MIDTERM REVIEW
On 4–5 December 2006 in Frankfurt, ADF deputies from
donor countries, representatives from ADF borrowing
members, and observers from other international de-
velopment institutions met with ADB Management and
staff to review the progress of ADF IX implementation
(2005–2008). Two vice presidents for operations headed
the ADB team. The discussion emphasized the need for
ADB to continue its focus on poverty reduction, with
Pathways Out
of Poverty
A study completed in 2006 challenges some key
assumptions underlying ADB’s poverty targeting in rural
areas. Given that poverty reduction is ADB’s overarching
goal and that most of the poor still live in rural areas, the
study has far-reaching implications for future projects.
A key recommendation of Pathways Out of Rural
Poverty and the Effectiveness of Poverty Targeting
is to tailor projects to address the specific causes of
poverty in a particular area instead of providing a
standard package of rural infrastructure and agricultural
development.
The study argues against a too-narrow focus on
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
greater effort to demonstrate a link between ADF opera-
tions and poverty reduction.
In this context, a midterm report prepared by ADB’s
Operations Evaluation Department was submitted to ADF
donors. To provide some indication of the results achieved
by ADF-funded public sector projects, their success rates
were compared with those of OCR-funded projects over
OVERVIEW
time. The analyses found that 70% of OCR projects were
POLICY
rated successful compared with 58% of ADF-funded
projects, although both OCR and ADF ratings converged
and improved markedly in recent years. This result should
automatically reduces poverty, and that the solution to
poverty in a poor region lies within that region.
The study found that the bulk of the rural poor live in
less-poor regions, the location of projects in poor regions
does not guarantee significant poverty reduction, and
solutions to persistent rural poverty in remote and poorly
endowed regions often lie in economic growth outside
those regions.
The full report is at http://adb.org/Documents/SES/
REG/Rural-Poverty-Targeting/ses-poverty-targeting.asp
Supporting economic activity
led by the nonpoor could
create jobs for the poor and
lift them out of poverty
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
insufficient control and flexibility over these functions by
the vice presidents and decisions that are not seen as
transparent. Many participants called for the next staff
engagement survey to be brought forward and sug-
gested an independent progress review of the human
resources strategy. Participants welcomed the changes
in staff evaluation embodied in the performance and
development plans. They urged greater effort to institute
a merit-based system of staff selection and promotion
at all levels. Participants pressed for greater efforts to
achieve gender balance in ADB also at the senior levels.
ADB acknowledged the importance of these issues and
agreed to consider ways to address them.
MIDDLE-INCOME COUNTRIES
AND OCR BORROWERS
Providing effective assistance to middle-income countries
and borrowers from OCR is essential if ADB is to achieve its
vision of an Asia and Pacific region free from poverty. OCR-
borrowing countries are home to two thirds of the world’s
poor living below $1 dollar a day and account for the bulk
of ADB lending operations. In recent years up to 2004, the
OCR public sector portfolio had experienced little change
in the annual numbers of new loans approved, increased
concentration in a limited number of countries and sectors,
stable disbursements, and high cancellation rates. In 2006,
disbursements and new approvals increased significantly.
To address these concerns, in June 2004, ADB began
exploring how it could enhance its support to OCR bor-
rowers. The work focused on three mutually reinforcing
objectives: review the main development challenges facing
this diverse group of countries, articulate the countries’
demands and expectations of ADB’s role in helping them
meet these challenges, and discuss how ADB can improve
its services to OCR borrowers.
On 7 April 2006, ADB and the World Bank jointly organ-
ized a consultation meeting with senior officials from various
Asian middle-income countries at ADB headquarters. The
main objective of the consultation meeting was to assess
Providing effective assistance
to middle-income countries and
borrowers from OCR is essential if
ADB is to achieve its vision of an Asia
and Pacific region free from poverty
whether the current set of reforms under adoption and
implementation was sufficient to meet the development
needs of middle-income countries. The event promoted an
active exchange of views and valuable feedback.
The work culminated in the preparation of a paper,
Enhancing ADB Support to Middle-Income Countries and
OCR Borrowers, outlining a coherent framework for ongo-
OVERVIEW
ing and planned initiatives in this area. The paper, which the
POLICY
ADB Board of Directors discussed in August 2006, would
serve as a basis to monitor progress over time. The initiatives
were grouped into three main areas: reducing the costs of
doing business with ADB, expanding and enhancing ADB’s
operational instruments, and enhancing the quality of
ADB’s services. Many of these initiatives were developed as
part of the innovation and efficiency initiative.
MODERNIZING THE
OPERATIONAL MODEL
The second medium-term strategy proposes several adjust-
ments in ADB’s operational model to better align it with
the five strategic priorities outlined under Strengthening
Strategic Priorities under the Second Medium-Term Strategy
(pages 23–26). The most important of these include
greater sector focus and selectivity; product and process
innovations to enhance responsiveness, flexibility, and
efficiency—most were developed as part of the innova-
tion and efficiency initiative; and increased emphasis on
portfolio performance, development, and results as part of
ADB’s broader effort to manage for development results.
GREATER SECTOR SELECTIVITY
ADB recognizes that it cannot be effective in all sectors
and in all countries. Selectivity and focus are important
determinants of ADB’s ability to deliver quality develop-
ment results. The second medium-term strategy identifies
core sectors where ADB will focus its operations and build
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
sectors, and ADB’s track record of quality project delivery.
Group I covers core operational sectors where ADB will
build up a critical mass of expertise and be a leading pro-
vider of financing and expertise. These sectors include road
transport, energy, urban infrastructure, rural infrastructure,
education, and financial services. Group II comprises sectors
29
 for which building ADB capacity is not a priority but which
are identified as important for ADB to be able to meet
the diversity of needs across different countries. Group
II includes agriculture and natural resources, railways,
health, trade (related to regional cooperation and integra-
tion), law and the judiciary, public finance, and economic
management. Group III covers sectors with limited demand
OVERVIEW
and where ADB’s performance has sometimes been poor.
POLICY
Operations in group-III sectors are to be gradually phased
out, thereby freeing up resources for focusing operations
in group-I and -II sectors. Three of ADB’s most poorly
performing sectors (fisheries, livestock, and development
finance institutions) are in group III. Group III also includes
some sectors where ADB has had success (airports, water
transport, and communications, for example), but demand
from developing member countries for ADB financing in
these sectors is likely to be limited.
This selective approach has been working well so far.
For public sector loans and ADF grants, 73% of total
approvals in 2006 were for group I, 17% for group II, and
4% for group III.
ADB realigned its regional departments to remove
structural constraints identified during the independent
assessment of the 2002 reorganization. These adjustments
were aimed to ensure greater synergy between country
and regional operations by regrouping countries more
in line with existing regional and subregional initiatives,
strengthen country focus as a result of more balanced
workload across regional departments, and optimize
The Water Financing Program (2006–2010) seeks to make water a core
investment area for ADB
30
the use of staff resources and skills through operational
synergy and focus by regrouping countries with congruent
development challenges and priorities.
INNOVATION AND EFFICIENCY
INITIATIVE
Another important adjustment to the operational model is
the introduction of new products and processes to enable
ADB to more flexibly and innovatively meet the needs of
developing member countries and improve real develop-
ment outcomes on the ground. Greater efficiency in this
regard is required to reduce transaction costs that develop-
ing member countries incur by doing business with ADB,
including measures to accelerate loan processing. Many
plans are already under way as part of the innovation and
efficiency initiative.
Launched in November 2003, the initiative focused on
the following priority areas: cost sharing and eligibility of
expenditures, procurement and consulting services, busi-
ness processes, country strategies, safeguard policies, and
new financing instruments and modalities. These initiatives
are now being implemented.
Cost Sharing and Eligibility of Expenditures. On 25
August 2005, the Board approved a new policy framework
on cost sharing, expenditure eligibility, and local cost
financing for public sector assistance. In the past, cost-
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.
Pilot Financing Instruments and Modalities. On 25
August 2005, the Board approved the 3-year pilot-testing
of three new financing instruments and modalities: the
multitranche financing facility, the nonsovereign public sector
financing facility, and the refinancing facility. The innovation
and efficiency initiative pilot financing instruments and
modalities do not replace ADB’s existing instruments, but
rather expand the range of alternatives available in ADB’s
portfolio of development finance solutions. They are intended
to provide ADB clients and operational teams with additional
and flexible alternatives to help finance individual projects
and investment programs.
Multitranche Financing Facility. The multitranche financ-
ing facility allows ADB to offer financial resources to clients
for an agreed investment program or a set of interrelated
investments. These resources may be provided in a series of
separate financing tranches over a fixed period. Of the vari-
ous pilot financing modalities, the multitranche financing
facility is the most in demand among clients. From August
2005 to December 2006, 10 multitranche financing facility
proposals were submitted to and approved by the Board.
Financing made available through this facility amounted to
$5.3 billion. As of 31 December 2006, two loans amount-
ing to $360 million had been declared effective.
Nonsovereign Public Sector Financing Facility. The
nonsovereign public sector financing facility allows ADB
to provide loans and guarantees directly to selected
nonsovereign public sector entities, without need for a
central government or sovereign guarantee. In the first
year since the facility was adopted as a pilot instrument,
the Private Sector Operations Department has processed
two nonsovereign public sector financing facilities: the
National Thermal Power Corporation Capacity Expansion
Financing Facility in India and the South Sumatra to West
Java Phase II Gas Pipeline Project in Indonesia. In both
cases, the clients were state-owned enterprises. Staff
instructions and guidance notes for nonsovereign public
sector financing facilities were issued on 15 December
2006. They reiterate the policy directive that these
facilities should be processed in accordance with private
sector operations procedures.
Refinancing Facility. Using the refinancing facility,
ADB can restructure the existing debt of public, private,
or public–private clients who are burdened by a legacy of
inappropriate or onerous financing plans. No refinanc-
ing transaction has yet been processed and no concept
paper for a refinancing transaction has been cleared.
There is potential demand for this type of facility, but
two factors continue to affect its uptake: skills mix and
ability to restructure financing plans, and tight condi-
tions and criteria for its use. As with nonsovereign public
sector financing facilities, refinancing facilities are to be
processed in accordance with private sector operations
procedures.
As a precondition for the pilot instruments, the in-
dependent Risk Management Unit was created in 2005
to evaluate nonsovereign finance transactions. The unit
became fully operational in 2006 with respect to credit
OVERVIEW
risk assessment on individual transactions of nonsovereign
POLICY
operations, provision and reserve measurement, credit
portfolio management on nonsovereign operations, and
market and treasury risk management. The unit reviewed
two policies in cooperation with other departments: the
loss provisioning policy for nonsovereign operations (jointly
with the Controller’s Department) and ADB’s investment
strategy and authority (with the Treasury Department).
Completing the risk framework for nonsovereign opera-
tions will continue in 2007.
ADB also reviewed and revised its major financial and
liquidity policies in 2006 to update and align the financial
policies and practices with ADB’s business activities and
initiatives and to harmonize with best practices. ADB for-
malized a comprehensive asset and liability management
policy framework for managing the financial assets and
liability and updated the liquidity policy and investment
authority and guidelines.
Procurement and Consulting Services. On 1 January
2005, streamlined procedures became effective for the
procurement of goods and services and the engagement
of consultants. In February 2006, the Board approved
additional amendments to ADB procurement and
consulting services policies, which further streamlined
the procedures, improved project implementation per-
formance, and responded to borrowers’ demands for
more flexibility and modernization in procurement and
consultant engagement. The revised policies became
effective on 1 April 2006.
Country Strategies and Business Processes. In August
2006, Management approved new business processes
to improve the preparation of country strategies and
programs as well as project processing of sovereign
The innovation and efficiency
initiative pilot financing
instruments and modalities
expand the range of alternatives
available in ADB’s portfolio of
development finance solutions
31
 operations. The improvements will make ADB program-
ming and processing more responsive, relevant, and results
oriented by ensuring strategic clarity at the country level
and selectivity in operations pipelines, results orientation
and operational quality at entry, and procedural efficiency
and improvement.
The Strategy and Policy Department, in close consulta-
OVERVIEW
tion with operations and non-operations departments,
POLICY
prepared the operations manual section on country
partnership strategy and the detailed country partnership
strategy guidelines, which Management finalized and
approved in February 2007. The department and the
Office of the Secretary prepared templates on the country
partnership strategy, partnership strategy midterm review
report, and country operations business plan. The entire
set of documents was discussed at a workshop conducted
on 6–7 November 2006 with staff concerned, including
those from resident missions.
Safeguard Policy Update. ADB’s review of its safeguard
policies continued. These policies—on the environment
(2002), indigenous peoples (1998), and involuntary
resettlement (1995)—aim to avoid, minimize, mitigate,
and/or compensate for any adverse environmental impacts,
social costs to project-affected people, or marginaliza-
tion of vulnerable groups that might result from project
interventions supported by ADB. The ongoing review
takes into account two special evaluation studies by the
Operations Evaluation Department on the environment
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
make progress in implementing its managing for develop-
32
ment results agenda at the country and institutional levels
and through global partnerships. This is in line with its revised
action plan for managing for development results for 2006–
2008, approved by Management in August 2006.
ADB approved 13 technical assistance projects to help
build capacity in managing for development results in its
developing member countries. Some of the projects are
funded through the agenda’s cooperation fund. A com-
munity of practice on managing for development results
was launched in March 2006 to help build capacity in
developing member countries.
At the institutional level, ADB has adopted a results-
based country strategy and program for 11 countries.
Strategic planning processes, including the work program
and budget framework, the annual report on the poverty
reduction strategy, and other policy documents, are now
more results oriented. ADB has introduced a curriculum for
managing for development results to promote staff learning
and development at all levels. Vice presidents now convene
regular development effectiveness meetings with depart-
ment heads to focus on performance and outcomes.
ADB has been active in the global partnership in manag-
ing for development results. ADB still chairs the Multilateral
Development Bank Working Group on Managing for
Development Results and co-chairs the Organisation for
Economic Co-operation and Development–Development
Assistance Committee Joint Venture on Managing
for Development Results. ADB conceived and initiated the
ADB’s safeguard policies help avoid marginalization of vulnerable
groups
first Multilateral Development Bank Common Performance
Assessment System Report and worked with many development
partners in sharing knowledge and experience in this area.
Strengthening Project Performance Management
Systems. ADB’s enhanced project performance
management system helps manage projects for greater
development results. It outlines a systematic way of
designing and implementing projects. The design and
monitoring framework, the key element of the project
performance management system, is a results-based tool
for analyzing, conceptualizing, designing, implementing,
monitoring, and evaluating projects. It structures the
project-planning process and helps communicate
essential information about the project to stakeholders
in an efficient, easy-to-read format. The design and
monitoring framework can be applied to the analysis
and planning of country programs, and sector strategies,
programs, and projects.
Operations manual sections on project performance
management systems were issued in January 2006
and Guidelines on Preparing a Design and Monitoring
Framework was published in March. These guidelines
focus on applying the design and monitoring framework
at the program, project, and technical assistance levels.
The guidelines are being translated into Afghanistan’s
Dari language, Mandarin (Chinese), Russian, and Viet-
namese. Capacity building for officials of developing
member countries, executing agencies, and ADB staff
focused on the participatory process in designing a
project, stakeholder analysis, problem and objectives
analyses, results chains, and analysis of alternatives.
The results of the participatory process are summarized
and presented in a results matrix format in the design
and monitoring framework. Workshops and training
programs were conducted for ADB staff and for of-
ficials in 13 developing member countries: Fiji Islands,
Indonesia, Kazakhstan, Kyrgyz Republic, Lao People’s
Democratic Republic, Mongolia, Nepal, Papua New
Guinea, Philippines, Sri Lanka, Tajikistan, Uzbekistan, and
Viet Nam. In all, 325 officials from developing member
countries and executing agencies, 56 consultants, and
376 ADB staff were trained.
ADB’s enhanced project
performance management
system helps manage projects for
greater development results
Improving Portfolio Performance and Results. The
Operations Evaluation Department presented its Annual
Report on Loan and Technical Assistance Portfolio
Performance for 2005 in September 2006. The main
recommendation arising from the analyses is to see that
the action plan to improve loan and technical assistance
portfolio performance is fully implemented. The action
OVERVIEW
plan was prepared by Management in 2005 in response
POLICY
to the previous year’s report. Seven action plan items were
flagged for importance and are being acted upon. These
are a closer alignment of staff and budget allocations with
specified output deliverables in the work program and
budget framework for 2006–2008, provision of career
incentives and development for staff involved in project
implementation and portfolio management, improvement
in the strategic application of technical assistance
resources, more accurate costing of actions to complete
project preparatory work, revision of project and technical
assistance performance report formats to improve efficacy
and efficiency, review of the private sector development
strategy and private sector operations, and full functioning
of the Risk Management Unit.
Assessing Project Quality. The Operations Evaluation
Department analyzed successful projects in the group-I
sectors identified in the second medium-term strategy as
those where ADB’s operations are expected to grow—
irrigation and water management, power, water supply and
sanitation, education, and roads. Project success rates in
these sectors have ranged from 55% to 90%. The analyses
found that common factors across sectors contribute to
good project performance: strong ownership by govern-
ments and executing agencies; continuity of ADB’s involve-
ment; an ability to learn lessons and incorporate them into
project design; careful project preparation; strong executing
agencies that operate in the right policy environment, are
autonomous, and have the necessary human resources,
technical skills, and access to adequate financing for project
implementation and for operation and maintenance;
an ability to identify and solve problems during project
implementation; a clear unmet demand for the goods and
services provided by the project; use of a participatory ap-
proach and involvement of stakeholders and beneficiaries
in all project phases; successful institutional impacts; and
good performance by consultants and contractors.
Improving Country Strategies. Experience in 2005
through early 2006 suggests that the influence of country
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
does not normally discuss a country strategy and program
until after the Development Effectiveness Committee has
considered the corresponding country assistance program
evaluation and informed the full Board of the committee’s
views based on the findings.
All country strategies and programs discussed by the
Board in 2005 and 2006 were reviewed to assess whether
the respective country assistance program evaluations had
influenced them. In most instances, the corresponding
country assistance program evaluation recommendations
were used as inputs.
The lessons from the review of the country strategies
and programs discussed by the Board in 2005 fall broadly
into 10 areas:
• Future assistance should be prioritized based on selec-
tivity and focus, with successful ADB performance in a
sector as one key criterion.
• Country strategies and programs should be results
based—the lack of monitorable indicators made it
difficult to evaluate past strategies and programs.
• Success has been greatest when ADB maintains a
long-term involvement in a sector and combines pro-
grams of capacity building with investment support.
• Projects and programs using relatively simple designs
that are rooted in local conditions are more likely to
succeed than complex interventions.
• Steps must be taken to strengthen the impact of the
technical assistance used to support policy reform,
capacity building, and institutional strengthening.
• ADB should deepen its relationships with broader
34
society as this enhances ownership and often helps
achieve better development results.
• ADB should intensify its coordination with develop-
ment partners and stakeholders.
• Governance, including the need to control corruption,
should be explicitly addressed in country strategies
and programs, and not just as a crosscutting theme.
• The understanding of corruption and the risks that it
has for ADB operations remains superficial in country
strategies and programs.
• Failure of project designs to recognize and address
institutional weaknesses in implementing agencies
early on leads to weak project performance.
Promoting Quality at Entry. An interdepartmental panel
reported on quality at entry of ADB projects and country
strategies approved during 2004–2005. For projects, the
panel said that improvements to overall project quality at
entry will occur if particular attention is paid to implemen-
tation arrangements, fiduciary matters, risk, and policy
and institutional aspects. Regarding country strategies,
it noted that thematic country diagnostics are usually
comprehensive but that they tend to be descriptive rather
than analytical. Sector diagnostics tend to be inadequate
or missing. A common problem is that diagnostic work
is insufficiently distilled to identify a set of constraints on
development, which should provide the focus of ADB’s
operations.
In 2007, the Operations Evaluation Department will
conduct a special evaluation study on the effectiveness of
ADB’s loan-processing system by documenting the expe-
rience and insights of ADB mission leaders and officials
of developing member countries. The study will identify
issues that impinge on the effectiveness of ADB’s loan-
processing system, evaluate the system’s effectiveness in
screening projects and facilitating incorporation of lessons
into new operations, and recommend improvements. It
may also explain why the average number of months from
as poverty reduction, governance, gender, HIV/AIDS,
natural disasters, and others. The 34 funds include the
Asian tsunami and Pakistan earthquake special funds,
established in 2005 as Special Funds with ADB as the
initial sole contributor but with the possibility for other
donors to join. Subsequently, external donors joined these
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
combat HIV/AIDS and other infectious diseases.
ADB also manages and administers Special Funds (see
pages 29–30) and grants provided by bilateral and multilateral
donors to support technical assistance and soft components
of loans. In recent years, thematic trust funds were estab-
lished focusing on gender and development, governance,
poverty reduction, water, energy, and the environment.
Technical assistance funded through grants or loans
helps maximize ADB’s development impact. Technical
assistance grants are used for preparing projects, and for
OPERATIONS
FINANCING
LOANS
Sovereign lending amounted to $6.8 billion in
71 loans (59 projects and programs), compris-
ing 26 loans from ADB’s OCR for $5.5 billion, and
45 loans from the ADF for $1.3 billion. These amounts in-
clude six OCR loans for $930.8 million and three ADF loans
for $30.0 million from the multitranche financing facili-
ties. Overall, sovereign lending increased by 30% over the
$5.2 billion approved in 2005 (an increase of 43% for OCR
lending and decrease of 6% for ADF lending). Two nons-

supporting advisory and regional activities in areas such
as law and policy reform, strengthening fiscal policies
and procedures, good governance, capacity building, and
natural resources management.
ADB has a triple-A credit rating and actively mobilizes
financial resources through its cofinancing operations,
tapping official, commercial, and export credit sources.
Assistance to its developing member countries creates
an enabling environment for private sector development.
ADB also directly finances private sector projects to assist
commercial investors and lenders.
OVERVIEW OF OPERATIONS
ADB approved 80 loans (67 projects) for $7.4 billion,
14 equity investments for $260.5 million, 3 guarantees for
$124.8 million, 5 syndication operations for $530.0 million,
43 grant projects for $538.4 million, 260 technical assistance
projects for $241.6 million, and 8 multitranche financing
facilities for $3.8 billion.
overeign public sector loans to state-owned enterprises for
$150.0 million were approved. Seven nonsovereign loans
(six projects) to the private sector for $425.0 million were
also approved—17% less than the $513.0 million that
went to six loans (six projects) in 2005.
Of the 67 projects and programs approved, 18 (27%)
were targeted interventions, and 49 (73%) were general
interventions. Sustainable economic growth was the most
prevalent theme and was associated with 57 projects. Finance
received the largest share of lending (24%) (Table 3).
The 52 projects approved will result in total invest-ments
of about $17.5 billion: $4.3 billion (25%) will be financed
by ADB; $4.9 billion (28%) by governments and borrowers;
$8.2 billion (47%) by cofinanciers, equity sponsors, and local
financial institutions; and $22.3 million (0.1%) by project
beneficiaries. Four projects, amounting to $314.2 million,
will be financed under sector lending, compared with eight
projects amounting to $1.0 billion in 2005.
The 15 policy-based programs approved in 2006 were
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
coupled with an investment project loan.
EQUITY OPERATIONS
Fourteen equity investments for $260.5 million were ap-
proved, compared with eight for $196.5 million in 2005.
COFINANCING AND
GUARANTEE OPERATIONS
Total direct value-added cofinancing amounted to
$1.5 billion for 103 projects, of which $1.4 billion was for
29 investment projects and $92.7 million was for 74 tech-
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.
Note: Totals may not add up because of rounding.

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
DVA = direct value added.
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
Note: Totals may not add up because of rounding.

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
($430.0 million) for Bangladesh, three ($1.1 billion) for
India, three ($2.2 billion) for Pakistan, and one ($50.0
million) for the People’s Republic of China (PRC).
RESOURCE TRANSFERS
The year showed significant improvement in disburse-
ment, compared with the past 10 years. In discussions
with borrowers, countries highlighted the need for ADB
to expand support for poverty reduction programs. The
7 private sector loans of $425.0 million, of which $75.0
million has been reinsured, 2 public sector loans of $150.0
million, two partial credit guarantees of $109.8 million, a
political risk guarantee of $15.0 million, and $455.0 million
in commercial loans under ADB’s B-loan program (Table 9), of
which $105.0 million is for B-loans for private sector projects
and $350.0 million is for B-loans for public sector projects.
As of 31 December 2006, the overall exposure of
nonsovereign operations amounted to about $2.6 billion,
consisting of $915 million in equity investments, loans of
$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
national grid in 2006–2009. The Bihar project mobilized
an additional $125 million from commercial banks as well
as Kreditanstalt für Wiederaufbau (KfW) and the Islamic
Development Bank.
ADB’s private sector portfolio has improved signifi-
cantly. As of the end of the year, the impaired portfolio
had been reduced to 4% of the total private sector out-
standing portfolio, compared with 9% in 2005. With a
fully functioning independent risk management group
rigorously screening nonsovereign projects at point of
entry, the quality of the private sector portfolio is expected
to improve further. Impaired projects are being monitored
closely by a work-out team and continue to be sold or
disposed of.
OPERATIONS
OVERVIEW
A $400 million program loan to Pakistan will establish
a comprehensive framework to address key policy,
regulatory, and institutional constraints on private sector
investment in the power, transport, and water sectors and
eventually help mobilize private sector resources for them.
ADB focused on encouraging public–private part-
nerships and private investment through projects in
railways (Cambodia, $42.0 million); infrastructure
reform (Indonesia, $426.5 million); forest plantation
development (Lao People’s Democratic Republic, $10.0
million); financial market regulation and intermediation
(Philippines, $200.0 million); and power sector develop-
ment (Philippines, $450.0 million), among others.
ADB invested substantially in rural finance projects in India
44
ADB focuses particularly
on investments to support
rural development
STRENGTHENING INCLUSIVENESS
The second medium-term strategy emphasizes strength-
ening inclusive patterns of growth and social development
to enable disadvantaged groups to benefit equitably from
the opportunities that development provides. The strategy
focuses particularly on investments to support rural devel-
opment—as the vast majority of the poor remain in rural
areas—as well as investments in key social development
interventions.
ADB invested substantially in projects that sup-
ported rural road construction (India, Papua New Guinea,
People’s Republic of China [PRC]); rural water supply
systems (Sri Lanka); irrigation (Pakistan); rural finance
(India); and rural electrification (PRC). About a quarter
of approved loans cited inclusive social development as a
theme. ADB strengthened inclusiveness through projects
to develop education (Bangladesh, Indonesia, Lao People’s
Democratic Republic [Lao PDR], Mongolia, Nepal, and Viet
Nam); improve the environment (India); reduce poverty
(Viet Nam); and support sustainable livelihoods through
livestock development (Lao PDR).

Safe water, sanitation, and responsible environmental management are
all ADB priorities
REGIONAL COOPERATION
AND INTEGRATION
In cooperation with governments in the region, ADB drew
up its first regional cooperation strategy and program for
South Asia (2006–2008). The ADB-supported South Asia
Subregional Economic Cooperation Program took a major
step in developing four investment projects for informa-
tion and communications technology, tourism, transport,
and trade. ADB also supported studies and cooperation
activities of the South Asian Association for Regional
Cooperation and the Bay of Bengal Initiative for Multi-
Sectoral Technical and Economic Cooperation in transport
and energy.
The Central Asia Regional Economic Cooperation pro-
gram took a major step forward in October 2006 when
ministers endorsed its comprehensive action plan. The
ADB’s private sector portfolio has
improved significantly. As of the end
of the year, the impaired portfolio
had been reduced to 4% of the
total private sector outstanding
portfolio, compared with 9% in 2005
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
in October 2005, the time is ripe to promote regional
cooperation. The Pacific Plan is an evolving document
which presents initiatives supporting the achievement
of four strategic goals—economic growth, sustainable
development, good governance, and security. ADB has
directly supported implementation of the Pacific Plan in
2006 through approval of two regional technical assis-
tance projects to strengthen regional cooperation among
Pacific developing member countries, and governance and
financial management in these countries.
In 2006, 42.3% of ADB’s technical assistance—$102.2
million—supported regional initiatives.
MANAGING THE ENVIRONMENT
To ensure compliance with its safeguard policies, ADB re-
viewed all projects before Board consideration. In a review
of 81 projects and equity investments approved in 2006,
ADB found that 55 projects required the preparation of
environmental assessment reports and management
system frameworks, 20 required the preparation of a plan
or framework or specific actions for indigenous peoples,
and 35 required resettlement plans and frameworks—to
address potential adverse impacts on the environment and
affected people. ADB issued revised operational procedures
for each of the three safeguard policy areas, taking into
account the new disclosure requirements of the recently
approved public communications policy. ADB organized
orientation and training for its own staff and developing
45
 member country officials on safeguard requirements. It
also enhanced knowledge capture and dissemination
through regular updates of its websites on the environ-
ment, involuntary resettlement and indigenous peoples,
and safeguards.
ADB continued to enhance legal frameworks and ca-
pacity development related to involuntary resettlement in
Bangladesh, Cambodia, Nepal, and Sri Lanka. As a continu-
ing commitment to global dialogue on indigenous peoples’
issues, ADB participated in the Fifth Session of the United
Nations Permanent Forum on Indigenous Issues, which high-
lighted the need to redefine the Millennium Development
Goals to include indigenous peoples’ concerns.
Of the 67 projects approved in 2006 (excluding equity
investments), 17 (25%) had environmental sustainability as a
OPERATIONS
OVERVIEW
theme—up from 10 (16%) in 2005. Total ADB assistance for
the 17 projects amounted to $1.6 billion (22% of total ADB
funds), twice the $794 million (14%) committed in 2005.
Nearly half of ADB funds (44%) approved aimed to
improve urban environments by providing or rehabilitating
water supply, sanitation, and waste management systems.
More than 30% of ADB funds supported cleaner produc-
tion processes and controlled industrial pollution. Other
projects helped conserve natural resources.
Several approved technical assistance projects aimed
to strengthen capacity, start policy reforms, make project
implementation more effective, and help achieve the
Millennium Development Goals, among others. For
example, ADB will help the Government of the PRC estab-
lish the Clean Development Mechanism Fund by designing
a governance structure and building its initial operational
capacity. ADB is financing a study to help Bangladesh,
Bhutan, India, and Nepal improve and develop policy and
regulations for managing hazardous wastes.
ADB is working in partnership with other institutions.
The Global Environment Facility provided $9 million in
cofinancing for a coastal resources management project
in the Philippines and a commitment of $20 million in
grant support for the first phase of the ADB-led Central
Asian Countries Initiative for Land Management.
The Asian Environmental Compliance and Enforce-
ment Network, established by ADB and the United
Nearly half of technical assistance
aimed to provide or rehabilitate
water supply, sanitation, and
waste management systems
46
States Agency for International Development on the
premise that sustainable development depends on
good governance, supported pilot activities, including
regional training and consultation to develop national
environmental compliance and enforcement indicators
in the Philippines, Thailand, and Viet Nam. During the
network’s first annual forum held in Ha Noi, Viet Nam,
participants discussed general principles for compliance
and enforcement tailored to Asia, and lessons from
country case studies.
The Clean Air Initiative for Asian Cities progressed well,
with rapid expansion of country-level air quality analysis
and investment planning. The Better Air Quality Conference
held in Yogyakarta, Indonesia, highlighted the success of
Asian countries, cities, and communities in reducing air
pollution, and efforts needed to improve air quality.
The Poverty and Environment Program continued to
accelerate learning on the link between environment
and poverty, and effective approaches for poverty reduc-
tion. ADB’s Poverty and Environment Net website—a
repository of successful poverty and environment strat-
egies, programs, and projects—has become a much
sought-after knowledge management tool inside and
outside the region.
IMPROVING GOVERNANCE
AND PREVENTING CORRUPTION
ADB is committed to working with its client countries to
improve governance and reduce vulnerability to corrup-
tion, which is key to reducing poverty.
Eighteen of 67 approved public and private sector loan
projects and 85 technical assistance projects had improving
governance as a theme. Assistance to strengthen gover-
nance in developing member countries totaled $2.7 billion,
including technical assistance to improve public auditing
capacity in Pacific island member countries and to help
develop the Afghanistan National Development Strategy
(including support to develop a national anticorruption
strategy); preparation of a governance reform and decen-
tralization cluster program in Nepal; and a program cluster
to support the Development Policy Support Program of
Indonesia, which, among other things, will strengthen the
public financial management and anticorruption framework
and improve the delivery of public services.
ADB’s five regional departments have begun to imple-
ment the second governance and anticorruption action plan.
Preparations have begun to apply this action plan to five new
country partnership strategies scheduled for completion in

Involving stakeholders strengthens their support for, and reduces challenges to, ADB-assisted activities
2007. Initial assessments of governance, institutional, and
corruption risks have been completed for projects and pro-
grams with a high perceived exposure to governance issues.
One such assessment, for example, was for a rural coopera-
tive credit restructuring and development program in India.
ADB approved the revised Guidelines on the Use of
Consultants and Procurement Guidelines in 2006. They
are now substantially harmonized with those of the Inter-
American Development Bank and the World Bank, and
streamline ADB’s procurement processes, enhance their
transparency, and allow greater flexibility in procurement
for experienced executing agencies. The guidelines include a
provision for declaring misprocurement when agreed proce-
dures are not followed, and contain harmonized definitions
of corrupt, fraudulent, coercive, and collusive practices.
Ensuring adequate project implementation capacity
is the responsibility of ADB’s borrowers and requires a
commitment to provide resources, develop skills, and put
in place the necessary systems and procedures. ADB has
introduced a number of measures for borrowers to assess
OPERATIONS
OVERVIEW
and improve their procurement capacity. These measures
include executing agency capacity assessment, training to
develop a project procurement plan, and improvement of
executing agency staff’s skills in project implementation
through seminars and customized training programs. An
important role of executing agency capacity assessment is
to evaluate the project risks that may hinder the ability of
an executing agency to carry out effective, efficient, and
transparent procurement. Assessments will feed into plans
to develop institutional capacity to mitigate such risks, and
a procurement plan commensurate with the capacity of
each executing agency. ADB introduced capacity assess-
ment with executing agencies and procurement plans,
and will expand activities in 2007.
ADB’s NGO Center approved small grants amounting
to $150,000 to nonprofit, nongovernment groups in
Mongolia, Pakistan, and the Philippines to pilot-test and
demonstrate the relevance and impact of nongovernment
mechanisms and approaches to improving transparency
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
to a results-oriented program with tangible targets and
outputs, based on strong country ownership, pragmatic
approaches, and mutual accountability.
One regional project was approved during the year. The
$56.5 million Regional Power Transmission Interconnection
Project will tap Tajikistan’s power surplus to meet serious
shortfalls in neighboring Afghanistan. The project will
construct a 220-kilovolt double-circuit transmission line
Contract awards topped $1.2 bil-
lion and disbursements reached
$1.0 billion in 2006, both up
substantially from 2005
timated at $114.0 million, split fairly evenly between the
two countries.
Portfolio Management
Contract awards topped $1.2 billion and disbursements
reached $1.0 billion in 2006, both up substantially from
2005. Program loan tranche releases to Pakistan in the
last quarter contributed to this performance. Pakistan ac-
counts for 85% of the department’s total contract awards
and 79% of disbursements (Table 10). The department
took a number of initiatives to improve project supervision
and portfolio management, including a special review of
the portfolio, establishment of a project administration
unit network, and the initiation of regular portfolio review
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.
Note: Totals may not add up because of rounding.

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
Market Development Program will encourage private sector
activity and improve access to financial services.
A $35 million ADF loan will support the Afghanistan
component of the Regional Power Transmission Inter-
connection Project to connect the Afghanistan and Tajikistan
power grids.
A $40 million nonsovereign loan and guarantee of
up to $15 million will help accelerate the expansion of
Afghanistan’s leading cellular network. The investment
builds upon ADB’s 2004 investment of $35 million in
Roshan, a telecommunications company owned by the
Aga Khan Fund for Economic Development (see story,
page 55). Roshan’s cellular network was the first private
sector project to attract international commercial bank
financing to Afghanistan for some 30 years, made
possible through ADB’s B-loan program and political
CENTRAL AND
WEST ASIA
risk guarantee product. As a result of additional financ-
ing, Roshan was able to provide service to more than
1 million Afghan subscribers.
Since resuming operations in Afghanistan in 2002, ADB
has approved more than $1 billion in assistance to the coun-
try. This has been complemented by $126.2 million in donor
cofinancing, largely through the Japan Fund for Poverty
Reduction. ADB has pledged up to $200.0 million a year over
2006–2010.
Because of lack of capacity and procurement delays,
overall implementation progress has been slower than
Since resuming operations in
Afghanistan in 2002, ADB has
approved more than $1 billion
in assistance to the country

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
northern link road (from Pul-e-Khumri to Andkhoy)
have been completed. A project to rehabilitate 241 km
of 220-kilovolt double-circuit transmission lines will be
completed by mid-2007. ADB has helped develop policy
and institutional reforms related to fiscal management,
restructuring of state-owned enterprises, public admin-
istration, and the country’s statistical system, as well
as road sector and energy master plans. ADB, together
with other donors, will help the Government prepare a
national anticorruption strategy.
ARMENIA
Armenia joined ADB in September 2005. On 1 August
2006, the Board of Directors endorsed an economic
report and interim operational strategy for 2006–2009.
ADB’s strategic priorities are to accelerate rural and urban
development, promote the private sector, and enhance
regional cooperation. Continued progress in macro-
economic, fiscal, and debt management reaffirmed the
Government’s commitment to reform. ADB is developing
an assistance program for 2007–2009 in consultation with
the Government.
ADB will focus initially on rehabilitating rural roads, water
supply, and social infrastructure.
A rural roads rehabilitation project preparatory technical
assistance for $150,000 was approved.
Azerbaijan significantly increased investment in infrastructure and the non-oil economy
AZERBAIJAN
In March 2006, ADB approved its first nonsovereign loan
and equity investment to Azerbaijan, totaling $15 million.
This will strengthen the emerging private banking sector.
The financial assistance will improve regulation, growth
of the small- and micro-loan portfolio, and support the
implementation of professional banking practices by three
local private banks—Micro Finance Bank of Azerbaijan,
Azerigazbank, and Bank Respublika. ADB approved $8
million to help facilitate trade. ADB has three ongoing loan
projects in Azerbaijan totaling $104 million. The disburse-
ment of these loans has been slow on account of lack of
familiarity with ADB procedures. ADB also supported the
Government’s campaign against avian influenza.
Rich oil and gas resources are expected to continue to be major
sources of export revenue. The Government significantly expanded
its investment program to develop infrastructure and the non-oil
economy. ADB’s strategy in the country focuses on promoting
CENTRAL AND
WEST ASIA
sustainable and inclusive growth through rehabilitation of roads,
and improvement of water and sanitation, good governance,
private sector development, and regional cooperation.
KAZAKHSTAN
ADB approved two private sector loans totaling $125 mil-
lion. In line with Government priorities, ADB’s assistance
focuses on private sector activity.
53

CENTRAL AND
WEST ASIA
ADB is helping rehabilitate the regional road network in the Kyrgyz
Republic
ADB approved two 5-year loans to two commercial
banks—$75 million to Bank TuranAlem JSC and $50 million
to JSC Alliance Bank—representing ADB’s first nonsover-
eign financing in Kazakhstan. They will help the two banks
expand their small and medium-sized enterprise portfolio
by providing debt funding and bridging an unwarranted
maturity gap, allowing the banks to match their assets and
liabilities more closely.
A partial credit guarantee was provided to JSC Alliance
Bank for its first diversified payment rights securitization
program with a total issue amount of $200 million. This
will help develop Kazakhstan’s securitization market. The
project is the first diversified payment rights securitization
of a medium-sized private sector bank in Kazakhstan.
It is expected to help similar banks access this type of
funding.
Ongoing public sector technical assistance and invest-
ments support the Government as it strives to achieve
environmentally sustainable development, wider access
to drinking water, improved water supply and sanitation
services, long-term benefits from higher farm income, and
improved irrigation networks and water service institutions.
ADB approved two private
sector loans totaling $125
million in Kazakhstan
54
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
financial institutions since 2003. A results-based joint
country support strategy for 2007–2010 is being prepared
with the United Kingdom’s Department for International
Development, Swiss Agency for Development Cooperation,
United Nations, and World Bank.
PAKISTAN
ADB’s large and diverse portfolio consists of 80 loans
totaling $6.4 billion. ADB approved $1.5 billion in 2006.
Six loans were approved under the multitranche financing
facility that provides long-term support in transport and
communications, energy security, and irrigation services.
In addition, ADB also provided $180 million to modern-
ize the national highway network under a $770 million
multitranche financing facility approved in 2005. A re-
newable energy sector development program, through a
$510 million multitranche financing facility, will fund new
investments in small to medium-sized hydropower units
that will help realize Pakistan’s significant hydropower
potential. A power transmission enhancement project
under an $800 million multitranche financing facility
aims to ensure reliable and high-quality power supply
to an ever-increasing number of industrial, commercial,
and retail consumers. The Punjab Irrigated Agriculture
Investment Program, representing the first of a series of
investments under a multitranche financing facility of
$900 million, will rehabilitate the canal system reduc-
ing water losses and improving irrigation efficiency and
agricultural productivity.
Supporting Economic
Reconstruction:
Afghanistan’s Cellular
Phone Net work
After more than 25 years of conflict, Afghanistan was
left with no national fixed-line telecommunications
service, a barely functioning postal service, and poor
roads. Cellular networks, while growing fast, are basic,
limited, and require over $300 million in investments to
extend their coverage beyond major cities.
In mountainous and landlocked Afghanistan,
cellular telephony is the only way to provide reliable,
countrywide communications. National demand
for this service will continue to increase rapidly but
limited funds constrain its development.
ADB is helping improve telecommunications
through a $120 million assistance package that
includes separate $35 million and $40 million
nonsovereign loans, a political risk guarantee of up
to $15 million, and a B-loan of up to $30 million that
leverages funds from other sources. ADB funding
Roshan—Afghanistan’s leading network provider—uses public call offices to give the less affluent access to telephones
for the program and its political risk cover have
encouraged commercial lenders to join the program,
a first for Afghanistan in several years. ADB’s presence
encourages international aid agencies and commercial
lenders to support private sector development.
This assistance will help the Roshan Cellular Phone
Network, Afghanistan’s leading network provider,
upgrade its systems and services and expand its
coverage.
The cellular network project will use global systems
for mobile communication, cellular, satellite, and radio
wave transmission technologies. The new funding
will help Roshan—a private limited liability company
providing cellular telephone, international gateway,
and Internet services—expand coverage countrywide,
pilot a mobile banking service, and deploy public call
CENTRAL AND
offices that provide access to communications for
WEST ASIA
less-affluent users.
ADB’s presence encourages
international aid agencies and
commercial lenders to support
private sector development
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.
The program will establish policy, legal, and regulatory
frameworks and support reforms in priority sectors such
as power, transport (highways), and water to make them
attractive for financing by the private sector.
A flagship program in the financial sector, approved for
$320 million, focuses on improving access to microfinance
and other financial services.
ADB also approved $7.6 million in grant financing for
technical assistance projects, including $2.0 million to help
the Government develop a national strategy to support its
Access to Financial Services Program.
TAJIKISTAN
ADB approved a $5.5 million loan and a $6.5 million ADF
grant for a sustainable cotton development project to help
restore the cotton subsector, the country’s main source of
farm income, agriculture exports, and rural employment.
The project will target four major cotton-growing districts
and use a two-tiered strategy to resolve cotton farm debt
on a pilot basis and to develop the cotton market. ADB
also supports the Government’s farm debt resolution
strategy.
ADB assistance to the power sector continued, with a
$21.5 million loan for the Regional Power Transmission
56
A flagship program in Pakistan’s
financial sector, approved
for $320 million, focuses on
improving access to microfinance
and other financial services
Interconnection Project for Afghanistan and Tajikistan
(including a $35.0 million loan to Afghanistan). The loan
will finance the construction of a 220-kilovolt double-
circuit transmission line from the Sangtuda Hydropower
Plant to Shekabandar, and rehabilitation of the Khatlon
Power System. ADB is cooperating with other develop-
ment partners to support a larger regional proposal for the
Central Asia–South Asia Transmission Line Project, which
will export power from Tajikistan to Pakistan.
TURKMENISTAN
ADB maintains a liaison office in Ashgabat to facilitate
dialogue with the Government. No active operations took
place in Turkmenistan in 2006. Turkmenistan is involved
in two regional technical assistance programs cover-
ing the sharing of environmental information and land
management. Consultations continued on the proposed
Turkmenistan–Afghanistan–Pakistan pipeline.
UZBEKISTAN
ADB’s $60.2 million Land Improvement Project, approved
in July 2006, will address the degradation of about 162,000
hectares of irrigated land in nine districts in Bukhara,
Kashkadarya, and Navoi provinces, where crop yields have
declined by 30% since 1991, directly affecting about 1.4
million people. The project will improve land reclamation
practices and establish three farms to demonstrate innova-
tive farm technologies and enhanced agronomic practices.
It will also rehabilitate drainage and irrigation systems to
improve water control and efficiency. A technical assistance
grant for $800,000, cofinanced by the Poverty Reduction
Cooperation Fund of the Government of the United
Kingdom, accompanies the loan and will help strengthen
institutions and prepare legislation.
In March 2006, ADB approved a $1.5 million Japan
Fund for Poverty Reduction grant to pilot a project that
ADB continues to assist the power sector in Tajikistan
will improve basic education for children with special
needs to increase their learning, social confidence, and
social integration.
ADB also approved a 5-year country strategy and
program focusing on four strategic priorities: accelerat-
ing rural development, building human capital through
basic education and early childhood development,
promoting regional trade and transport, and enhancing
private sector activities.
ADB approved a 5-year country
strategy and program focusing on
accelerating rural development,
building human capital, promoting
regional trade and transport, and
enhancing private sector activities
CENTRAL AND
WEST ASIA
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
impart nonformal skills training to unemployed youth and
poor adults. Cumulative lending for the region amounted
to $18.6 billion (Table 14).
ADB is pursuing a more focused approach to producing
and disseminating knowledge products by mainstreaming
knowledge management into technical assistance and loans.
The objective is to incorporate knowledge products into all
loan and technical assistance operations to add value to ADB’s
operations. This is considered essential and operationally
relevant, particularly in the PRC, which is seeking high-quality
international know-how and advice on good management
practices. ADB has set up a knowledge management unit in
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-
work on climate change in the PRC’s Tsinghua University.
Regional Cooperation
In line with the second medium-term strategy’s priorities
and the regional cooperation and integration strategy,
active support is being provided for the PRC’s participa-
EAST ASIA
TOP 5 ACHIEVEMENTS IN 2006
• Launched new regional cooperation initiatives in East Asia
involving the PRC and Mongolia
• Mainstreamed knowledge management into loans and technical
assistance to add value to operations
• Implemented innovative projects and project components,
including clean development mechanism carbon credits and a
pilot multitranche financing facility energy project
• Promoted a coordinated sector-wide approach to primary
education in Mongolia with the Government and other donors in
an initiative that will also give significant grants for education
• Achieved good portfolio performance, with few “at risk” projects
and a largely project-based disbursement ratio of 20.9%
Cooperation programs, and Mongolia’s participation in
the latter, particularly in cross-border infrastructure con-
nections and trade facilitation that cover the PRC and
Mongolia. The PRC hosted two senior officials’ meetings
and the Fifth Ministerial Conference on Central Asia
Regional Economic Cooperation in Urumqi, Xinjiang Uygur
Autonomous Region. ADB provided technical support to

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
Country OCR ADF Total Project Cost a Approved

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
China, People’s Rep. of
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
– = 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.

60
shop that brought together key decision makers from
government agencies for in-depth discussions of issues
related to regional cooperation. ADB also supported the
inaugural forum of the Beibu Regional Economic Cooperation
Program to promote regional cooperation between the PRC’s
Guangxi Zhuang Autonomous Region and the Association of
Southeast Asian Nations (ASEAN) and the GMS.
ADB is facilitating a number of cooperation initiatives
between the PRC and Mongolia under a regional techni-
cal assistance project covering transport, trade facilita-
tion, and capacity building for participation in regional
cooperation.
Another approved regional technical assistance project
on subregional cooperation in Northeast Asia focuses on
all loans it administers. Technical assistance administra-
tion improved significantly. Several technical assistance
projects were financially closed and savings realized to
augment the scarce resources.
Portfolio performance in the PRC continued to be
good with only one project (2.1% of the portfolio) at risk.
Disbursements (all for projects) totaled $984.8 million.
For Mongolia, contract awards totaled $52.5 million.
Disbursements amounted to $28.6 million (Table 15).
TABLE 14 East Asia: Cumulative Lending and
Disbursements by Country as of the end of 2006
($ 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:
ADB Lending by Country, 2005–2006
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
Country (as of Dec 2006) ($ million) ($ million) ($ million) ($ million) (%) (%)

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 –
Note: Totals may not add up because of rounding.

61

COUNTRY HIGHLIGHTS
THE PEOPLE’S REPUBLIC OF CHINA
The new country partnership strategy (2008–2010), which
is being prepared, will align ADB’s country strategy with
the PRC’s 11th Five-Year Plan and the priorities set out in
ADB’s second medium-term strategy. ADB approved 10
sovereign loans to the PRC totaling about $1.5 billion and
secured $3.2 billion in nondirect value-added cofinancing.
In addition, 27 technical assistance projects (includ-
ing two supplementary approvals) provided grants
amounting to $13.6 million. ADB began diversifying its
operations away from transport, which still accounted
for more than half of total lending (52.6%). Other key
sectors were water supply, sanitation and waste man-
agement (25.0%), agriculture and natural resources
(13.1%), and energy (9.3%).
Increasing Connectivity
Removing constraints on transport infrastructure remains
a high priority for the Government. Since 1989, ADB has
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
this investment, was allocated to the poorer central and
western regions.
All three transport sector projects approved in 2006
are in less-developed regions. These include a $200 mil-
ADB-supported railway projects give inland provinces access to ports
62
lion loan (Heilongjiang Road Network Development
Project) to upgrade 428 km of the Jixi–Nehe highway
in the northeast, along with 170 km of rural link roads.
A second transport sector project for $300 million is
in southern Gansu, one of the poorest provinces. The
project will support the construction of the 134-km
Wudu–Guanzigou expressway, the upgrading of 357 km
of rural roads in the Lanzhou–Haikou corridor, and the
improvement of road transport services by constructing
200 township bus stations and pilot-testing the road
transport action plan. These two road projects help
diversify ADB assistance within the sector by supporting
provincial roads and integrating logistics services and
rural development into expressway projects.
The third transport sector project in 2006 is a
$300 million loan to finance the construction of 944 km
of railway line from Taiyuan in Shanxi to Zhongwei and
Yinchuan in Ningxia. This will be the first east–west railway
linking the provinces of Shanxi, Shaanxi, and Ningxia. The
project will link Beijing, Qingdao, and other major cities
and ports in the east with Yinchuan, Zhongwei, Lanzhou,
and Urumqi in the west on its way to Kazakhstan. The
project introduces strategic and private investors and
ADB began diversifying its
operations away from transport,
which still accounted for more
than half of total lending
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
a $50 million multitranche financing facility for rural
hydropower projects in a remote region of western
Gansu province.
The clean development mechanism (CDM) allows
developed countries to fulfill their greenhouse gas emission
reduction obligations under the United Nations Framework
Convention on Climate Change (Kyoto Protocol) through
investments in emission reduction projects in developing
countries such as the PRC. In June 2006, ADB approved
technical assistance to help the PRC establish the CDM Fund
to manage the fees applied to the large revenue from CDM
projects. The CDM Fund will be used to support domestic
climate change-related activities. ADB introduced innovative
carbon financing to the Shandong Hai River Basin Pollution
Control Project through the CDM, which introduced ad-
ditional financing from international carbon markets. The
Government proposed to pilot-test the recently approved
carbon market initiative for the ADB-assisted medium-sized
hydropower project in Gansu.
Urban Development, Environmental Management
ADB approved loans totalling $380 million for four water
supply, sanitation, and wastewater management projects.
These urban projects aim to support the Government’s
effort to promote sustainable economic growth through
urbanization while protecting the environment and improv-
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
coordination in urban infrastructure management and to
catalyze alternative sources of investments with help from
ADB’s technical assistance. ADB also provided assistance,
through its private sector window, to enhance the supply
of clean energy in urban areas.
Cleaning up the Suzhou creek: ADB supports environmental protection
and regeneration in the PRC
Private Sector Development
The domestic private sector contributes more than 40% of
GDP, 60% of economic growth, 75% of new jobs in the
organized sector, and more than half the tax revenue in
many areas. ADB supports government efforts to improve
the enabling environment for the private sector. An ADB-
EAST ASIA
supported study on private sector development was submit-
ted to the Chinese People’s Political Consultative Conference
and the National People’s Congress in March 2006. ADB
provided technical assistance to formulate the supervisory
framework for small and medium-sized enterprise credit
guarantee companies, and to improve corporate govern-
ance of companies in which ADB has invested.
In addition to policy advice and assistance in improving
the enabling environment, ADB provides project-based
financial support, focusing on infrastructure and the
financial sector. In December 2006, ADB invested $30 million
to take a 5% minority stake in Hangzhou City Commercial Bank,
the fourth largest commercial bank in Hangzhou, a city that
thrives on private sector economic activity. City commercial
banks in the PRC play a vital role, especially in developing
small and medium-sized enterprises. However, they have
weaknesses in a number of areas, including strategic risk
management, corporate governance, credit risk manage-
ADB helps the PRC establish the
Clean Development Mechanism
(CDM) Fund to manage the
fees applied to the large
revenue from CDM projects
63

EAST ASIA
ADB support has played an important role in the PRC’s economic
development
ADB is exploring new areas in social
development, including education
ment, and inadequate capital. Through its investment,
ADB will help the bank improve its corporate governance
and internal control procedures.
ADB provided $150 million in assistance to the China Gas
Group, consisting of a $50 million direct loan, a $25 million
equity investment, and $75 million in commercial loans under
ADB’s B-loan program to help construct natural gas distribu-
tion infrastructure in municipalities for supplying natural gas
to residential, industrial, and commercial customers. The
project supports the Government’s efforts to promote the use
of natural gas to reduce particulates and sulfur dioxide emis-
sions from households and small industries. This will benefit
the urban population, particularly the poor, who are exposed
to indoor and outdoor air pollution. ADB’s assistance to the
project is expected to have a demonstration effect and help
catalyze support for more such projects in the PRC.
64
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
also evolved with client requirements and continues to
focus on innovative approaches in management, new
modalities in project implementation, and initiatives for
reform. ADB is becoming increasingly active in delivering
knowledge-based products in agriculture and natural
resources, energy, environment, finance, governance,
macroeconomic management, transport, and urban
development. These products provide valuable inputs for
socioeconomic reforms.
The PRC has strengthened its partnership with ADB
in new ways by contributing $30 million to the Asian
Development Fund (ADF), and establishing the $20 million
Fund for Regional Cooperation and Poverty Reduction in
ADB, becoming the first developing country to set up such
a fund with an international development agency.
The 11th Five-Year Plan period of 2006–2010 will see a
stronger ADB–PRC partnership on many new fronts. ADB is
exploring new areas in social development, including techni-
cal education and vocational training, and public health. ADB
is also looking to expand its assistance to rural development.
MONGOLIA
In October 2005, the ADB Board approved a new country
strategy and program for Mongolia that is closely aligned
with the Government’s poverty reduction strategy and more
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
country strategy and program aims to reduce poverty by
supporting stable, broad-based growth, and socially inclu-
sive development. It programs an indicative lending level
of $78 million from ADF resources for 2007–2009, supple-
mented by an additional $40 million for regional projects
from the ADF. The country strategy and program will help
the Government as it embarks on a results-based approach
to development, formulating rigorous performance indica-
tors and establishing systems to manage the Government’s
strategy for results. The strategy and program calls for
assistance in agriculture, transport, education, health,
and urban development. ADB is preparing an agribusiness
supply chain development project in Mongolia to target
niche markets for premium value products. The project
has strategic implications for livelihood improvement,
economic diversification, and environmental protection.
The ADB Board endorsed a country strategy and
program update in September 2006. While maintaining
the overall directions of the country strategy and program,
the update incorporates changes needed to support the
strategic approach that the Government has adopted to
achieve the Millennium Development Goals, increase the
effectiveness of development activities, boost governance,
improve alignment with the Government’s and ADB’s
66
priorities, and strengthen coordination with other devel-
opment partners to increase the inflow of funds.
ADB’s cumulative lending to Mongolia for 39 public
sector loans totaled $662.0 million. ADB provided
$4.5 million in assistance to the private sector through its
private sector window. Eighteen sovereign loans and one
nonsovereign loan were active at the end of 2006. Technical
assistance grants totaled $61.3 million, and grants from
the Japan Fund for Poverty Reduction, the Japan Fund for
Information and Communication Technology, the Republic
of Korea e-Asia and Knowledge Partnership Fund, and
Norway totaled $9.7 million.
In 2006, three new loans for education, urban develop-
ment, and customs modernization totaling $46.2 million,
and four technical assistance grants of $2.5 million, were
approved. ADB also approved a $1.0 million Japan Fund
for Poverty Reduction project to develop nonformal skills
training for unemployed youth and poor adults.
The country strategy and program
aims to reduce poverty by supporting
stable, broad-based growth, and
socially inclusive development
Better Health for
Mongolian Villagers
ADB is helping provide thousands of rural poor with
access to improved health services.
ADB, in close partnership with the Government
and key stakeholders, has been supporting the
health sector in Mongolia since 1997. In 2003, ADB
approved a $14 million loan for the Second Health
Sector Development Project to improve rural health
services, especially for the poor and vulnerable, and
to build the capacity of the health sector through
reforms in sector efficiency, effectiveness, and
sustainability.
The project has helped improve rural health
services in five aimags (provinces) chosen because
of their high levels of poverty, infant and maternal
mortality, and infectious diseases.
More than 422,000 Mongolians—about 17% of
the population—are benefiting from the project’s
rural health component, which has raised vaccination
rates to 98% among children under 5 years of age in
ADB has helped raise health standards in five of the poorest provinces in Mongolia
the project area, above the national target of 92%.
The average length of hospital stay has come down
from 10 to 8 days. Contraceptive use in the project
aimag has reached 55% among women aged 15–44,
above the national average of 43%.
The project also trains community nurses, district
doctors, district and provincial administrators,
economists of the health department, and staff
of the health insurance organization to help the
Ministry of Health build institutional capacity. The
project supports key reforms in the sector, including
strengthening primary health care through family
group practices, improving hospitals, and developing
human resources in the health sector. Twenty-three
district health centers, five interdistrict hospitals, and
four provincial center hospitals have been built or
renovated, and equipped.
More than 422,000 Mongolians—
about 17% of the population—are
EAST ASIA
benefiting from the project’s
rural health component
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
promoting private sector development. Two regional techni-
cal assistance projects are driving this approach: Improving
Delivery of Infrastructure Services, approved in 2005; and
Private Sector Development Initiative, approved in 2006.
By approving the second of these projects, ADB strength-
ened its long-term commitment to the region. This initiative
will be implemented in cooperation with the Government of
Australia. The $8.7 million technical assistance grant is pro-
moting long-term economic growth by creating an enabling
environment, including greater transparency, for private
sector development in the Pacific. It is focusing on reforming
state-owned enterprises, improving access to finance, and
strengthening the business environment through legal and
regulatory reforms. ADB will conduct diagnostic studies; pro-
vide technical expertise in priority reform areas; strengthen
capacities in relevant government agencies and organizations;
support regional initiatives; and disseminate information on
good practices, reform opportunities, and results.
The Improving Delivery of Infrastructure Services Project
made progress. A regional workshop was held in Sydney,
Australia, in August 2006 for government officials and
private sector representatives from 11 Pacific countries who
are directly involved in infrastructure financing and plan-
ning. Participants discussed service delivery and efficiency,
sustainable finance, and the role of the private sector. The
workshop was a success, with outputs being used as a plat-
PACIFIC
TOP 5 ACHIEVEMENTS IN 2006
• Aggressively leveraged ADB grant resources by quickly
processing the Solomon Islands Road Improvement (Sector)
Project, which was well coordinated with partners and had
significant cofinancing
• Employed an innovative approach to Public–Private Partnerships
in the Papua New Guinea HIV/AIDS Project, which had significant
cofinancing
• Drew up the first results-based country strategy and program for
Papua New Guinea
• Conducted performance assessments in weakly performing
countries, which serve as a basis for policy dialogue aimed at
improving governance and development effectiveness
• Launched regional initiatives in private sector development, audit,
statistics, and aviation
reduction. The Pacific strategy (2005–2009) provides the
framework for ADB operations in the 14 Pacific developing
member countries and for support for regional cooperation.
Priority areas for ADB facilitation of regional cooperation in
the Pacific are to be further identified in the regional coop-
eration strategy (2007–2011) due for completion in 2007.
ADB regional assistance in 2006 supported the Pacific’s
own development strategy, the Pacific Plan endorsed by lead-
ers of 16 Forum island countries in October 2005, and fol-
lowed on from earlier ADB support for analytical input to the

form for the next phase of strategic action in the region.
Promoting Regional Cooperation and Integration
ADB supports Pacific regional cooperation and integration as
a mechanism to meet national priorities, including poverty
plan. Key priorities in the plan are supported by ADB’s private
sector development initiative and through ADB support for
regional statistical development. Two other regional techni-
cal assistance projects were approved—one that focuses on
improving governance and accountability in Pacific devel-

TABLE 16 Pacific: 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
Country (as of Dec 2006) ($ million) ($ million) ($ million) ($ million) (%) (%)

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.
Note: Totals may not add up because of rounding.

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
service quality, reduce costs, and achieve financial sustain-
ability. The project is now being implemented through an
associated technical assistance grant for legal and regulatory
harmonization, and is expected to conclude in 2010.
Managing the Environment
Pacific countries are highly dependent economically
and culturally on their natural environment. However,
the health and productivity of natural systems are
coming under increasing pressures. A broad consensus
has been reached over the past decade on the most
significant environmental problems facing the Pacific.
Eight priority concerns consistently emerge: threats to
freshwater resources, degradation of the marine and
coastal environment, degradation of land and forest,
urbanization and waste management issues, depletion
of biological diversity, energy-related environmental
concerns, adaptation to climate change, and weak
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
the country strategy and program (2006–2010) of Papua
New Guinea and the strategy and program update
(2007–2011) of the Marshall Islands.
ADB pays attention to compliance with its environ-
mental safeguard policy, rigorously reviewing projects
during processing and implementation. In one case in
2006, the review of a proposed Papua New Guinea gas
project generated specific recommendations for protect-
ing the unique tropical rainforests with high biodiversity
and for ensuring compliance with ADB’s forest policy.
Department began preparing for its implementation.
Discussions were held with the Government of Samoa,
which agreed to participate in the first phase of the plan
in 2007. This will involve preparing risk assessment and
management plans for three themes (public financial
management, procurement, and anticorruption measures)
in key operational sectors.
ADB approved in December 2006 a regional technical
assistance of $1.6 million for Strengthening Governance
and Accountability in Pacific Island Countries. Cofinanced
by Australia, this project has two components. The primary

TABLE 18 Pacific: Sovereign Loan Approval, 2006

($ million)
Total Date
Country OCR ADF Total Project Cost a Approved

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.
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.

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

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
and repair damaged infrastructure and improve the ef-
ficiency and effectiveness of the national transportation
network. No loans or technical assistance projects were
approved in 2006.
TIMOR-LESTE
ADB is intensifying its focus on infrastructure support in
Timor-Leste. Reversing the decline in infrastructure assets
and services is a high priority for the country. Meanwhile,
capacity constraints restrict the Government’s ability to fully
utilize the capital development budget allocations. ADB
and the Australian Agency for International Development
are preparing a $25 million 5-year joint technical assist-
ance program to help infrastructure ministries execute
their capital programs.
ADB’s three-pronged strategy for
Samoa is designed to accelerate
private sector growth and create a
sound macroeconomic environment,
strengthen basic social services by
providing infrastructure, and provide
access to quality education for all
The Tanavasa bridge is among those restored in the Solomon Islands under the Post-Conflict Emergency Rehabilitation Project
Political crises and violence affected ADB operations in
Timor-Leste. Work was suspended on an ADB-supported
road rehabilitation project and the start of a follow-on project
was delayed. Technical assistance for preparing a proposed
water supply and sanitation project for Dili under the Japan
Special Fund was also suspended.
Work on preparing the water supply and sanitation
project did not recommence in 2006 but resumed on the
road rehabilitation project ahead of any other Government-
or donor-funded project. By year-end, road works under the
Second Emergency Infrastructure Rehabilitation Project were
95% complete and road connectivity had been maintained in
very difficult terrain on several critical north–south routes.
TONGA
ADB’s strategy supports macroeconomic stability and
continuing economic and public sector reforms in the
context of Tonga’s Strategic Development Plan Eight,
2006/07–2008/09 (SDP-8) adopted in 2006 and the
approved technical assistance for the implementation of
SDP-8 and for Rationalization of Public Enterprises Phase
III. ADB prepared an urban development project for
processing, and reviewed the project’s capacity to support
the rebuilding effort in the aftermath of riots and the de-
struction of the capital’s business district in late 2006. ADB
is developing pilot models under a technical assistance for
Youth Microenterprise Development.
PACIFIC
77
 A Path to Progress in
Timor-Leste
In one of the world’s poorest countries, roads provide
poor farming communities with a way to get their
produce to market and the Government with the means
to deliver essential services to rural communities. Timor-
Leste has an extensive road network of about 6,000
km, but lack of maintenance during years of conflict,
combined with torrential rains and difficult geological
conditions in the mountainous country, has resulted in
rapid deterioration of the roads. Only 24% of national
roads and 11% of district roads are in good condition,
leading to high operating and repair costs for providers
of public transport. This means high passenger fares,
creating particular difficulties for the poor.
The ADB-supported Emergency Infrastructure
Rehabilitation Project (Phase 2), in operation since
2002, has helped provide much-needed work to the
poorest of the poor while improving access to markets
and to education, health, and other basic services.
Project implementation since September 2004 has
mostly kept pace with the revised schedule. In 2006,
PACIFIC
The emergency infrastructure rehabilitation creates jobs and builds roads
78
the country experienced extreme difficulties because
of civil unrest, which began in the capital, Dili, in April
and continued until September, with further occasional
disturbances reported until the end of the year. As a
result, public and private sectors companies based in
Dili faced severe operational difficulties for a significant
part of 2006. The ADB team remained in the country
during the crisis and was able to remobilize several
contractors in June 2006 and recommence works—the
first works anywhere in the country to restart. By the end of
December 2006, overall construction progress for the seven
road contracts and Cassa Bridge had been 93% completed.
The project continues to create jobs, inject money
into poor communities, connect them to services,
and reduce economic costs.
The Emergency Infrastructure
Rehabilitation Project has
provided much-needed work to
the poorest of the poor while
improving access to markets
and to education, health,
and other basic services
Young people at the Maoro Community School on Malaita, Solomon Islands, where the community discussed the Post-Conflict Emergency
Rehabilitation Project
TUVALU
ADB’s operational strategy focuses on harmonizing efforts
with other assistance agencies to improve governance
and economic management; enhance job prospects
through skills development, particularly through the
Tuvalu Maritime Training Institute; and improve services
on the outer islands, where poor and vulnerable groups
are concentrated, partly through sustainable financing
mechanisms such as the Falekaupule Trust Fund. A country
partnership strategy (2007–2011) is being formulated
jointly with the Government and the Australian Agency
for International Development and in close consultation
with New Zealand’s International Aid and Development
Agency. ADB hosts regular quarterly reviews with other
development partners such as the European Union, United
Nations Development Programme, France, and Japan. The
interagency cooperation strategy focuses on joint commit-
ment on macroeconomic performance benchmarks that will
underpin technical assistance for tax reforms and other fiscal
management issues. ADB prepared an assessment of the
country’s public finance management conditions, published
in the Pacific Islands Economic Report series.
ADB approved technical assistance worth $300,000 to
support Capacity Building for Taxation Reforms. No loans
were approved. An abbreviated public expenditure and finan-
cial assessment study was undertaken in October–November
2006 and has been widely distributed for comments.
PACIFIC
VANUATU
ADB’s updated program for Vanuatu for 2006–2009 focuses
on promoting sustainable economic growth led by the pri-
vate sector. The 4-year country program consists of technical
assistance grants amounting to $2.5 million to improve regu-
latory institutions and increase access to finance. Technical
assistance was approved to help modernize commercial and
financial laws. ADB, in partnership with the National Bank
of Vanuatu, has pioneered a project to create sustainable,
profitable rural microlending. This rural microfinance project
will be expanded in 2007. ADB is also working toward a plan
to help reform the company registration process in 2008. This
work complements ongoing activities to develop a secured
transactions framework that will increase access to finance.
No loans were approved.
Technical assistance was approved
to help modernize commercial
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
implementing measures to improve regional multimodal
transport connectivity and by exploring an investment
financing mechanism. A $1 million regional technical as-
sistance was approved to facilitate energy sector dialogue
and develop the capacity of the energy center of the South
Asian Association for Regional Cooperation.
ADB also stepped up support to the Bay of Bengal
Initiative for Multi-Sectoral Technical and Economic
Cooperation to enhance transport and logistics in the re-
gion. A regional technical assistance for $960,000 will help
countries that are part of this initiative identify measures to
enhance transport infrastructure, improve logistics, reduce
transport time, and lower transport costs. This initiative will
strengthen links between South Asia and Southeast Asia.
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
marks an important milestone for the region and is a key step
toward greater regional integration and the formation of a
South Asian economic union. Through the trade agreement,
customs tariffs for goods will be reduced to 0–5% by 2016
and a free trade area established in South Asia.
Knowledge Management
ADB recognizes the critical importance of economic, thematic,
and sector work as knowledge products that are fundamental
to the preparation, design, implementation, and ultimate im-
pact of ADB lending and nonlending to South Asia. Knowledge
management initiatives in South Asia included the publication
SOUTH ASIA
TOP 5 ACHIEVEMENTS IN 2006
• Successfully led a joint effort with the Government and 10 other
development partners to support primary education in Bangladesh
• Pioneered the implementation of the second ADB governance
and anticorruption action plan in South Asia, developing a
methodology that will become the tem plate for ADB risk
assessments
• Sharpened focus on outcomes that matter to developing member
countries in South Asia by mainstreaming the managing for
development results approach into country partnership strategies
• Promoted new financing instruments and modalities through road
shows and workshops in Bangladesh, India, and the Maldives
• Attracted wide media attention with the South Asia Economic
Report, a biannual publication on economics and development
in the region
In December 2006, the third annual economists’ confer-
ence brought together ADB’s South Asia country economists
to discuss papers on the South Asia development model
and the regional trade and integration in South Asia. The
Australia–ADB South Asia Development Partnership Facility is
providing $320,000 grant assistance for further research on
intraregional trade and investment in South Asia.
Another important initiative is South Asia Economic Report,
a series of biannual reports on economic and development is-
sues in South Asia that provides a unique regional perspective.
Against the background of increasing awareness of a regional
identity, this series discusses common regional trends as well
as differences among South Asian countries in socioeconomic

of Annual Report: SARD Economic, Thematic and Sector Work,
2005, which contains abstracts of 103 studies completed in
2005, and the creation of an intranet website that features an
online economic, thematic, and sector work library and the
latest economic indicators for South Asian countries, as well as
recent external research and studies on South Asia.
development. Publication of South Asia Economic Reportt received
wide attention in the international print and TV news media.
Portfolio Management
Focusing on results, ADB enhanced portfolio performance
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
Country (as of Dec 2006) ($ million) ($ million) ($ million) ($ million) (%) (%)
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
Note: Totals may not add up because of rounding.

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).
Country Lending Disbursements
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-
ment, intensively engaging with the Government, improv-
ing financial management, and intensive spring cleaning.
The Sri Lankan portfolio weakened mainly because of
the security situation in the north and east of the country,
which has slowed down reconstruction in all uncleared
areas, and because the post-tsunami reconstruction boom
continues to use up available construction materials and
skilled labor. Government ministries are also confronted
with increasingly scarce human resources to supervise and
administer complex projects.
COUNTRY HIGHLIGHTS
BANGLADESH
The new country strategy and program (2006–2010),
approved in 2005, was one of the first prepared using
a results-based approach. It was developed jointly with
the United Kingdom’s Department for International
Development, Government of Japan, and World Bank. The
joint country strategy and program allows ADB to be more
selective and focused while providing coordinated sup-
port, along with the other country strategy and program
partners, to reforms that are difficult but fundamentally
important to poverty reduction and economic growth.
The political situation remained the main challenge to
smooth program delivery, particularly in the last quarter of
the year. However, close coordination with the Government
helped mitigate the constraints. Policy dialogue with the
Government helped foster reforms in the energy, education,
and railways sectors. The dialogue focused on improve-
ments in transparency and efficiency in public procurement,
portfolio performance, and preparation of operational risk
mitigation action plans to address key governance risks.
ADB operations helped remove critical constraints on
the investment climate and on empowering the poor by

TABLE 21 South Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
Country OCR ADF Total Project Cost a Approved

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
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.

84
improving governance in the energy, transport, educa-
tion, and integrated urban infrastructure sectors. Energy
reforms aimed to help the Government restructure the
power sector to ensure adequate and reliable power sup-
ply at competitive prices through increased private sector
participation and more efficient management and opera-
tions. Successful implementation of the Second Primary
Education Development Program, which will improve
the quality of primary education and its accessibility to
poor children is under way with ADB as the lead agency,
together with 10 other development partners.
ADB approved four projects totaling $255.1 million
for rural infrastructure improvement, secondary educa-
tion, secondary towns’ water supply and sanitation, and
improvement of capital market and insurance gover-
nance. In addition, a multitranche financing facility for
the railways subsector ($430.0 million) was approved.
ADB also approved seven technical assistance grants
totaling $5.7 million.
The rural infrastructure improvement project will up-
grade about 9,920 km of tertiary roads that make up the
rural road network to help reduce poverty in 23 districts
in north and central Bangladesh, providing the poor with
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
Bhutan’s two largest cities, as well as in Dagana, a regional
center. The program will improve governance, promote a
better investment climate, and encourage greater private
sector participation to ease constraints facing Bhutan’s
financial system.
ADB also approved five technical assistance grants
for a total of $1.9 million, four of which were for institu-
tional strengthening and capacity development in urban
infrastructure, the financial sector, and debt manage-
ment. Grant assistance from the Japan Fund for Poverty
Reduction amounting to $1.0 million was approved for
rural electricians’ training. ADB also processed, through the
Australia–ADB South Asia Development Partnership Facility,
a grant assistance for $0.5 million (part of the approved
$8.5 million Development Partnership Program for South
Asia regional technical assistance) to support anticorruption
efforts and good governance at the local level.
ADB’s India program has
supported the Government’s
efforts to combat poverty through
infrastructure-led growth

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
infrastructure.
In 2006, ADB approved six loans amounting to $1.5 bil-
lion. In addition, three multitranche financing facilities
amounting to $1.1 billion were approved during the year.
Sovereign assistance includes loans for the Rural Cooperative
Credit Restructuring and Development Program ($1.0 bil-
lion), Kolkata Environmental Improvement Project (supple-
mentary financing) ($80.0 million), and Rural Roads Sector
II Investment Program (first periodic financing request)
($180.0 million), as well as multitranche financing facility
operations for the Uttaranchal Power Sector Investment
Program ($300.0 million), the Uttaranchal State Roads
Project ($550.0 million), and the North Karnataka Urban
Sector Investment Program ($270.0 million). ADB also
approved 12 technical assistance grants to India totaling
SOUTH ASIA
$30.6 million.
The Rural Cooperative Credit Restructuring and Develop-
ment Program will address the problems faced by farmers
by undertaking a comprehensive reform of the cooperative
credit structure, which is impaired on the governance,
managerial, and financial fronts. The Uttaranchal Power
Project will harness the capacity of one of India’s poorest
states, which has undeveloped hydropower potential esti-
mated at 20,000 megawatts, to meet the state’s needs for
clean and efficient energy and enable it to export power to
surrounding states. The Uttaranchal State Roads Project will
help improve the living standards of the rural population of
Uttaranchal through road upgrading. The North Karnataka
Urban Sector Program will rehabilitate existing, and con-
struct new, urban infrastructure in the north of the state.
The private sector accounts for three fourths of
both gross domestic product and investment in India.
Development of the sector is therefore critical for growth.
86
A broad-based and inclusive growth strategy is critical to reducing
poverty
ADB’s strategy under its private sector window is to
support infrastructure and financial sector projects by
providing long-term financial assistance. Approved loans
included two nonsovereign private sector loans amount-
ing to $200.0 million, one with $75.0 million reinsurance.
In addition to these loans, $72.6 million was provided
for equity investments. Nonsovereign operations also
included a $75.0 million loan to National Thermal Power
Corporation, a state-owned enterprise, with $225.0 mil-
lion in complementary financing under ADB’s B-loan pro-
gram to finance its power generation capacity expansion
program and reduce the country’s power shortfall.
MALDIVES
ADB is promoting energy, education, regional develop-
ment, and private sector development.
In October 2005, the Government requested ADB to defer
all project-related assistance for 2006 and instead consider
providing a quick-disbursing program loan to help stabilize
the macroeconomic situation. ADB positively responded
to this request and developed the Public Sector Resource
Management Program operation. The policy dialogue is
continuing, with special emphasis on fiscal policy. ADB is
also helping the Government transform its role from provid-
ing social services to setting policy. A technical assistance for
Restructuring and Privatization of State-Owned Enterprises
amounting to $400,000 was approved in December 2006.
During the year, ADB continued to strengthen the capacity
of the Public Service Division and the Ministry of Finance
and Treasury.
Lighting Up Lives
in Rural Bhutan
Darkness used to fall early in the Himalayan country
of Bhutan. In remote villages without electricity, this
meant parents stopped work early and children could
not do much studying at home. The lack of electricity
also limited the work of hospitals and the availability of
school facilities.
Since 2003, ADB and other international
organizations such as the Japan International
Cooperation Agency have helped dispel some of the
darkness through a program of rural electrification.
The Rural Electrification and Network Expansion
Project has brought electricity to over 8,000 new
consumers, including poor households, hospitals,
and schools.
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
to connect the house to the distribution system in
the village, which was about $75, as well as the cost
of doing internal wiring in the house. To address this,
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
and sit to weave. “Sometimes I keep on weaving till
late night because during the day I have to attend to
other household works,” she said.
Educational opportunities have improved for
children and adults: children can study after sundown
and adults attend evening classes conducted by the
Department of Education in the project areas.
A villager in Gelephu village said, “Now we don’t
have to depend on timber for cooking and our
children can also do their studies in a better way.”
The project’s environmental benefits include
less pressure on forests as a source of household
fuel. Since 1995, when ADB first supported a rural
electricity project in Bhutan, kerosene use has come
down from an average of 10 liters a month to 1 liter.
Electrified villages have also reported a drop in
theft, burglary, and vandalism with light deterring
criminals.
Fewer women now suffer
from eye and respiratory
ailments caused by kerosene
lamps and wood fires

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
Significant political changes took place. An alliance of
seven political parties assumed power and Parliament
was reinstated following a political movement. These
developments facilitated peace negotiations with the
Communist Party of Nepal/Maoist, resulting in a his-
toric peace accord in November 2006 and an end to the
decade-long conflict.
The peace accord has increased Nepal’s development
prospects. The improved security situation and environ-
ment for development have helped revive rural livelihoods
and economic and development activities. The peace
process also promises a conducive political and security
environment for postconflict reconstruction and reha-
bilitation and for the tackling of longer-term issues of
poverty, social exclusion, and weak governance—some
of the root causes of the conflict.
ADB prepared a country operations business
plan—which updates the 2005 country strategy and
program—to guide its operations from 2007 to 2009
in the changed political and development context. The
business plan retains the strategic priorities of the country
strategy and program: reducing poverty and addressing
the root causes of the conflict through broad-based eco-
nomic growth, promoting inclusive social development,
and improving governance. The business plan seeks to
strengthen the results orientation of ADB’s assistance to
help make development effective.
ADB approved a total of $169.9
SOUTH ASIA
million in ADF assistance. For the
first time in Nepal, about 50%
was in the form of ADF grants
Education is a core sector for ADB operations in Sri Lanka
88
ADB approved a total of $169.9 million in ADF as-
sistance for four projects. For the first time in Nepal,
about 50% of this assistance was in the form of ADF
grants. The significantly high assistance resulted mainly
because of the rollover from the 2005 country program,
the processing of which was hampered by the prevail-
ing political and security situation. ADB also approved
13 technical assistance grants totaling $6.4 million. A
project funded by the Japan Fund for Poverty Reduction
to improve the livelihoods of poor farmers and disadvan-
taged groups was also approved for $1.0 million. In the
medium term, ADB will support the Government in its
postconflict reconstruction and rehabilitation activities.
SRI LANKA
The core sectors of ADB’s operations are transport,
education, water supply and sanitation, energy, and
rural development (small and medium-sized enterprises
and agriculture). The emphasis of the Government,
voted into power in November 2005, is spreading
development to rural areas to achieve the Millennium
Development Goals and reduce regional inequality and
income poverty. The Government intends to finalize
its 10-year development plan by early 2007. The plan
will form the basis for ADB’s country partnership strat-
egy, which will be finalized in late 2007. The security
situation is likely to have an impact on ADB’s project
implementation and processing in the north and east
of the country. The ADB strategy will need to take into
account the security situation and its possible overall
impact on fiscal management.
ADB approved supplementary financing of $60.0 mil-
lion for the Secondary Towns and Rural Community-Based
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
in 2006 for a total of $2.3 million.
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
Rehabilitation of the Railway in Cambodia, and the $60
million loan to Viet Nam for the GMS Kunming–Hai Phong
Transport Corridor: Yen Vien–Lao Cai Railway Upgrading
Project. ADB extended 11 technical assistance projects for
project preparation, and studies and advisory support for
regional cooperation from the Technical Assistance Special
Fund and Japan Special Fund amounting to $6 million for
the GMS. Key knowledge products were also upgraded and
updated, including the GMS webpage, e-newsletter, and
development matrix of priority subregional projects. The
GMS governments finalized the transport sector strategy
study. The GMS energy strategy study commenced and is
expected to be completed in March 2007. The GMS Core
Agriculture Support Program was prepared for endorsement
by GMS agriculture ministers in April 2007. Support for the
GMS Strategic Framework for Action on Trade Facilitation
and Investment was initiated in 2006.
The GMS Core Environment Program started during the
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
broad-based sustainable development of GMS countries by
mainstreaming the environment in the GMS Program. The
Biodiversity Conservation Corridors Initiative, which aims to
establish sustainable development and management regimes
in five GMS biodiversity corridor sites, is the flagship program
of the core environment program. The Working Group
on Environment, whose members include representatives
from the environment ministries of the GMS countries, is
the steering and oversight body for implementing the core
environment program. The Environment Operations Center
was established in Bangkok, Thailand, in April 2006 to serve
as the secretariat of the Working Group on Environment.
SOUTHEAST ASIA
TOP 5 ACHIEVEMENTS IN 2006
The merger of Mekong Department and Southeast Asia Department
under the 2006 realignment produced operational synergies that
helped deliver services to DMCs more efficiently and effectively.
These included:
• Three results-based country strategies and programs and one
country operations business plan, and an enhanced engagement
with Indonesia and the Philippines
• An updated regional cooperation strategy and program for
the Greater Mekong Subregion and strengthened links with
Association of Southeast Asian Nations members and programs
• Emergency assistance to Indonesia, the Philippines, and Viet
Nam, and support for their long-term disaster preparedness
programs
• Enhanced inclusive development through projects and programs
that help ethnic minorities in Cambodia, the Lao People’s
Democratic Republic (Lao PDR), and Viet Nam, particularly in
combating HIV/AIDS
• Support for good governance and reform in the Lao PDR, the
Philippines, and Viet Nam
effective implementation of the core environment program
in collaboration with various partners in governments, non-
government organizations (NGOs), and local communities.
Greater synergy between the GMS and national pro-
grams and strategies has been a strategic priority of the
country strategy and program papers for the Lao People’s
Democratic Republic (Lao PDR) and Viet Nam, which the
Board endorsed in October 2006. The strategies and pro-
grams were closely aligned with the GMS regional coopera-
tion strategy and program update, which was approved in
September 2006. The update includes an indicative lending
pipeline totaling about $1.6 billion over 2007–2009. The
lending program covers investments in power interconnec-

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
No. of Contract Awards/Commitments Disbursements Loans at Risk
Ongoing Loans 2006 2005 2006 2005 2006 2005
Country (as of Dec 2006) ($ million) ($ million) ($ million) ($ million) (%) (%)

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
Note: Totals may not add up because of rounding.

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
Country Lending Disbursements
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:
ADB Lending by Country, 2005–2006
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.
The growth triangle comprises Sumatra (Indonesia), the
eight southernmost provinces of Thailand, and eight
states in Peninsular Malaysia, with a total population of
more than 65 million. The year witnessed a substantial
deepening of the relationship between ADB and the
growth triangle cooperation initiative. Following their first
summit in December 2005, the leaders of the countries
asked ADB to help them develop a 5-year road map and
action plan to rebuild dynamism and refocus the initiative.
This road map was prepared and submitted for endorse-
ment at the second Indonesia–Malaysia–Thailand Leaders’
Summit held in Cebu, Philippines, January 2007. The sum-
mit endorsed ADB’s status as a development partner of
the growth triangle. The ministerial meeting in September
2006 in Selangor, Malaysia, requested ADB’s assistance in
implementing the road map after its formal endorsement,
including the development of flagship cooperation projects
and the creation of financial mechanisms for increasing
public and private investments in infrastructure and other
sectors. Under a new regional technical assistance, ADB
will also help the countries improve project implementa-
tion, coordination, and monitoring, and identify sectoral
opportunities for private investment in regional projects.
Brunei Darussalam–Indonesia–Malaysia–Philippines
East ASEAN Growth Area. ADB is the regional adviser

TABLE 24 Southeast Asia: Sovereign and Nonsovereign Loan Approvals by Country, 2006
($ million)
Total Date
Country OCR ADF Total Project Cost a Approved

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;
equity sponsors; and local participating private companies and financial institutions.

94
to the growth area. At the countries’ second summit held
in December 2005, a road map and action plan were en-
dorsed for subregional cooperation. ADB helped implement
the road map, in part by launching a trade and investment
database. The database is an important tool for decision
makers to monitor and quantify developments in the
area, and to prioritize investment projects. Stakeholders
can now access the database through the website of the
Brunei Darussalam–Indonesia–Malaysia–Philippines East
ASEAN Growth Area Facilitation Center. Cooperation in
easing trade also gained momentum. Senior customs, im-
migration, quarantine, and security officials from the area
attended the first task force meeting on customs, immigra-
tion, quarantine, and security in August 2006, organized
with technical assistance from ADB and the German Agency
for Technical Cooperation (GTZ). They agreed to accelerate
developing the area’s cooperation framework for customs,
immigration, quarantine, and security to pilot-test the
implementation of ASEAN agreements on easing cross-
border movement of passengers and freight across land
and maritime borders.
ADB helped prepare a draft action plan for develop-
ment of the transport and energy sectors. In 2007, ADB will
continue to support the area’s infrastructure development
(transport and energy sectors); trade facilitation (harmoni-
zation of customs, immigration, quarantine, and security;
and cross-border transport facilitation); and its efforts to
improve coordination and monitoring with technical assis-
tance approved in 2006. ADB will also explore opportunities
in cooperation with other donors in the areas of agro-in-
dustrial development and environmental management.
ADB’s program in Cambodia for 2007–2009 includes a focus on
education
Portfolio Management
Monitoring of portfolio performance and focus on the
quality of projects were intensified. Regular portfolio
review meetings were held at the division, department,
and country levels, and the resident missions were further
empowered, including through greater delegation of loans
for administration, for more intensive and on-the-ground
attention to portfolio management issues and quicker
response time. The Southeast Asia Department’s Portfolio
Management Unit within the Office of the Director
General, established in March 2005 to better coordinate
portfolio management, undertakes rigorous monitoring to
ensure that targets are met and issues are quickly resolved.
Portfolio performance in the region significantly improved
over the previous year. Disbursements amounted to $2.0
billion by the end of 2006, showing a 21% increase over
2005 while contract awards increased by 26%, reaching
almost $2 billion (Table 22). The higher disbursements and
contract awards are largely attributable to a considerable
expansion of the Philippine portfolio (Figure 10). ADB
disbursed $833.0 million in 2006, the highest annual
disbursement ever to the Philippines, including $750.0
million in program loan tranches and $83.0 million in
project loans (Table 22). This resulted in the first positive
net resource transfer of $268.5 million from ADB to the
Philippines since 1997. Performance indicators for the 21
active loans remained sound, making the Philippines port-
folio one of ADB’s best, and one of the lowest proportions
of projects at risk. The percentage of loans at risk in the
region is much lower than the ADB-wide average.
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
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
Beginning in Aceh
On the tragic morning tsunami waves ripped through
the village of Meunasah Tuah in Indonesia’s Aceh region,
little more than devastation was left in their wake.
“The water was as high as the coconut trees,” says
Mohamed Zein, who lost his wife and every member of
his immediate family, save one brother, to the violent
torrents on 26 December 2004.
Only 170 of the village’s 3,000 families had any
surviving members, and every last family suffered the
loss of a loved one. Not a single family survived intact.
“The greatest gift we can give to these families
who have already been through so much is simply an
opportunity to create a better and lasting future for
themselves,” says ADB Managing Director General Rajat
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
of the Millennium Development Goals, and environment
and natural resources management. Particular attention
is given to supporting the Government’s reform program,
and to increased private sector participation in financing the
country’s development needs, especially in infrastructure.
ADB, in coordination with other development partners,
helped the Government formulate policy reforms concern-
ing the investment climate, infrastructure development, and
financial sector deepening. The Government announced
three policy packages in these areas. The infrastructure
policy package sets out reform goals in nine infrastructure
sectors, supplemented by measures to boost investment.
sea. Under this ADB-supported initiative, impoverished
families receive training and support so they can earn a
dependable living raising livestock.
In Meunasah Tuah, 200 goats were divided among
25 of the community’s neediest families for them to
breed and sell. Goat curry is one of Aceh’s most popular
dishes, and there is never a shortage of demand at local
markets, so families can depend on a steady source of
income. The fact that Mohamed Zakir has been able to
change his trade from fishing to goat breeding has also
helped allay the worries of his wife, who says she never
wants her husband or their newborn son to ever have
to rely on the ocean for survival.
Although nothing can take away the pain Mohamed
and Nurjanna continue to endure, the recent addition
to the family is a source of new joy, and they take
comfort in the fact that they now have the resources
they need to provide for their son.
Wreckage after the tsunami
SOUTHEAST ASIA
The investment climate policy package supports broad-
ranging reforms on tax, customs, investment law, and labor.
The financial sector reform package aims to strengthen the
banking and nonbanking sectors and diversify sources of
financial intermediation. A small and medium-sized enter-
prise reform package is being prepared.
ADB loan approvals reached $784.8 million, with em-
phasis on supporting the Government’s reform program to
strengthen macroeconomic management, governance, and
the investment climate, and to accelerate infrastructure de-
velopment. This includes a $75.0 million nonsovereign public
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-
parency in planning and policy making. ADB also conducted
a policy dialogue with Malaysia.
MYANMAR
ADB continued to monitor economic development and
will formulate an operational strategy when appropriate.
ADB approved the last loan projects in 1986 and the last
technical assistance projects in 1987.
PHILIPPINES
The economy has grown steadily in the past 2 years. GDP
grew at 5.4% because of strong services performance and
the sustained momentum of manufacturing. Record levels
of remittances ($12.8 billion) from overseas workers have
allowed higher household spending. Increased merchan-
dise exports have also driven growth.
Fiscal consolidation has been moving well with better tax
collection and tighter government spending. The aggressive
tax reform program, begun in 2005, produced significant
results. Gains in fiscal consolidation keep the Government
on track for achieving its target of a balanced budget by
2008. The significance of the success with fiscal consolida-
tion extends well beyond contributing to macroeconomic
stability. It has the potential to be the tipping point that
moves the Philippines onto a path of accelerated growth
performance in the medium term. Already, the improved
fiscal situation has given space for new ADB program loans
in the power and finance sectors; it has also provided the
headroom for the Government to expand spending in infra-
structure and social expenditure needed by the poor.
The country strategy and program (2005–2007) is
designed to support high-impact projects. Key features
include a strategic focus on the most urgent development
constraints, including fiscal consolidation, an improved
investment climate, and achieving the Millennium
Development Goals; alignment of ADB’s program with
government strategy and priorities; reducing transaction
costs through harmonization with domestic systems and
activities of other development partners; and working
within a results framework emphasizing development
impacts and outcomes. Implementation of reforms, es-
pecially macroeconomic reforms, has improved, as recent
ADB-supported policy-based operations have indicated.
ADB approved two program loans for power and finance
totaling $650.0 million, the highest annual lending since
1998. In addition, ADB approved five technical assistance
projects (including one supplementary) for $4.7 million, and
three investment grants, funded by the Government of Japan,
for $4.4 million. The latter included support for the Southern
Leyte landslide disaster under a $3 million investment grant
financed by the Japan Fund for Poverty Reduction. ADB also
reprogrammed $570,000 from approved but unused technical
assistance grants for disaster-related assistance to finance the
rehabilitation work following the landslide in Southern Leyte
in early 2006 and in the Mayon area after a typhoon, and for
country-wide long-term disaster preparedness.
THAILAND
The resident mission’s first full year of operations was marked
by significant strengthening of the collaboration between the
Government and ADB as reflected in an expanded knowl-
edge-sharing program and continued policy dialogue on
addressing the development challenges and opportunities
that Thailand faces as a middle-income country.
Several major technical assistance projects were suc-
cessfully completed in 2006, including the preparation of
a long-term development plan for three tsunami-affected
provinces, the design of a comprehensive pension system,
and the analysis of options for integrating Bangkok’s
urban mass transit system and maximizing private sector
participation in the construction and operation of an ex-
panded network. ADB approved four technical assistance
grants (including one supplementary), amounting to
$1.5 million. One of these will support the implementa-
tion of a newly approved capital market development plan
while another will strengthen the capacity of Thailand’s
Neighbouring Countries Economic Development Cooperation
Agency to become a lead government donor agency. ADB also
maintained its prominent role in the domestic capital market
with the issuance of a second baht bond in the amount of
SOUTHEAST ASIA
B6.50 billion. No loans were provided, but discussions to de-
velop a business pipeline for both sovereign and nonsovereign
lending progressed well during the year.
In the context of joint efforts to prepare a new country
partnership strategy, consultations with the Government
have reconfirmed that there is scope for an expanded,
yet tightly focused, role for ADB in Thailand. Policy dia-
logue has centered on building a partnership with ADB
that helps strengthen Thailand’s competitiveness in the
global economy by removing key constraints on greater
productivity and creating a more conducive environment
for private sector investment. At the national level, the
Government seeks ADB’s support in core strategic areas,
such as structuring private–public sector partnerships for
99
 Thailand desires to increase its
role, capacity, and effectiveness
as a regional donor and global
development partner
complex, large-scale infrastructure projects; addressing
key structural and regulatory reforms to further develop
the domestic capital market; and introducing innovative
approaches and technologies for improving environmental
management and promoting energy efficiency initiatives.
As a middle-income country, Thailand desires to
increase its role, capacity, and effectiveness as a regional
donor and global development partner. ADB brings con-
siderable added value to the partnership by sharing its ex-
tensive experience and expertise in supporting subregional
cooperation programs and regional economic integration.
At the regional level of partnership, Thailand and ADB
will work together to cofinance development projects in
neighboring countries, facilitate increased subregional
trade and investment, and contribute to the develop-
ment of more efficient and liquid bond markets in Asia.
Continued progress on these initiatives will also serve to
strengthen the role of the resident mission as a hub for
ADB’s operations in the GMS and in the region.
VIET NAM
The year was a period of transition with the approval of
the new Five-Year Socio-Economic Development Plan
2006–2010. Viet Nam was accepted as the 150th member of
the World Trade Organization. ADB prepared its first results-
based country strategy and program for 2007–2010 for Viet
Nam in full alignment with the development plan. To help
achieve the development plan’s targets, the country strategy
SOUTHEAST ASIA
and program focuses its operations on pro-poor, business-led
economic growth; social equity and balanced development;
and proper environmental protection and management.
The country strategy and program emphasizes promo-
tion of good governance and anticorruption efforts in all
operations, with appropriate multifaceted support for
regional cooperation. The country strategy and program
also focuses more on creating an enabling environment for
pro-poor private sector operations and on improving links
between private and public sector operations.
ADB approved $308.2 million in loans and $32.5 million
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
People’s Republic of China, and a grant of $20.0 million for
100
HIV/AIDS prevention. ADB also approved a loan of $51.0 mil-
lion for Emergency Rehabilitation of Calamity Damages for
Viet Nam. ADB approved 15 technical assistance projects
(including 2 supplementary) for $16.5 million. The HIV/AIDS
Prevention among Youth Project aims to stop the spread
of the disease in 15 provinces through an integrated plan
involving mass media and community campaigns. It will be
complemented by a comprehensive program of activities
and services to bring about widespread behavior changes
among young people.
ADB continued to support the Government by creating
a favorable private sector environment through a program
loan of $20.0 million supporting small and medium-sized
enterprise development and a loan of $30.0 million
supporting the development of agriculture science and
technology. ADB supported social inclusiveness through
an ADF loan of $34.0 million to upper secondary and
professional teacher development, a loan of $45.0 mil-
lion for Forests for Livelihood Improvement in the Central
Highlands, and a loan of $53.2 million for Central Region
Small and Medium Towns Development. The technical as-
sistance program to help develop a lending program and
build capacity is highlighted by a high degree of cofinanc-
ing: every dollar under ADB technical assistance financing
is matched by another dollar from cofinanciers.
ADB actively participated in initiatives of the five-bank
group of ADB, African Development Bank, Kreditanstalt
für Wiederaufbau (KfW), Japan Bank for International
Cooperation, and the World Bank. The group helped imple-
ment the Hanoi Core Statement by actively participating in the
thematic groups, particularly those dealing with procurement
and environmental and social safeguards. The banks also
helped revise regulations to ensure efficiency in investments
financed by official development assistance, and contributed
considerably to drafting the procurement law and its imple-
mentation guidelines, and to improving project management
unit structures, their transparency, and accountability to
support the Government’s anticorruption efforts.
Under the technical assistance’s results-based monitor-
ing of poverty and growth, ADB has worked closely with
the Government and other donors to help develop the
monitoring and evaluation framework for the new Five-
Year Socio-Economic Development Plan (2006–2010).
ADB prepared its first results-based
country strategy and program for
2007–2010 for Viet Nam in full
alignment with the development plan
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
strategy requires an adjustment in the staff skills mix. ADB
completed an enhanced separation program, involving 32
professional and 85 local staff members. Furthermore, 30
positions were sequestered and strategically reallocated
to operations departments and other priority areas. ADB
prepared to launch a strategic recruitment initiative to fill
the gaps in its talent and skills.
The second cycle of the new performance manage-
ment system was implemented to continue the effort to
promote a results-oriented work culture. Implementation
proved to be managerially demanding. Revisions are under
way to support a more merit-based culture.
ADB reviewed its learning and development program
to identify better ways to meet its business needs. To en-
able its managerial leaders to take on more demanding
roles, ADB provided learning and development support on
managerial and leadership skills.
INITIATIVES
INTERNAL
ADB has established a systematic talent management
process for identifying potential leadership and managing
their development. An assessment and development center
will be established in 2007 to provide the foundation for
the developmental growth of ADB’s potential managerial
leaders.
A nonmanagerial dual career path was introduced
to provide leadership in strategic technical areas and to
respond to the need to professionally reward and retain
104
ADB’s highly valued technical talent. Initiatives to support
an inclusive environment were implemented.
During the first 2 years of the strategy’s implementation,
ADB has carried out a significant number of activities to
improve the effectiveness of its human capital and introduce
a new performance management and rewards system.
Strengthening of leadership and accountability throughout
ADB to initiate and sustain the culture change is an ongoing
process and challenge that will require more time. The imple-
mentation of most of the strategy’s action plans or initiatives
will be completed or under progress by the end of 2007 as
planned. ADB will continue to implement several ongoing
initiatives beyond 2007 to achieve the strategy’s objectives.
Staffing
At the end of 2006, ADB’s staff totaled 2,405 from 54
of its 66 member countries: 5 members of Management,
Thirty positions were sequestered
and strategically reallocated
to operations departments
and other priority areas. ADB
prepared to launch a strategic
recruitment initiative to fill the
gaps in its talent and skills
A modest real budget growth
in 2007 ensures adequate
funding for high-priority work
programs and initiatives
and 856 professional and 1,544 local staff members,
of whom 465 or about 19.3% are in field offices. There
were 2 appointments and 1 departure in Management,
70 appointments and 97 departures of professional staff
members, while 122 local staff members joined ADB and
147 left. The share of women professional staff members
has remained constant at 29%.
COMPENSATION
Consistent with ADB’s market-based compensation
system, the Board approved a 4.4% increase in the salary
budget for 2007 for professional staff, 3.5% of which will
be used for performance-related salary increases and the
balance for performance and team bonuses. The Board
also approved a weighted average increase of 9.2% for
national officers and administrative staff at headquarters
for 2007. An overall weighted average increase of 13.8%
for national officers and administrative staff in 25 field
offices will be implemented in 2007.
The Board approved a new pension plan effective
1 October 2006 for staff hired from this date onward.
The new plan is similar to the current one but provides
fewer ADB-guaranteed benefits and more staff-directed
contributions. The new scheme will have a lower pension ac-
crual rate and will be noncontributory for staff participants,
with an option to contribute to the discretionary benefit
scheme to top up their staff retirement plan benefits.
Changes were made to the Group Medical Insurance
Plan for pensioners. The reimbursement rate was reduced
from 80% to 75%, and the stop-loss benefit was reintro-
duced but at slightly higher limits with no ADB subsidy.
Cost-effective improvements to the plan were introduced,
such as more advantageous reimbursement rates for ge-
neric drugs and the inclusion of phytomedicines, additional
services for physiotherapy and ultrasound, and expansion
of the vaccination program for staff and dependents at
the ADB Medical Center.
Benefits administration was streamlined by introduc-
ing more self-service facilities—the certification request
system, benefits self-service, staff loan system, and home
country travel system—which allow easier online access
by staff to their personal benefits information. The ADB
alumni portal was expanded from an e-mail forwarding
service for former ADB staff to an information portal for
pensioners on their retirement and insurance benefits.
INTERNAL ADMINISTRATIVE
EXPENSES
Internal administrative expenses totaled $299.4 million,
with savings amounting to $13.5 million against the original
budget of $312.9 million. Overall savings were primarily at-
tributed to lower-than-expected staff-related costs because
of lower staff years resulting from the implementation of
enhanced separation program; and lower-than-anticipated
relocation costs, business travel, and administrative expenses.
About $1.4 million was transferred from the general contin-
gency to the offices of the directors ($0.8 million) and the
Operations Evaluation Department ($0.6 million) to meet
increase in staff related costs.
For 2007, the net internal administrative expenses bud-
get is $332.9 million. The increase over the 2006 budget
reflects a price growth of 5.2% and a volume growth of
1.2%. An estimated $4.1 million is expected to be recover-
able from administrating trust funds of multilateral and
bilateral institutions.
A modest real budget growth in 2007 ensures
adequate funding for high-priority work programs and
initiatives, including aligning priorities with the second
medium-term strategy through country partnership and
regional cooperation strategies; strengthening support to
portfolio management, including continued delegation
of projects and country portfolio management to resident
missions; ensuring quality at entry of new projects; sup-
porting the increasing demand for private sector opera-
tions in ADB’s developing member countries; strengthen-
ing risk management, especially credit risk management;
and improving ADB’s catalytic role through financing
partnerships that mobilize resource commitments from
cofinanciers to ADB’s developing member countries.
The 2007 budget also includes an annual capital
budget of $3.7 million, mainly to fund cyclical capital
INITIATIVES
INTERNAL
expenditures for headquarters facilities and information
technology equipment, and to meet the replacement and
acquisition requirements of field offices.
The Board approved a new pension
plan effective 1 October 2006 for
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
learned. C-Cube allows users to chat and hold virtual con-
ferences or meetings. Users can access files or documents
from anywhere, anytime; hold online discussions; monitor
the task performance of other group members; plan or
schedule meetings; and search for information.
The four knowledge departments—Asian Development
Bank Institute, Economics and Research Department,
Office of Regional Economic Integration, and Regional
and Sustainable Development Department—established
arrangements to strengthen coordination among them-
selves to avoid duplication and improve synergies in their
knowledge management work. The departments agreed
to examine existing quality control processes and to jointly
and regularly prepare major publications, preferably one
publication a year. The first one—Infrastructure for Regional
Cooperation in Asia—slated for completion in 2008, will
be led by the Asian Development Bank Institute.
Four other ADB departments established knowledge
management units, and all departments appointed knowl-
edge management coordinators. These arrangements
were designed to promote best practices and mainstream
knowledge management into ADB’s operations.
To disseminate knowledge in developing member
countries, ADB established five regional knowledge hubs
in partnership with government and nongovernment
development partners in key areas of operational relevance:
clean energy at The Energy and Resources Institute (India);
the 3Rs—reduce, reuse, recycle—at the Asian Institute of
Technology (Thailand), with support from the United Nations
Environment Programme Regional Resource Centre for Asia
and the Pacific; public finance at the Center for Public Finance
and Regional Economic Cooperation at the Asian Institute
of Management (Philippines); climate change at Tsinghua
University (People’s Republic of China); and public–private
partnership in infrastructure at the Emerging Markets Forum
(Singapore).
The e-Asia and Knowledge Partnership Fund, set up
with a $20 million contribution from the Government
of the Republic of Korea, will also support knowledge
management in the Asia and Pacific region. The fund,
administered by ADB, will, among other things, help
developing member countries reduce the digital gap and
share knowledge and experience.
Asian Development Bank Institute (ADBI). The
mission of the Tokyo-based ADBI is to identify effective
development strategies and improve the capacity of
development agencies and organizations in ADB’s devel-
oping member countries. ADBI retained its focus on its
four priority theme areas of poverty reduction, regional
cooperation, governance, and private sector development,
choosing infrastructure for regional cooperation as an area
of specialization. ADBI responds to stakeholders’ requests
for assistance in research, capacity building, and training.
Among the books the ADBI published were Poverty
Strategies in Asia and Policies and Institutions for Advancing
Regional Development: The Philippines in Comparative
Asian Context. It also released studies on cross-border
infrastructure, contract farming, market facilitation for
the poor, and renminbi revaluation. Work on the private
sector and governance included a study on comparative
corporate governance in the banking sector.
ADBI actively collaborates with the World Bank, Inter-
American Development Bank, UN agencies, and other
international organizations and development partners on
research and training (e.g., in conducting distance-blend-
ed learning courses). Its capacity-building and training
program focused on strengthening policy implementation
and management capacity for development programs un-
der the four priority themes. ADBI conducted 20 training
courses, trained more than 1,600 participants, produced
8 workshop reports, 68 CD-ROMs, and, for the first time,
offered 3 distance learning courses.
ADBI was actively involved in strengthening the knowl-
edge management framework with ADB’s knowledge
departments. As part of knowledge management activities,
about 90 independent expert reviews of development-
oriented CD-ROMs have been posted on ADBI’s website. The
website received international recognition with an honorable
mention in the inaugural Web for Development awards.
Economics and Research Department. The depart-
ment’s main role is to conduct policy research and dissemi-
nate the outputs, both in ADB and in the Asia and Pacific
region. The department launched the Portal for Statistics
Resources, a one-stop service on statistics available to all
ADB staff. It also coordinated the international comparison
program for the Asia and Pacific region. The program is a
system for comparing GDP and its components, converted
into a single currency using purchasing power parities,
INITIATIVES
INTERNAL
ADBI’s capacity-building and
training program focused on
strengthening policy implementation
and management capacity for
development programs under
the four priority themes
107
 eliminating the shortcomings of using market exchange
rates. Regular publications included the Asian Development
Outlookk and its update, with assessments of the economic
outlook for the region as well as discussions of topical issues
such as the impact on the region’s economies of rising oil
and commodity prices, the effect of the end of quotas on
Asia’s textile and clothing industries, and the challenges and
opportunities created by free trade agreements.
Office of Regional Economic Integration. The
office is ADB’s focal point for knowledge management
related to regional cooperation and integration, a key
priority under the second medium-term strategy. The of-
fice’s knowledge products helped promote regional policy
dialogue on cooperation and integration. It published
six working papers on regional economic integration as
well as two issues each of its regular publications, the
Asia Economic Monitorr and the Asia Bond Monitor. The
office disseminated information and analyses through its
two websites: the Asia Regional Integration Center and
AsiaBondsOnline. It helped build capacity in developing
member countries through a series of seminars.
Regional and Sustainable Development Depart-
ment. The department is responsible for knowledge
management across ADB and coordination of regional
public goods. It supports quality and efficiency in all ADB
operations. It focuses on sector and thematic issues and has
a strong operational orientation. The department’s knowl-
edge management center coordinated the discussions of
the four knowledge departments during 2006. As such,
INITIATIVES
INTERNAL
Business processes were improved and streamlined
108
it helped reach agreement on closer cooperation between
these departments, mainly by coordinating work programs
and holding regular meetings of department heads.
INFORMATION SYSTEMS AND
TECHNOLOGY
The Office of Information Systems and Technology
continued to streamline operations, respond to technology
changes and user demands, and accelerate the implemen-
tation of the information systems and technology strategy
capital expenditure program. The new Technology Division
within the office introduced an enterprise architecture road
map to guide technology decisions for the organization.
The Information Technology (IT) Committee approved 12
principles to align ADB’s IT goals with its overall operations.
Financial control mechanisms were strengthened in line with
the internationally recognized COBIT (control objectives for
information and related technology) framework.
The implementation of IT rules and regulations
received Management approval and formed the basis for
high-level data and information security. Security simula-
tions, penetration tests, and audit reviews performed
on business systems and equipment substantiate the
progressive and comprehensive strengthening of infor-
mation and communications systems security. Intensified
awareness of information security risks and password
protection were communicated through road shows to
further improve IT security throughout ADB.
Staff skills in new technologies
were upgraded through
extensive training programs
In the area of knowledge management, key projects
completed under information systems and technol-
ogy strategy include a collaborative software solution
for communities of practice and the initial release from
the document repository system. The document reposi-
tory is envisioned as the sole, common, easily accessible
repository for key ADB documents. It features a search and
retrieval facility as well as an enterprise-wide classification
structure used to identify, track, and retrieve information.
Four departments have started using the repository.
The office adopted a proactive relationship with its
client departments to provide better and higher levels of
service. A performance management system using the bal-
anced scorecard was initiated to improve internal perfor-
mance and accountability. Under the e-mail server upgrade
project, users benefited from increased e-mail capacity,
additional firewall protection, and printer optimization.
To ensure better alignment between business and IT,
the office embarked on a business improvement program
that is expected to eliminate redundancies in processes,
data entry, and reporting. The engagement model in-
troduced allows users to be directly involved with the
development and execution of their IT needs.
Staff skills in new technologies and specialized areas
such as COBIT, performance management scorecard, IT
service, and project management were upgraded through
extensive training programs.
AUDIT AND INTEGRITY
The Office of the Auditor General, through its Financial,
Administrative and Information Systems Division, con-
ducted independent appraisals of ADB’s operations. These
appraisals have helped strengthen internal controls and
efficiencies in the financial, operational, and IT areas.
Through its Integrity Division, the office addressed al-
leged incidents of corruption and fraud in ADB activities,
conducted staff workshops, initiated a series of regional
anticorruption seminars, and worked with national audit
institutions of developing member countries in carrying
out project procurement-related audits. These activities
have helped increase staff’s as well as borrowers’ aware-
ness and compliance with the anticorruption policy and
procedures, and enhanced their capacity to detect and
prevent fraud and corruption.
The Financial, Administrative and Information Systems
Division completed 25 audits in 2006, including audits of
internally managed investments, operations of a resident
mission, technical assistance trust or grant funds, and
several consultant contracts. IT reviews covered data se-
curity of ADB’s network environment, selected databases
and operating systems, and disaster recovery testing of
critical systems. The office also monitored the progress of
outstanding recommendations and verified that corrective
actions have been undertaken.
ADB barred 37 firms and 31 individuals in 2006 as a
result of corruption investigations, making a total of 311
firms and individuals currently ineligible to participate
in ADB-financed activities. The Integrity Division, which
enforces ADB’s anticorruption policy, received 171 com-
plaints during the year.
The Integrity Division also conducted five project
procurement-related audits to reduce weaknesses that
may allow fraud, corruption, or abuse in ADB-financed
projects. Supreme audit institutions of borrower countries
participated in some of these audits, reinforcing ADB’s
ability to share this audit knowledge and support capacity
development.
The Integrity Division further contributed to a Joint
International Financial Institutions Anticorruption Task
Force comprising seven multilateral development banks
and international financial institutions. As a result, ADB
approved harmonized definitions of fraud and corruption
with those of the other international financial institutions
and agreed on common principles and guidelines for
investigation.
The Integrity Division’s 2006 Annual Report is at:
www.adb.org/Documents/Reports/Anticorruption/OAGA-
Annual-Report-2006.pdf.
ADB barred 37 firms and
INITIATIVES
INTERNAL
31 individuals in 2006 as a result of
corruption investigations, making
a total of 311 firms and individuals
currently ineligible to participate
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
(as of 31 December 2006)

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
(as of 31 December 2006)

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
(as of 1 March 2007)

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
OFFICE OF
DEVELOPMENT DEPARTMENT
THE AUDITOR GENERAL
P. Pedersen, Auditor General
STRATEGY AND POLICY
DEPARTMENT
K. Sakai, Director General
OFFICE OF REGIONAL
ECONOMIC INTEGRATION
J. Lee, Head
OFFICE OF THE SPECIAL
PROJECT FACILITATOR
R. May, Special Project
Facilitator
RISK MANAGEMENT UNIT
Y. Shin, Head
DEPARTMENT OF EXTERNAL
RELATIONS
(vacant), Director General
SOUTH ASIA DEPARTMENT
K. Senga, Director General
B. Lohani,4 Director General
BANGLADESH
RESIDENT MISSION
ECONOMICS AND RESEARCH H. Du, Country Director
DEPARTMENT
I. Ali, Chief Economist INDIA RESIDENT MISSION
T. Kondo
Country Director
OFFICE OF
COFINANCING OPERATIONS NEPAL
W. Liepach, Principal Director RESIDENT MISSION
(vacant), Country Director
SRI LANKA
RESIDENT MISSION
R. Vokes, Country Director
CENTRAL AND WEST ASIA
DEPARTMENT
J. Miranda,5 Director General
AFGHANISTAN
RESIDENT MISSION
B. Fawcett, Country Director
AZERBAIJAN
RESIDENT MISSION
(vacant), Country Director
EAST ASIA DEPARTMENT OFFICE OF
H. S. Rao, Director General THE SECRETARY
J. Hovland, The Secretary
PRC RESIDENT MISSION
T. Shibuichi
Country Director OFFICE OF THE
GENERAL COUNSEL
MONGOLIA A. Mitchell, General Counsel
RESIDENT MISSION
A. Ruthenberg, Country Director
BUDGET, PERSONNEL AND
MANAGEMENT SYSTEMS
SOUTHEAST ASIA DEPARTMENT
K. Munenaga, Director General
DEPARTMENT
A. Thapan, Director General
CAMBODIA OFFICE OF
RESIDENT MISSION ADMINISTRATIVE SERVICES
A. Goswami, Country Director A. Wasan, Principal Director
INDONESIA
RESIDENT MISSION
CONTROLLER’S
E. Cua, Country Director DEPARTMENT
(vacant), Controller
LAO PDR
RESIDENT MISSION
J. Nugent, Country Director
TREASURY
PHILIPPINES DEPARTMENT
COUNTRY OFFICE M. Kashiwagi, Treasurer
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
T. Diaz N. Jain, Country Director
Resident Director General
UZBEKISTAN
RESIDENT MISSION
H. Wei, Country Director
PRIVATE SECTOR
OPERATIONS DEPARTMENT
R. Bestani, Director General
APPENDIXES
PACIFIC LIAISON AND
COORDINATION OFFICE
N. Chakwin, Regional Director
PACIFIC
SUBREGIONAL OFFICE
S. Jarvenpaa, Regional Director
PAPUA NEW GUINEA
RESIDENT MISSION
S. van der Tak, Country Director

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
(as of 31 December 2006)

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
(as of 31 December 2006)

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
(as of 31 March 2007)

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 adbnrm@adb.org
Fax 5535 204 Fax +62 21 251 2749 www.adb.org/nrm
adbafrm@adb.org adbirm@adb.org 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: phco@adb.org
Fax +994 12 465 9990 Tel +62 651 41429 www.adb.org/phco
adbazrm@adb.org 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
adbbrm@adb.org Almaty 050010, Kazakhstan adbplco@adb.org
www.adb.org/brm Tel +7 3272 582223 / 917344 www.adb.org/plco
ADB local: 5512 Fax +7 3272 918670 ADB local: 5589
adbkarm@adb.org
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 adbpnrm@adb.org
adbcarm@adb.org adbkyrm@adb.org 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
adbinrm@adb.org adblrm@adb.org Fax +86 10 6642 6606
www.adb.org/inrm www.adb.org/lrm adbprcm@adb.org
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 adbmnrm@adb.org adbprm@adb.org
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 adbero@adb.org
E-mail: Fax +66 2 263 5301 www.adb.org/ero
www.adb.org.tl jpverbiest@adb.org 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 adbjro@adb.org
adbspso@adb.org adburm@adb.org 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
adbslrm@adb.org adbnaro@adb.org
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) adbvrm@adb.org 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
adbtjrm@adb.org Fax + 81 3 3593 55071
www.adb.org/tjrm info@adbi.org
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)
Report of Independent Auditors
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)
Report of Independent Auditors
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)

Report of Independent Auditors
JSF-1 Statement of Financial Position, 31 December 2006 and 2005 87
JSF-2 Statement of Activities and Changes in Net Assets for the
Years Ended 31 December 2006 and 2005 88
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)

Report of Independent Auditors
ADBISF-1 Statement of Financial Position, 31 December 2006 and 2005 95
ADBISF-2 Statement of Activities and Changes in Net Assets for the
Years Ended 31 December 2006 and 2005 96
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)

Report of Independent Auditors
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)

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

DISCUSSION AND ANALYSIS

(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

Average Earning Assets 37,859 36,076 36,306 37,524 38,244
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
Equity-to-Loan Ratio 47.72% 49.48% 50.54%

Current Value Basis

Net Income 544.1 93.7 562.8 1,363.3 1,182.9

Average Earning Assets 39,130 37,948 39,391 40,244 40,680
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
Equity-to-Loan Ratio 47.90% 49.72% 50.27%

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
DISCUSSION AND ANALYSIS

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

DISCUSSION AND ANALYSIS

($ 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
DISCUSSION AND ANALYSIS
Loans and Related Swaps. Most loans are made to or
MANAGEMENT’S
guaranteed by ADB members. ADB does not sell its loans
believing that there is no comparable market for them.
The current value of loans incorporates management’s
best estimate of expected cash flows including interest.
Estimated cash flows from principal repayments and inter-
est are discounted by the applicable market yield curves for
ADB’s funding cost plus lending spread.
The current value also includes an appropriate credit
risk assessment. To recognize the risk inherent in these
and other potential overdue payments, the value of the
loan is adjusted through loan loss provisioning. ADB has
never suffered a loss on sovereign loans except opportunity
losses resulting from the difference between payments for
interest and charges not in accordance with the loan’s
contractual terms.
The positive adjustment of $0.7 billion indicates that
the average interest rates on loans on an after-swap basis
are higher than ADB would currently originate on similar
loans.
Investments and Related Swaps. Under both the
statutory and current value bases, investment securities
and related derivatives are reported at fair values based on
market quotations when available. Otherwise, the current
value is calculated using market-based valuation models
incorporating observable market data. The net positive
adjustment of $23.8 million resulted from unrealized
gains on asset swaps due to increasing interest rates in
certain markets.
Equity Investments. Under both statutory and cur-
rent value bases, equity investments are reported (i) at
fair value when market values are readily determinable,
(ii) by applying equity method for investments in limited
partnership and certain limited liability companies, or for
investments where ADB has the ability to exercise signifi-
cant influence, or (iii) at cost less impairment, if any, which
represents a fair approximation of the current value.
Receivable from Members. These consist of un-
restricted and maybe restricted promissory notes. The
current value is based on the cash flow of the projected
encashment of the promissory notes discounted using
appropriate interest rates.
Borrowings after Swaps. The current value of these
liabilities includes the fair value of the borrowings and
associated financial derivative instruments. The current
value of these liabilities is calculated using market-based
valuation models incorporating observable market data.
8
The $147.7 million unfavorable current value adjust-
ment is due to the fact that the average cost of the bor-
rowings on an after-swap basis is higher than the market
rate at which ADB can currently obtain new funding.
CURRENT VALUE INCOME
STATEMENT
The total current value adjustment of $161.4 million
($321.8 million in 2005) in Table 4 represents the change
in the current value of all ADB financial instruments during
the year. The adjustment reflects changes in both interest
rates and in currency exchange rates.
Current Value Adjustments. All unrealized gains
and losses are presented as current value adjustments.
Thus, the change in net unrealized gains on investments
and equity investments of $170.5 million as well as the
$32.5 million write-back of provision for loan losses are
presented as part of the adjustment.
For 2006, current value net income is $544.1 million
compared with pre-FAS 133 net income of $705.5 mil-
lion and statutory reported net income of $570.1 million
(Table 3). The $161.4 million decrease from the pre-FAS
133 basis to current value basis (i.e., current value adjust-
ment) comprises a net unfavorable adjustment of $295.6
million from the change in the valuation of all outstanding
financial instruments, and $76.6 million from pension
and postretirement benefit liability adjustments, offset
by $40.3 million from favorable translation adjustments,
$158.6 million and $11.9 million from unrealized gains on
equity investments, and investments, respectively (Table 4).
Impact of Changes in Interest Rates. The net
decrease in the current value adjustments on the balance
sheet during 2006 was $295.6 million. It was a result of
a decrease in unrealized losses in the borrowing portfolio
and other assets of $211.7 million and $7.1 million, re-
spectively; offset by a decrease in unrealized gains in the
loan and investment swap portfolios of $503.3 million
and $11.1 million, respectively. The current value changes
reflect the effects of changes in the market environment
for the year.
Impact of Changes in Exchange Rates. Translation
adjustments, reflected as part of “accumulated other
comprehensive income” under the statutory basis, are pre-
sented as current value adjustments. The general weaken-
ing of the US dollar against most of the major currencies
in 2006 resulted in a positive translation adjustment of
$40.3 million. This is in contrast to the unfavorable trans-
lation adjustment of $227.6 million in 2005.
OPERATING ACTIVITIES
In pursuing its objectives, ADB provides financial assist-
ance through loans, technical assistance, guarantees, and
equity investments to its developing member countries to
help them meet their development needs.
Loans. Until 30 June 2001, ADB’s three windows for
loans from OCR were the pool-based multicurrency loan,
the pool-based single-currency loan in US dollars, and the
market-based loan. With the introduction of LIBOR-based
loan on 1 July 2001, the pool-based multicurrency loan
and market-based loan are no longer offered, and on 1
July 2002, the pool-based single-currency loan in US dol-
lars was retired. The LIBOR-based loan is a timely response
to borrowers demand for loan products that suit project
needs and effectively manage their external debt. LIBOR-
based loan products give borrowers a high degree of
flexibility in managing interest rate and exchange rate risks
and at the same time provide low intermediation risk to
ADB. Since November 2002, ADB has been offering local
currency loans to nonsovereign borrowers and expanded
this to the sovereign borrowers in August 2005.
OCR Loan Approvals, Disbursements, Repayments,
and Prepayments. In 2006, 35 OCR sovereign and
nonsovereign loans totaling $6.1 billion were approved
compared with 32 OCR sovereign and nonsovereign loans
totaling $4.4 billion in 2005. Disbursements in 2006
totaled $4.4 billion representing an increase of 26% from
the $3.5 billion disbursements in 2005. Regular principal
repayments for the year were $1.3 billion ($2.9 billion in
2005) while prepayments amounted to $0.5 billion ($0.6
billion in 2005). In 2006, 22 loans were fully prepaid and
2 were partially prepaid. As of 31 December 2006, the total
loans outstanding after provision for losses and unamortized
front-end fees amounted to $26.2 billion.
In 2005, ADB established the multitranche financing
facility, a debt financing facility that allows ADB to deliver
financial resources for a specific program or investment in a
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
on periodic financing requests submitted by the borrower.
In 2006, eight multitranche financing facilities of $3.8
billion (2 multitranche financing facilities of $1.5 billion
in 2005), were approved under OCR. Periodic financing
requests under multitranche financing facilities amounting
to $931.0 million were approved in 2006 (nil in 2005).
Starting September 2005, ADB provided lending with-
out sovereign guarantee to entities that can be considered
public sector borrowers but are structurally separate from
the sovereign or central government. Such entities include
DISCUSSION AND ANALYSIS
state-owned enterprises, government agencies, munici-
MANAGEMENT’S
palities, and local government units. In 2006, two loans
to state-owned enterprises without sovereign guarantee
amounting to $150.0 million were approved (nil in 2005).
Status of Loans. Two sovereign OCR loans and six
nonsovereign loans were in non-accrual status at the end
of 2006; the total outstanding balance was $6.1 million
($2.3 million in 2005) and $29.7 million ($49.2 million
in 2005), respectively. Nonsovereign loans in non-accrual
status decreased due to the foreclosure of three Philippine
loans. The total loans in non-accrual status of $35.8 million
represented 0.1% of the total outstanding OCR loans.
Lending Rates. The lending rates for pool-based single-
currency loans are based on the previous semester’s average
cost of borrowings. Interest rates for market-based loans are
either fixed or floating. The lending rates for market-based
loans are determined on the basis of 6-month LIBOR with
reset dates of either 15 March and 15 September or 15 June
and 15 December. LIBOR-based loans carry a floating lending
rate that consists of 6-month LIBOR and a lending spread
fixed over the life of the loan. The lending rate is reset every
6 months on each interest reset date of LIBOR-based loan.
The floating lending rate of LIBOR-based loans can be fixed at
borrower’s request. Effective 2001, all sovereign loans with-
out specific provisions in the loan agreements were charged
with a lending spread of 60 basis points over the base lending
rate. In 2004, 20 basis points of the lending spread were
waived on sovereign loans outstanding from 1 July 2004 to
30 June 2005 for borrowers that do not have loans in arrears.
Subsequently, the policy was extended to cover the period
up to June 2007. ADB’s variable lending rates for pool-based
single-currency loans in US dollars and in Japanese yen are
shown in Table 5.
For nonsovereign loans, the lending spread is deter-
mined on a case-by-case basis to cover ADB’s risk exposure
to specific borrowers and projects.
TABLE 5 PSCL Lending Rates a
(% per annum)
2006 2005 Currency
1 January 1.49 1.73 Japanese yen
5.94 6.06 US dollar
1 July 1.46 1.71 Japanese yen
5.86 6.14 US dollar
a Lending rates are set on 1 January and 1 July every year and are valid for six
months and are represented net of 20 basis points lending spread waiver.
9
 ADB also normally charges a front-end fee of 1% to
DISCUSSION AND ANALYSIS
cover the administrative costs incurred in loan origination.
In 2004, the Board of Governors approved the waiver of the
MANAGEMENT’S
entire front-end fee on all new sovereign loans approved
from 1 January 2004 to 30 June 2005. Subsequently, the
policy was extended to cover the period up to June 2007.
Prior to that, 50 basis points waiver was applied to all
sovereign loans approved on or after 1 January 2003.
ADB currently applies a progressive commitment fee of
75 basis points on undisbursed loan balances for sovereign
project loans and a flat commitment fee of 75 basis points
for sovereign program loans. As part of the enhancement
of ADB’s loan and debt management products, all sover-
eign loans negotiated after 1 January 2007 will carry a flat
commitment fee of 35 basis points on the full amount of
all undisbursed loan balances.
Rebates and surcharges are standard features of sover-
eign LIBOR-based loans. To maintain the principle of cost
pass-through pricing, ADB returns the actual sub-LIBOR
funding cost margin to its LIBOR-based loans sovereign
borrowers through rebates. A surcharge could arise if
ADB’s funding cost exceeds the 6-month LIBOR, but that is
a remote possibility unless ADB experiences serious credit
deterioration. Rebate or surcharge rates are set on 1 January
and 1 July every year and are based on the actual average
funding cost margin for the preceding 6-month period.
Based on rebate rates, ADB returned an actual sub-LIBOR
funding cost margin of $25.2 million to its LIBOR-based
loan sovereign borrowers during 2006 (Table 6).
Technical Assistance. From 1967 to 1991, technical
assistance expenses were charged to OCR and other techni-
cal assistance funding resources—the Technical Assistance
Special Fund, the Japan Special Fund, and trust/grant funds.
From 1992 to 2000, no technical assistance expenses were
charged to OCR. In 2001, the Board of Directors approved
the financing of high-priority technical assistance programs
out of OCR current income within a rolling 4-year financ-
ing framework. The amount of financing required varies
between years and is subject to the approval of the Board.
In 2003, the Board reverted to the practice of allocating
OCR net income to the Technical Assistance Special Fund
TABLE 6 Rebate Rates
(% per annum)
US dollar Japanese yen
1 January 2006 0.31 0.39
1 July 2006 0.31 0.34
10
and of financing technical assistance activities through it
and other various funding resources.
Guarantees. ADB provides guarantees as credit
enhancements for eligible projects to cover risks that the
private sector cannot easily absorb or manage on its own.
Reducing these risks can make a significant difference in
mobilizing debt funding for projects. ADB has used its guar-
antee instruments successfully for infrastructure projects,
financial institutions, capital markets, and trade finance.
These instruments generally are not recognized in the bal-
ance sheet and have off-balance sheet risks. For guarantees
issued and modified after 31 December 2002 in accordance
with Financial Accounting Standards Board Interpretation
No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness to Others,” ADB recognized at the inception
of a guarantee the non-contingent aspect of its obligations.
ADB’s total exposure on signed and effective loan guarantees
is disclosed in Note F of OCR Financial Statements.
ADB offers two guarantee products—political risk
and partial credit—designed to mitigate risk exposure of
commercial lenders and capital market investors. These
guarantees are not issued on a stand-alone basis but are
provided for projects in which ADB participates. ADB co-
operates with other multilateral, official, and nonsovereign
lenders and insurers to provide guarantee products.
Political Risk Guarantees. A political risk guarantee is
designed to facilitate cofinancing by providing lenders/
capital market investors of ADB-assisted projects with cov-
erage against specifically defined political risks. Coverage
is available against any combination of the risks of expro-
priation, currency inconvertibility or nontransferability,
political violence, and breach of contract, and is available
for loans and other forms of debt instruments. Tenors are
based on the merits of the underlying project. All or part
of outstanding debt service obligations to a lender may
be covered. The cover may be for principal and/or interest
payment obligations. For nonsovereign projects, ADB can
issue a political risk guarantee without a counterguarantee
TABLE 7 Outstanding Guarantee Exposure a
($ million)
2006 2005
Partial credit guarantees 1,086.6 1,011.3
Political risk guarantees 149.6 179.3
Others 1.0 1.0
Total 1,237.2 1,191.6
a None of these amounts were subject to call as of 31 December 2006 and 2005.
from the host government; however, political risk guar-
antee exposure to such a project is currently subject to a
maximum of $150.0 million or 50% of the project cost,
whichever is lower. Fees are market-based composed of
guarantee fees, front-end fees, and standby fees. A politi-
cal risk guarantee is callable when a guaranteed event has
occurred and such an event has resulted in debt service
default to the lender.
Partial Credit Guarantees. A partial credit guarantee
provides comprehensive cover (of commercial and political
risks) for a specific portion of the debt service provided by
cofinanciers. It is particularly useful for projects in develop-
ing member countries with restricted access to financial
markets but which ADB considers creditworthy and finan-
cially sound. Since the 1997 Asian financial crisis, borrow-
ers, project sponsors, cofinanciers, and host governments
have increasingly sought to hedge currency mismatch
risks by borrowing in the same currency as the revenues
generated by the project. A partial credit guarantee can
cover local currency debt including domestic bond issues
or long-term loans from local financial institutions. For
private sector transactions not supported by a counter-
guarantee from the host government, the exposure limit
currently stands at $75.0 million or 25% of the project
cost, whichever is less. Guarantee fees for private sector
transactions are market-based. Fees for transactions
backed by the host government guarantee comprise a
standard guarantee fee of 40 basis points per annum on
the present value of the outstanding guarantee obligation
plus a front-end fee to cover processing costs. Fees can be
charged to the borrower or to the lender.
Cofinancing. In line with the approval of the
financing partnership strategy and the review of credit
enhancement operations in 2006, ADB is now focusing on
direct value-added cofinancing1 for resource mobilization
and/or administration based on contractual or coopera-
tion arrangements. In 2006, ADB’s cofinancing activities
and reports will focus on two major areas: (i) grants and
concessional partnerships, and (ii) commercial resource
mobilization including guarantees and syndications.
In 2006, total direct value-added cofinancing
amounted to $1.5 billion for 103 projects, of which $1.4
billion was for 29 loan projects and $92.7 million was
for 74 technical assistance projects. Direct value-added
cofinancing for loan projects comprised $124.8 million for
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.
3 guarantee operations, $530.0 million for 5 syndication
operations (of which one project in India generated 42%
DISCUSSION AND ANALYSIS
of the total), $166.1 million for 12 grant operations, and
MANAGEMENT’S
$569.2 million for 11 official loan cofinancing operations.
Total direct value-added cofinancing in 2006 is about
370% higher than in 2005. On a 3-year average basis, this
represents 47% increase over the previous period.
Non-direct value-added cofinancing amounted to
about $4.5 billion in the form of parallel grants and loans
from bilateral and multilateral institutions, and domestic
and international financial institutions for 20 ADB-financed
projects and programs.
Nonsovereign Operations. ADB’s Charter mandates
that its nonsovereign operations promote the investment of
private capital in the region for development and empowers
it to provide assistance in the form of equity investments,
loans without government guarantees, and other financing
schemes. The Charter allows the use of OCR for equity in-
vestments in private enterprises up to 10% of its unimpaired
paid-in capital together with reserves and surplus, exclusive
of special reserves. In 2006, the total equity investment
portfolio for the OCR for both outstanding and undisbursed
approved facilities amounted to $1,047.4 million. This rep-
resented about 77% of the ceiling defined by the Charter.
As of 31 December 2006, the overall nonsovereign
portfolio (equity investments, loans, and guarantees) was
about $2.6 billion. As an interim arrangement, pending the
implementation of an objective capital allocation mechanism,
the Board allowed approvals of nonsovereign operations in
excess of $1.5 billion since September 2001.
During 2006, nine nonsovereign loans totaling $575
million were approved compared with seven loans totaling
$536 million in 2005.2 Loan disbursements in 2006 to-
taled $358.8 million, which represented a 75.5% increase
from the $204.4 million disbursed in 2005. Principal
payments for the year totaled $98.6 million ($54.7 mil-
lion–2005) while prepayments amounted to $39.0 million
($4.6 million–2005). In 2006, three nonsovereign loans,
all of which were prepayments, were fully repaid. On 31
December 2006, the total loans outstanding amounted
to $881.9 million. The lending spread for nonsovereign
loans is determined on a case-by-case basis to cover ADB’s
risk exposure to specific borrowers and projects. ADB also
charges front-end fees of 0.50–1.0% to cover the admin-
istrative costs incurred in loan origination.
11
 In 2006, 14 equity investments totaling $260.5 million
DISCUSSION AND ANALYSIS
were approved compared with 8 equity investments total-
ing $196.53 million in 2005. In 2006, ADB disbursed a total
MANAGEMENT’S
of $129.9 million in equity investments that represented a
1.4% decrease from $131.8 million disbursed in 2005. ADB
divested its equity shareholdings in 25 projects, whether in
full or in part, for a total amount of $134.6 million. These
divestments are carried out in a manner consistent with
good business practices, after ADB’s development role in
its investments have been fulfilled, and without destabiliz-
ing the companies concerned. In so doing, ADB is able to
use the funds made available for other new projects.
In 2006, ADB approved two partial credit guarantee
facilities without government counterguarantee totaling
$109.8 million. One facility is to provide a credit guarantee
for principal of $100.0 million and accrued interest in con-
nection with diversified payment rights securitization by a
bank in Kazakhstan, and the other is for the acquisition
and securitization of motor loan portfolio by Deutsche
Bank AG in Indonesia for $9.8 million. ADB also approved
a political risk guarantee cover to mobilize commercial
debt of $15.0 million to finance the second phase of
expansion of services by the largest provider of mobile
telecommunications services in Afghanistan.
CAPITAL AND RESOURCES
Capital. Total shareholders’ equity on a statutory basis in-
creased from $12.3 billion as of 31 December 2005 to $13.1
billion as of 31 December 2006. This was primarily due to (i)
net income for the period of $570.1 million; (ii) net increase
in other comprehensive income of $121.8 million (unreal-
ized gain on investments and equity investments of $170.5
million, favorable translation adjustments of $26.5 million,
amortization of FAS 133 adjustment of $1.4 million, offset by
unfavorable adjustment to pension/postretirement benefit of
$76.6 million); (iii) the net effect of change in special drawing
rights value on capital and reserves of $67.4 million; (iv) addi-
tional subscription received of $17.9 million; (v) transfer of an
unutilized amount of $10.0 million from the Asian Tsunami
Fund, and (vi) the cumulative effect of FAS 155 adjustment
of $118.6 million; offset by (vii) allocations to the Asian
Development Fund (ADF) and the Technical Assistance Special
Fund, of $40.0 million and $20.0 million, respectively.
In June and July 2006, Brunei Darussalam and Ireland
subscribed to 12,462 shares and 12,040 shares, respectively.
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
This brought the total authorized and subscribed capital to
3,534,230 shares amounting to $53,169.0 million as of 31
December 2006. Of the subscribed capital, $3,739.6 million
was paid-in and $49,429.4 million was callable. Callable capi-
tal can be called only if required to meet ADB’s obligations
incurred on borrowings or guarantees under OCR. No call has
ever been made on ADB’s callable capital.
To ensure it has adequate risk-bearing capacity, ADB
reviews its income outlook annually. Based on that review,
the Board of Directors allocates a portion of the previous
year’s net income to reserves to ensure that the level is
commensurate with the income planning framework. In
addition, to the extent feasible, it allocates part of the net
income to support development activities in its developing
member countries. In May 2006, the Board of Governors
approved that 2005 net income of $105.2 million together
with $308.7 million transferred from cumulative revalua-
tion adjustments account and $36.9 million from loan loss
reserve be allocated as follows: $320.0 million to surplus,
$70.8 million to ordinary reserve, $40.0 million to ADF and
$20.0 million to Technical Assistance Special Fund.
In February 2004, the Board of Directors reviewed
ADB’s lending and borrowing limitations and approved
the following policies: (i) gross outstanding borrowings
are limited to no more than the sum of callable capital
from non-borrowing members, paid-in capital, and re-
serves (including surplus), subject to the Charter limit of
100% of callable capital; (ii) outstanding loan commit-
ments measured by the sum of outstanding disbursed and
undisbursed loans, equity investments, and guarantees4,
are limited to no more than the sum of the total callable
paid-in capital and reserves (including surplus but exclud-
ing special reserve).
In April 2006, the Board of Directors reviewed the
OCR resource position. The review followed a medium-
term capital management approach within the approved
financial framework, for assessing the adequacy of current
and prospective lending and borrowing headroom. The
review concluded that ADB’s capital position is sufficient
to support projected lending operations through 2008
and to maintain a prudent buffer against exchange rate
fluctuations and a margin for unutilized lending capacity.
As of 31 December 2006, headrooms for lending and bor-
rowings were $18.2 billion and $15.8 billion, respectively
(compared with $18.8 billion and $16.2 billion, respec-
tively, in 2005).
 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

DISCUSSION AND ANALYSIS

operations. Subject to this objective, ADB seeks to diversify enhance its presence in the market and to meet temporary

its funding sources across markets, instruments, and maturi-
ties. To achieve that objective, ADB continued in 2006 a
strategy of (i) issuing liquid benchmark bonds to maintain its
strong presence in key currency bond markets, and (ii) rais-
ing funds through cost efficient opportunistic and private
placement transactions to minimize borrowing costs. Also,
in 2006 ADB continued to pursue its objective of contribut-
ing to the development of regional bond markets and of
providing local currency financing for ADB’s projects through
local currency bond issues. All proceeds from new funding
transactions are invested until they are required for ADB’s or-
dinary operations. Funding raised in any given year is utilized
for ADB’s ordinary operations, including loan disbursements
and refinancing of maturing funding obligations.
2006 Funding Operations. In 2006, ADB completed
51 borrowing transactions raising about $5.4 billion in
long- and medium-term funds compared with $4.0 billion
in 2005. The new borrowings were raised in 13 currencies,
namely, Australian dollar, Canadian dollar, Euro, Hong
Kong dollar, Japanese yen, Malaysian ringgit, Mexican
peso, New Zealand dollar, Singapore dollar, South African
rand, Thai baht, Turkish lira, and US dollar. After swaps,
$5.2 billion or 95.9% of the 2006 borrowings were in US
dollar and the remaining 4.1% were in Japanese yen. The
average maturity of 2006 borrowings was 5.9 years com-
pared with 4.3 years in 2005. Of the total 2006 borrow-
ings, $2.9 billion was raised through 8 public offerings,
and the rest through 43 private placements amounting to
MANAGEMENT’S
cash deficiencies. Table 8 shows details of 2006 borrow-
ings as compared to borrowings in 2005.
Local Currency Bond Issues. ADB’s local currency
bond issuances in 2006 are shown in Table 9. In April,
ADB returned to the bond market of Malaysia and estab-
lished a 15-year Malaysian ringgit 3.8 billion medium-term
note program and launched the first note issue under this
program. This is the first Asian currency medium-term
note program by ADB and the first by a supranational in
Malaysia. In September, ADB issued its second Thai baht
bond in two tranches with a total principal amount of Thai
baht 6.5 billion in the domestic capital market of Thailand.
Also in September, ADB established its $10-billion Asian
currency note program and launched the inaugural notes
under the Asian currency note program in the domestic capi-
tal markets of Hong Kong and Singapore. The Asian currency
note program is Asia’s first multicurrency bond platform since
the Asian financial crisis that links the domestic capital mar-
kets in the region under a single unified framework with a
common set of documents under English law.
Use of Derivatives. ADB undertakes currency and in-
terest rate swaps to raise, on a fully hedged basis, currencies
needed for operations in a cost efficient way while maintain-
ing its borrowing presence in major capital markets. Figures
1 and 2 show the effects of swaps on the interest rate
structure and currency composition of ADB’s outstanding
borrowings as of 31 December 2006. Interest rate swaps are
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
DISCUSSION AND ANALYSIS

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
policies and practices in line with ADB’s business activities
and initiatives and to harmonize its liquidity policy with
other multilateral development banks. Under the new
policy, the duration for the prudential liquidity portfolio
can be extended up to 4 years for the portfolio funded
by equity. The remaining part of the prudential liquidity
portfolio is funded by debt and is invested to maximize the
spread earned between borrowing cost and investment
income on high-quality investments.
The operational cash portfolio is designed to meet net
cash requirements over a 1-month horizon. It is funded
by equity and invested in short-term, highly liquid money
market instruments. The portfolio performance is meas-
ured against short-term external benchmarks.
The cash cushion portfolio holds the proceeds of
ADB’s borrowing transactions pending disbursement. It is
invested in short-term instruments, and the performance
is measured against short-term external benchmarks.
The discretionary liquidity portfolio is used to support
medium-term funding needs and is funded by debt to
provide flexibility in executing the funding program over the
medium-term to permit borrowing ahead of cash flow needs
and bolster ADB’s access to short-term funding through
continuous presence in the market. For 2006, the target size
of the discretionary liquidity portfolio was set at $3.8 billion.
CONTRACTUAL OBLIGATIONS
In the normal course of business, ADB enters into various con-
tractual obligations that may require future cash payments.
Table 12 summarizes ADB’s significant contractual cash
obligations at 31 December 2006 and 2005. Long-term debt
includes direct medium- and long-term borrowings excluding
swaps but does not include any adjustment for unamortized
premiums, discounts, or effects of applying FAS 133. Other
long-term liabilities correspond to accrued liabilities including
those for pension and postretirement medical benefits.
FINANCIAL RISK MANAGEMENT
In its development banking operations, ADB assumes various
credit, market (interest rate and foreign exchange), liquidity,
and operational risks. Of these, credit risks in the loan and
guarantee portfolios are the most significant. Sovereign loans
and guarantees to its developing member countries consti-
tute the large majority of ADB’s portfolio. ADB has adopted
an integrated risk management framework designed to
ensure that credit and other risks are appropriately identi-
fied, measured, monitored, and managed. In November
2005, ADB established the Risk Management Unit, which is
independent of the business units and mandated to man-
DISCUSSION AND ANALYSIS
age credit risk of the sovereign and nonsovereign loan and
guarantee portfolios and ADB’s market- and treasury-related
MANAGEMENT’S
risks. The unit has been implementing risk management tools
and methodologies under the said framework.
Asset and Liability Management. The primary objec-
tive of asset and liability management for ADB is to safe-
guard ADB’s net worth and overall capital adequacy while
promoting steady growth in ADB’s risk bearing capacity.
The asset and liability management safeguards net worth
from foreign exchange rate risks, protects net interest mar-
gin from fluctuation in interest rates, and provides sufficient
liquidity to meet ADB’s operations. ADB also adheres to cost
pass-through pricing policy for the loans to sovereign bor-
rowers, and allocates the most cost efficient borrowings to
fund the loans. The asset and liability management objec-
tives and practices were clarified and formalized in 2006
through the Board approved comprehensive asset and
liability management policy framework. The framework has
formalized the guiding principles for managing the financial
assets and liabilities of the OCR and provided the governing
framework to guide all asset and liability management-
related financial policies, including liquidity, investments,
equity management, and capital adequacy.
Risk Bearing Capacity. ADB’s income planning
framework establishes the equity-to-loan ratio as the key
measure of ADB’s risk bearing capacity. The equity-to-loan
ratio measures the adequacy of equity capital to absorb any
unexpected losses from its loan and guarantee portfolios
as well as the ability to generate adequate net income to
absorb loss of loan income while matching growth in the
portfolios. Because ADB’s loan and guarantee portfolios are
unavoidably highly concentrated, an adverse credit event of
one borrower could have a significant cumulative impact
due to high correlations. ADB has established a target
equity-to-loan ratio of 35% to accommodate this volatility.
TABLE 12 Contractual Cash Obligations
($ million)
2006 2005
Long-Term Debt 27,602.5 24,189.6
Undisbursed Loan
Commitments 16,768.2 15,501.8
Undisbursed Equity
Investment Commitments 391.6 309.5
Guarantee Commitments 1,293.7 1,276.9
Other Long-Term Liabilities 373.4 458.6
TOTAL 46,429.4 41,736.4
15
 The recently approved asset and liability management
DISCUSSION AND ANALYSIS
policy expanded the measurement of equity-to-loan ratio
to incorporate risks other than credit risks in the loan
MANAGEMENT’S
portfolio to ensure ADB is adequately capitalized for other
financial risks. New methodologies will be developed and
applied in 2007 based on the revised framework.
In determining equity-to-loan ratio, ADB’s equity
capital is defined as the sum of useable paid-in capital,
the ordinary reserve, the special reserve, and surplus. At
31 December 2006, equity-to-loan ratio was 47.7% under
the pre-FAS 133 basis (49.5% on 31 December 2005). The
higher-than-target equity-to-loan ratio represents a very
strong equity capital position relative to the credit risk
assumed in its loan and guarantee portfolios indicating
that both net income and equity capital are adequate
to sustain any major credit event. ADB also protects the
equity-to-loan ratio from exchange rate fluctuations by
periodically aligning the currency composition of its equity
to that of its loans.
Under the income planning framework, ADB utilizes the
loan loss reserve to absorb expected losses from its loan and
guarantee portfolios. Hence both expected and unexpected
losses for its loans and guarantees are addressed through
adequate loan loss reserve and equity-to-loan ratio. On the
other hand, loan loss provisions are made against impaired
loans and recognized in the net income.
Country Credit Risks. The income planning frame-
work also links the adequacy of net income and equity
capital to the country credit risk of the loan and guarantee
portfolios. A credit risk model is used to estimate expected
and unexpected losses in these portfolios, incorporating
borrower’s default probability, loss given default, projected
exposure, and default correlations. In addition, ADB stress
tests net income projections to ensure that net income
is adequate to absorb the loss of loan income due to
credit shocks and to support sufficient growth. To assess
the creditworthiness of its developing member countries
independently, ADB adopted an internal country credit risk
rating system.
Credit Risk of Nonsovereign Operations. Aside
from providing loans and guarantees to its developing
member countries, ADB provides loans and guarantees
to firms or projects owned by nonsovereign entities. The
entities include purely private sector firms, state-owned
enterprises, and local government units. It can also make
equity investments in private sector firms and state-owned
enterprises. ADB’s nonsovereign investments are usually
not backed by government guarantees and are exposed to
commercial and political risks. Managing and monitoring
16
those risks are important aspects in the project cycle. ADB
evaluates not only the development impact of a project
but also analyzes its credit strength, financial, commercial,
and technical viability, and good corporate governance.
Each nonsovereign project undergoes an in-depth credit
analysis and appraisal prior to approval with emphasis
being given to the project’s financial sustainability and
ability to pay its debt. The Risk Management Unit reviews
the risk of new proposals for loans and equity investments
and ensures that they are in line with ADB’s credit risk
policy, and that ADB is compensated properly for the risk
undertaken on an overall portfolio basis.
The current private sector strategy focuses on the infra-
structure and financial market sectors. Nevertheless, ADB
remains responsive to the changing needs of developing
member countries and private investment opportunities
in other sectors. The objective is to build a diversified
nonsovereign portfolio in terms of both countries and
sectors while managing concentration risks by establishing
appropriate limits for countries, industries, and groups of
related companies. The total amount of ADB assistance
to a single project, including equity investments, loans,
and guarantees, must not exceed 25% of the total project
cost or $75.0 million, whichever is lower. ADB uses an
internal rating system to classify its exposure based on
international credit standards that reflect the risk of timely
and full recovery of investments. The rating system is used
to monitor risk exposure to individual projects.
ADB streamlined approval of private sector investment
recovery operations. They generally involve negotiations
for financial restructuring, foreclosure, or other remedies,
including liquidation. Restructuring is undertaken only
when it is expected to improve ADB’s prospects for recov-
ery. If the financial condition of the entity has deteriorated
beyond recovery, ADB may have to proceed with liquida-
tion or other legally permissible forms of recovery.
Counterparty Credit Risks. Counterparty credit risk
is the risk of loss when a derivative counterparty does not
honor its obligations measured by the aggregate positive
replacement cost or the net positive marked-to-market
value of the derivatives. To mitigate counterparty credit risk,
ADB has strict counterparty eligibility criteria. In general,
ADB will undertake swap transactions with counterparts
that have a minimum credit rating of A3 and/or A- with
Moody’s and/or Standard and Poor’s and have executed
an International Swaps and Derivatives Association Master
Agreement and a credit support annex with ADB.
ADB utilizes a sophisticated computerized system that
allows for daily monitoring and managing of counterparty
credit risk exposure. Under the credit support annex ar-
rangements, derivatives’ positions are marked-to-market
daily, and collateral calls, transfers, and adjustments with
counterparties are made in coordination with an external
collateral manager. ADB also sets exposure limits on indi-
vidual counterparties based on their credit ratings and eq-
uity and daily monitors current and potential counterparty
exposure against the limits.
Market Risks. ADB manages the market risk of its
liquid asset investments by adopting investment policy
guidelines which only allow for investments in government
and government-related debt instruments, time deposits,
and other unconditional obligations of banks and financial
institutions, and to a limited extent, in corporate bonds,
mortgage-backed securities, and asset-backed securities
of high credit quality. The principal source of investment
risk arises from income volatility due to interest rate move-
ments. ADB monitors and manages interest rate risks by
employing various quantitative methods. All positions are
marked-to-market, and risk-sensitive measures, including
potential exposure, are calculated and compared to inter-
nally established risk limits.
ADB manages its currency risk to ensure that the equity-
to-loan ratio as the measure of equity capital adequacy
and risk-bearing capacity is immune from fluctuations in
exchange rates. ADB can achieve this by periodically align-
ing the currency composition of its equity to that of its
loans, thus, ensuring that fluctuations in exchange rates
would have similar effects on both. ADB mitigates the
market risks associated with the loan portfolio by employ-
ing derivatives to closely match the characteristics of loans
with those of borrowings.
ADB has an infrastructure designed to ensure that the
market risks associated with its activities are fully identi-
fied, measured, monitored, and managed. Specifically,
ADB manages its market risks by employing (i) market
standard risk metrics and assumptions in the valuation and
risk analysis of its treasury activities, (ii) enhanced perform-
ance measurements and attribution methodologies and
systems for its investment portfolios, (iii) supplementary
risk management tools such as stress testing and scenario
analysis, and (iv) a computer system that values both
vanilla as well as highly structured borrowings and their
related swap transactions.
ADB utilizes a daily risk, performance, and attribu-
tion system to measure and monitor treasury investment
portfolios, thus providing regular and timely risk and
performance feedback to treasury management. In addi-
tion, ADB has outsourced much of the risk analyses of its
externally managed investment portfolios, thereby allow-
ing ADB to significantly bolster risk-metrics, stress testing,
DISCUSSION AND ANALYSIS
and scenario analyses for its investments in mortgage and
MANAGEMENT’S
asset-backed securities and corporate bonds.
Liquidity Risks. The objective of ADB’s liquidity policy
is to ensure the availability of sufficient cash flows to meet
all financial and operational commitments despite uncer-
tain conditions in the capital markets. The policy establishes
minimum levels of liquidity to maintain expected operations.
ADB’s liquidity requirements are primarily determined by ex-
pected lending volumes and disbursements, redemption of
current borrowings, repayments and prepayments of loans,
and cash from net income. The policy defines ADB’s annual
net cash requirement to meet large contractual obligations
for loan disbursements and debt redemption. ADB relies on
borrowings to meet most of these obligations. The proxy
net cash requirement is the sum of loan disbursements net
of repayments and debt redemption for the year.
The recently approved liquidity policy redefined the
prudential minimum liquidity as the 50% of the next 3
years’ proxy net cash requirement (40% of the next 3
years’ proxy net cash requirement under the previous
policy). This represents the minimum amount of liquidity
necessary for ADB to continue operations even if its access
to capital markets is temporarily denied. Maintaining the
prudential minimum liquidity level enables ADB to cover
normal net cash requirement for 18 months under the
normal and stressed situations without borrowing. In
addition, ADB can raise discretionary liquidity, funded
entirely by borrowings, to provide flexibility in the funding
and debt redemption schedule over time. The transition
to the new liquidity policy, which may result in a higher
level of prudential minimum liquidity level, will be man-
aged carefully to avoid an unnecessary surge in borrowing
needs or negative implications on the financial ratios.
Levels of liquidity, net cash requirement, and proxy net
cash requirement are monitored on an ongoing basis and
reviewed by the Board of Directors quarterly.
Operational Risks. Operational risk represents the
potential for loss resulting from inadequate or failed
internal processes or systems, human factors, or external
events including business disruptions and system failure,
transaction processing failures, and failure in execution of
legal, fiduciary, and agency responsibilities. ADB is exposed
to many types of operational risks and attempts to mitigate
them by maintaining a system of internal controls and proc-
esses, and system upgrades. In addition, ADB has a rigorous
process for approving transactions that requires reviews and
authorization by all relevant parties to ensure that all trans-
17
 actions are properly approved, documented, monitored,
DISCUSSION AND ANALYSIS
and controlled. ADB has adopted risk and control measures
for financial reporting under the Committee of Sponsoring
MANAGEMENT’S
Organizations framework. ADB has put in place a strategy
to strengthen the business continuity plan to reduce the
impact of disruption affecting business processes.
SUMMARY OF FINANCIAL
PERFORMANCE
Net Income. Net income before net unrealized losses and
cumulative effect of change in accounting principle was
$705.5 million, compared with $423.2 million in 2005.
The increase of $282.3 million (66.7%) was predominantly
due to the following:
• $197.8 million increase in investment income, including
$10.7 million increase in realized gains on sales, which
reflects improved realized returns on the investment port-
folio due to higher interest rates in some capital markets;
• $173.7 million increase in net loan income after
expenses on asset swaps hedging loan products, as-
sociated with $171.6 million increase in loan income
and $2.1 million decrease in expenses on swaps. The
increase in loan income is primarily associated with
higher loan balances and increase in interest rates;
• $80.4 million increase in income from equity invest-
ments resulting mainly from (i) $45.7 million increase in
net realized gains on disposal of equity investments; (ii)
$28.6 million increase in proportionate gains on equity
investments accounted for under equity method; (iii)
$5.5 million increase in dividend income for the year;
and (iv) $0.5 million net increase in other income;
• $8.3 million increase in income as executing agency
brought about by (i) $5.4 million additional fees
received from special funds ($0.7 million from Asian
Tsunami Fund; $1.3 million from Pakistan Earthquake
Fund), agency trust funds, and loan related grants;
(ii) additional $0.9 million fees received for administer-
ing complementary loans; and (iii) $2.0 million fees
received on account of guarantees;
• $29.0 million net decrease in provision for loan losses,
mainly because of the release of loan loss provisions
due to a revision in the provisioning methodology for
nonsovereign loans;
• $8.0 million decrease in net administrative expenses
after allocation of charges to Asian Development
Fund and direct loan origination costs for loans and
guarantees. This is primarily due to (i) $7.9 million in-
crease in salaries, which includes $2.0 million increase
18
in termination benefits for staff who accepted the
enhanced separation program which was offered in
2005; (ii) $8.9 million increase in benefits expenses for
2006, offset by (iii) $6.2 million decrease in relocation
expense mainly due to the change in the methodology
of provisioning for resettlement allowance and repa-
triation cost; (iv) $14.5 million increase in the amount
of administrative charges allocated to ADF based on
the proportion of the relative volume of operational
activities for each fund; and (v) $3.9 million increase
in the deferral of loan origination costs on loans and
guarantees which became effective during the year;
offset by
• $215.2 million increase in borrowings and related
expenses, net of $7.9 million increase in realized gains
on purchase/redemption of bonds, due to the increase
in the borrowing portfolio and higher interest rates.
Net unrealized gains and losses on derivatives,
as required by FAS 133 and 155. Net unrealized losses
on derivatives of $138.5 million, a decline over net unreal-
ized losses of $308.7 million in 2005, were due primarily
to a general increase in interest rates on the back of the
strengthening of certain major currencies against the US
dollar. The net effect of the movements in the interest rates
and currency appreciation against the US dollar during the
period increased (decreased) the value of the liability (asset)
portion of the borrowing related derivatives, i.e. swaps.
The impact was largely felt on the non-structured debts
and their related derivatives, as these swaps are designed
to behave as long-term fixed assets denominated in US
dollars. Because of the asymmetrical accounting treatment
between the non-structured debts and their swaps, the
net unrealized losses on the swaps were not offset by the
decline in the value of the non-structured debts, which are
not fair valued but recorded at their carrying book value.
A fair valuation of the non-structured debts would have
led to an unrealized gain offsetting the unrealized losses
on the swaps. In addition, the increase in the interest
rates had also reduced the value of the debts, mainly fixed
rate US dollar bonds, which did not have any derivatives
transactions attached to them.
The higher interest rates and appreciation of certain
currencies against the US dollar in 2006 also affected the
structured debt (hybrid instruments) portfolios to a cer-
tain extent. The increase in value of the underlying debts
outweighed the increase in the value of the embedded
derivatives, which are highly sensitive to the expected
foreign exchange rates movements. Thus, the change in
fair value of the structured debts led to an unrealized loss
of $8.9 million for the year ended 31 December 2006, as
required by FAS 155. However, as ADB generally takes a
fully hedged position on its debts, exercising prudent risk
management, the related derivatives transactions would
normally move in the opposite directions of the hybrid
instruments, relatively offsetting the unrealized loss (Note
M of OCR Financial Statements).
Cumulative Effect of Change in Accounting
Principle. The cumulative effect arising from the adoption
of the equity method for certain limited liability companies
that have characteristics of partnership (EITF 03-16) in
2005 resulted to a reversal of prior years’ income of $8.2
million, net of a release of provisions of $3.6 million.
CRITICAL ACCOUNTING POLICIES
AND ESTIMATES
Significant accounting policies are contained in Note B of
OCR’s financial statements. As disclosed in the financial
statements, Management makes estimates in determining
the fair value of financial instruments. Estimates by their
nature are based on judgment and available information;
therefore, actual results could differ and could have a
material impact on the financial statements.
Fair Value of Financial Instruments. Under statu-
tory reporting, ADB carries its investments and derivatives,
as defined by FAS 133 and its related amendments,
including FAS 155, on a fair value basis. These derivatives
include embedded derivatives in the structured borrowings
portfolio that are valued and accounted for in the balance
sheet as a whole. Fair values are usually based on quoted
market prices. If market prices are not readily available, fair
values are usually determined using market-based pricing
models incorporating readily observable market data and
require judgment and estimates.
The pricing models used for determining fair values of
ADB’s financial instruments are based on discounted expected
cash flows using observable market data. ADB reviews the
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
are subject to ongoing internal and external verification and
review. The models use market-sourced inputs such as inter-
est rates, exchange rates, and option volatilities. Selection of
these inputs may involve some judgment and may impact
net income. ADB believes that the estimates of fair values are
reasonable given existing controls and processes.
Provision for Loan Losses. Provision against loan
losses for impaired loans reflects management’s judgment
and estimate of the present value of expected future cash
flows discounted at the loan’s effective interest rate. ADB
DISCUSSION AND ANALYSIS
considers a loan as impaired when, based on current
MANAGEMENT’S
information and events, it is probable that ADB will be
unable to collect all the amounts due according to the
loan’s contractual terms.
In 2006, the Board approved the revision of the loan
loss provisioning methodology for ADB’s nonsovereign
operations to a risk-based model. The assessment applies
the concept of expected loss to establish loss provision
and loss reserve, similar to the concept applied to ADB’s
sovereign operations approved in 2004. The provisioning
estimate is performed by the Risk Management Unit on a
quarterly basis.
In the revised methodology, ADB utilizes an internal
risk rating system to estimate the probability of default
based on its past loan loss experience and a variety of tools
available in the market. Loans that are considered impaired
based on the probability of default are provisioned through
the income statement. Those that are not impaired will be
provisioned through the establishment of a loss reserve in
the equity section as an allocation of net income subject
to the approval of the Board of Governors.
At 31 December 2006, ADB had 8 impaired loans
(11–2005) with principal outstanding of $35.8 million
($51.5 million–2005) in non-accrual status. Of this re-
duction, $19.4 million was the result of write-off due to
foreclosure of three nonsovereign loans. Total provision
for loan losses at 31 December 2006 was $28.3 million
($79.5 million–2005). The decrease in provision for loan
losses was mainly a result of the revised provisioning esti-
mate for the nonsovereign loans ($28.2 million) and the
foreclosure of three nonsovereign loans ($18.5 million).
At 31 December 2006, based on the revised provision-
ing methodology, management’s estimate of the loan loss
reserve for nonsovereign operations is $30.5 million. This
will be established as an allocation of net income subject
to the approval of the Board of Governors.
SPECIAL FUNDS
ADB is authorized by its Charter to establish and administer
special funds. These are the Asian Development Fund;
Technical Assistance Special Fund; Japan Special Fund, includ-
ing the Asian Currency Crisis Support Facility; ADB Institute
Special Fund; the Asian Tsunami Fund; and the Pakistan
Earthquake Fund. Financial statements for each fund are
prepared in accordance with generally accepted accounting
19
 principles except for ADF’s which are special purpose financial
DISCUSSION AND ANALYSIS
statements prepared in accordance with ADF Regulations.
MANAGEMENT’S
ASIAN DEVELOPMENT FUND
The ADF is ADB’s concessional financing window for
developing member countries with low per capita gross
national product and limited debt repayment capacity. It
is the only multilateral source of concessional assistance
dedicated exclusively to reducing poverty and to improv-
ing the quality of life in Asia and the Pacific. Thirty donor
members (regional and nonregional) have contributed to
the Fund.
Contributed Resources. During the eighth
replenishment of the ADF (ADF IX), donors recom-
mended a replenishment of $7.0 billion, consisting
of $3.3 billion in new contributions from donors
and $3.7 billion from internal resources based on
the exchange rate specified in the Resolution of the
Board of Governors. ADF IX, which covers the 4-year
period from 2005 to 2008, became effective in April
2005 after instruments of contribution deposited with
ADB for unqualified contribution exceeded 50% of all
pledged contributions. As of 31 December 2006, 27
donors submitted their Instruments of Contribution to
ADF IX totaling $3.2 billion5. In addition, two new ADB
members, Brunei Darussalam and Ireland, have pledged
to contribute to ADF IX, with an advance payment of
Euro 11.55 million from Ireland prior to depositing the
instrument of contribution. As of 31 December 2006,
donors have deposited installment payments totaling
TABLE 13 ADF Commitment Authority a
($ million)
2006
Carryover from ADF VIII b
120.9
ADF IX Contributionsc 1,292.9
ADF VIII Contributions 157.8
OCR Net Income Transfer 80.0
Loans Savings and Cancellation 316.5
Expanded Advance Commitment Authority 1,893.2
Provision for Disbursement Risk (120.1)
Total ADF IX Commitment Authority 3,741.4
Loans and Grants Committed (3,240.3)
ADF Commitment Authority
Available for Future Commitments 501.1
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
rates.
c Contributions received to finance forgone interest of grants are excluded as
they have been incorporated as cash inflows in the computation of Expanded
Advance Commitment Authority.
Note: Total may not add due to rounding.
20
$1,462.5 5 million that include $1,292.9 million for
ADF operations, $97.8 million for Technical Assistance
Special Fund, and $71.8 million for financing forgone
interest of grants. The remaining unpaid contributions
under ADF VIII amounted to $164.85 million as of 31
December 2006. (For details of amounts released for
operational commitment in 2006, see the column la-
beled “Addition” in Statistical Annex 23.)
In May 2006, the Board of Governors approved the
transfer of $40 million to ADF as part of OCR’s net in-
come allocation ($40 million–2005). In addition, a total
of $316.5 million from loan savings and cancellations
have been included in the commitment authority for
2006, resulting from management’s continuous assess-
ment of opportunities for freeing committed resources
through cancellations of unused loan balances. During
2006, promissory notes totaling $980.0 million5 have
been encashed, $57.0 million of which was transferred
to the Technical Assistance Special Fund.
Currency Management. Effective 1 January 2006,
the new currency management framework for ADF,
which was approved by the Board of Directors in October
2005, was implemented. Under this new framework,
the practice of managing ADF resources in as many as
15 currencies was discontinued, and an approach based
on special drawing rights basket of currencies was
introduced. While ADF donor contributions continue
to be made in national currencies, US dollar or special
drawing rights, conversion of these contributions, along
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
drawing rights.
2005 ADF Loan Approvals, Disbursements, and
114.9 Repayments. In 2006, 45 ADF loans totaling $1.3
497.6 billion were approved compared with 40 loans total-
151.8
ing $1.4 billion in 2005. Disbursements during 2006
40.0
− totaled $1.3 billion, an increase of 7.3% from $1.2
899.3 billion in 2005. At the end of the year, cumulative
( 44.8)
disbursements from ADF resources were $23.5 billion.
1,658.8
(1,619.0) Loan repayments during the year amounted to $468.4
million. At year-end, outstanding ADF loans amounted
39.8 to $21.5 billion.
Status of Loans. At the end of the year, 28 sover-
eign loans to Myanmar ($462.8 million) and 5 sovereign
loans to the Republic of Marshall Islands ($25.1 million)
5 US dollar equivalent at 31 December 2006 exchange rates.
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

DISCUSSION AND ANALYSIS

Investment Portfolio Position. The ADF invest- million was committed (Statistical Annex 24).

ment portfolio6 amounted to $6.4 billion at 31 December
2006 compared with $5.7 billion in 2005. About 86%
of the portfolio was invested in bank deposits, and 14%
was invested in fixed income securities. The annualized
rate of return on ADF investments in 2006 and 2005
was 4.0% and 3.4%, respectively. At the start of 2006,
ADF investments were denominated in 11 currencies
with 44% of the portfolio invested in fixed income se-
curities. As part of the implementation of the new ADF
currency management framework, substantially all of
these securities were liquidated and the underlying cur-
rencies were converted into the special drawing rights
basket of currencies.
ADF Grants. With the introduction of grant financ-
ing in ADF IX, 16 grants (19–2005) were approved in
2006 totaling $274.9 million ($246.6 million–2005),
while 22 grants (2–2005) totaling $346.5 million ($24
million –2005) became effective.
TECHNICAL ASSISTANCE
SPECIAL FUND
Review of Activities. In 2006, the Board of Governors
approved an allocation of $20 million from 2005 OCR net
income to the Technical Assistance Special Fund. With the
effectivity of the eighth replenishment of ADF (ADF IX) and
the third regularized replenishment of Technical Assistance
Special Fund, contributions of $212.6 million from 27 donors
have been committed and $98.8 million have been received.
In addition, India made a wholly untied, direct, voluntary con-
tribution amounting to Rs2.25 million ($50,000 equivalent).
MANAGEMENT’S
Operations and Resource Position. Technical as-
sistance commitments (approved and effective) increased
from $77.0 million in 2005 to $91.8 million in 2006 for
163 technical assistance projects that were made effective
during the year. In 2006, $9.4 million ($11.3 million in
2005) representing completed and canceled technical
assistance projects were written back as a reduction in
technical assistance, and the corresponding undisbursed
commitment was eliminated. Revenue from investments
increased from $7.2 million in 2005 to $11.8 million in
2006 because of higher yields in some capital markets.
As a result, the uncommitted balance available for future
commitments increased from $215.5 million in 2005 to
$220.5 million in 2006. Technical Assistance Special Fund
financed 38.2% of all technical assistance activities ap-
proved in 2006.
At the end of the year, Technical Assistance Special Fund
investments stood at $275.6 million, up by 8.4% from 2005.
Other assets—due from banks and contributors, advances to
consultants, and others—totaled $129.1 million.
JAPAN SPECIAL FUND
Review of Activities. The technical assistance grants
financed by Japan Special Fund continued to support ADB
operations aimed at reducing poverty. In March 2006,
Japan contributed ¥2.9 billion ($24.5 million equivalent) as
a regular contribution. As of 31 December 2006, Japan’s
cumulative contribution to the fund since its inception in
1988 amounted to ¥107.6 billion (about $928.7 million
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
DISCUSSION AND ANALYSIS
contributions of ¥18.1 billion ($150.8 million equivalent).
In 2006, ADB approved 64 technical assistance projects for
MANAGEMENT’S
the Japan Special Fund totaling $56.6 million inclusive of
those that were approved but not yet effective (Table 15).
The uncommitted balance including approved technical
assistance not yet effective as of 31 December 2006 was
$103.1 million (Statistical Annexes 25 and 26).
Sector Activities. In 2006, the Japan Special Fund
financed 23% of the total amount of technical assistance
that ADB approved, including 36% of the total amount of
project preparation technical assistance during the year.
The breakdown of Japan Special Fund approvals by sector
is shown in Table 15.
ADB INSTITUTE SPECIAL FUND
The costs for operating the ADB Institute are met from the
ADB Institute Special Fund which is administered by ADB in
accordance with the Statute of ADB Institute. Japan com-
mitted its 11th contribution in the amount of ¥1.34 billion
($11.3 million equivalent) in 2006. As of 31 December
2006, this had not been received and was reported as
“Due from Contributors.”
As of 31 December 2006, cumulative commitments
amounted to ¥14.4 billion (about $121.4 million equivalent)
excluding translation adjustments. Of the total contributions
received, $104.2 million had been used by the end of the year
mainly for research and capacity-building activities including
organizing symposia, forums, and trainings; preparing re-
search reports, publications, and websites; and for associated
administrative expenses. The balance of net current assets
excluding property, furniture, and equipment available for
future projects and programs was about $17.1 million.
ASIAN TSUNAMI FUND
The Asian Tsunami Fund was established on 11 February
2005 in response to the special circumstances surrounding
the developing member countries that were stricken by
the effects of the tsunami on 26 December 2004. ADB
contributed $600.0 million to the fund, of which, $50.0
million unutilized funds were transferred back to OCR,
$40.0 million in November 2005 and $10.0 million in June
2006. In addition, Australia and Luxembourg contributed
$3.8 million and $1.0 million, respectively.
Review of Activities. In 2006, one supplementary
grant amounting to $1.0 million was made effective. The
uncommitted resources of the Fund at the end of the year
amounted to $19.5 million.
22
PAKISTAN EARTHQUAKE FUND
The Pakistan Earthquake Fund was established in November
2005 in response to the special needs of Pakistan subsequent
to the earthquake on 8 October 2005. The fund is to serve
as a dedicated fund to deliver emergency grant financing
for investment projects and technical assistance to support
immediate reconstruction, rehabilitation, and associated
development activities. ADB contributed $80 million to the
fund. In addition, Australia, Finland, and Norway committed
$15.0 million, $12.3 million, and $5.0 million, respectively.
Norway’s contribution of $5.0 million was part of
the debt-for-development swap between Norway and
Pakistan, which involves the conversion of the latter’s
outstanding loan repayment obligations of up to $20.0
million equivalent into Norway’s contributions to the
Pakistan Earthquake Fund. This will be undertaken in four
equal installments of $5.0 million in 2006–2008.
Review of Activities. In 2006, one grant amounting
to $107.5 million became effective. The uncommitted
resources of the fund at the end of the year amounted to
$6.0 million.
TRUST FUNDS MANAGED BY ADB
In addition to OCR and the Special Funds, ADB also man-
ages and administers the Japan Scholarship Program, Japan
Fund for Poverty Reduction, Japan Fund for Information and
Communication Technology, and channel financing arrange-
ments of a number of trust funds provided by bilateral donors
to support technical assistance and soft components of loans.
These funds do not form part of ADB’s own resources.
JAPAN SCHOLARSHIP PROGRAM
The Japan Scholarship Program was established in 1988 to
provide an opportunity for well-qualified citizens of devel-
oping member countries to undertake postgraduate studies
in economics, management, science and technology, and
other development-related fields at selected educational
institutions in Asia and the Pacific. The Japan Scholarship
Program is funded by Japan and administered by ADB.
Currently, 20 institutions in 10 countries participate.
Between 1988 and 2006, Japan contributed $84.5
million. A total of 2,104 scholarships have been awarded
to recipients from 35 members. Recently, an average of
about 150 scholarships has been awarded each year. Of the
total, 1,739 have already completed their courses. Women
have received 686 scholarships. (www.adb.org/JSP)
GRANT COFINANCING ACTIVITIES
Official grant cofinancing plays a vital role in ADB opera-
tions, particularly in view of the continuing constraints on
Technical Assistance Special Fund and ADF resources.
These grant funds support technical assistance and finance
mostly soft components of loan projects. Most grants are
provided by bilateral donors under channel financing ar-
rangements (CFAs). ADB acts as administrator of the funds
and applies its own guidelines and procedures in recruit-
ing consultants, making disbursements, and supervising
projects.
Efforts continued to mobilize grant funds not only
from official sources but also from private sector enti-
ties. Funds mobilized from private sector entities mostly
cofinanced regional technical assistance projects in the
environment sector.
CHANNEL FINANCING ARRANGEMENTS
Under a channel financing arrangement, the donor enters
into a comprehensive agreement with ADB whereby the
donor provides an untied grant fund to be administered
by ADB, but the fund does not become part of ADB’s
own resources. The donor indicates its preferred sectors
and recipient countries. ADB regularly provides a list and
description of proposed technical assistance projects that
satisfy the donor’s preferences, and they agree on the
specific activities to be financed. Funds provided under
a channel financing arrangement are usually transferred
to an interest-bearing account and may also be invested
by ADB pending disbursement. Donors are provided with
regular financial statements and progress reports on the
use of the funds. ADB is responsible for project prepara-
tion, processing, and administration. Channel financing
arrangements may be replenished with additional funds
at the donor’s discretion.
The primary advantage of channel financing arrange-
ments is that funding for several individual technical assist-
ance projects may be provided under a single agreement.
Accordingly, they minimize the need for detailed nego-
tiations on a case-by-case basis and foster administrative
efficiency. The first channel financing arrangement was
negotiated in 1980. Since then, ADB has entered into
channel financing arrangements with the following bilat-
eral development partners: Australia, Belgium, Canada,
Denmark, Finland, France, Italy, the Netherlands, New
Zealand, Norway, the People’s Republic of China, Spain,
Sweden, Switzerland, and United Kingdom. In 2006, ADB
entered into its first channel financing arrangements with
Ireland, Korea, and Luxembourg, while a second channel
DISCUSSION AND ANALYSIS
financing arrangement was entered into with Australia
MANAGEMENT’S
for the ADB-Australia Development Partnership for South
Asia, where Australia provided a contribution of $8.5
million. ADB also entered into another channel financ-
ing arrangement with Denmark for the Second Danish
Cooperation Fund for Renewable Energy and Efficiency
in Rural Areas.
In addition to the traditional type of channel financ-
ing arrangement which may be used for several sectors,
thematic channel financing arrangements with bilateral
agencies have increased sharply in recent years in such
areas as renewable energy, climate change, poverty
reduction, governance, water, gender and development,
and poverty and environment. Several thematic channel
financing arrangements have been packaged as umbrella
facilities to allow more than one donor to contribute.
In 2006, ADB established the E-Asia and Knowledge
Partnership Fund (with Korea’s initial contribution of $20
million); Financial Sector Development Partnership Fund
(with Luxembourg’s initial contribution of $1.8 million);
Second Danish Cooperation Fund for Renewable Energy
and Efficiency in Rural Areas (with Denmark’s contribu-
tions of about $3.6 million). In addition, replenishments
were made to various existing funds: Ireland (in the
same year) provided $1.0 million each for the existing
Governance and Gender and Development Cooperation
Funds; Norway provided $4.0 million additional contribu-
tions to the Gender and Development Cooperation Fund,
and another $2.4 million to the Poverty and Environment
Fund; the Netherlands provided an additional $1.0
million to the Cooperation Fund for the Water Sector;
Canada provided about $0.2 million for its Trust Fund for
Climate Change.
NEW COFINANCING FACILITIES/
ARRANGEMENTS
New arrangements and development facilities are being
explored to expand the scope of partnership between
ADB and its financial partners. In 2006, ADB approved
an innovative Water Financing Partnership Facility aiming
to raise $100.0 million by 2008, in support of its water
financing program. Resources from the facility may be
provided for water projects through grants, concessional
loans, guarantees, or other forms of assistance under
framework agreements.
23
 The Asia Pacific Carbon Fund which was also established
DISCUSSION AND ANALYSIS
in 2006 will be managed by ADB to acquire future flows of
certified emission reduction (CER) credits on behalf of par-
MANAGEMENT’S
ticipants, in return for upfront cofinancing payments. So far,
Spain has remitted $30.0 million to this fund. Contributions
under this fund are expected to be covered by Instruments
of Contributions but the use of channel financing arrange-
ment, if preferred by a specific donor, may be allowed.
Another cofinancing collaboration arrangement con-
cluded in 2006 was with the Cities Alliance. The Cities
Alliance will approve grants based on funding applica-
tions by ADB. Under the Memorandum of Understanding
concluded with International Bank for Reconstruction
and Development and IDA, as administrator for the Cities
Alliance coalition, projects to be funded by grants from
the Cities Alliance may already be processed and admin-
istered following standard ADB procedures.
EXTERNAL CONTRIBUTIONS TO
EMERGENCY SPECIAL FUNDS
In response to the earthquake that struck Pakistan in
October 2005, the Pakistan Earthquake Fund was estab-
lished in late 2005 to mobilize funds to support immediate
reconstruction, urgent rehabilitation, and associated devel-
opment activities in Pakistan. Australia and Finland made
contributions to the fund in 2005. In 2006, Finland made
an additional 5.5 million contributions while Norway
provided an equivalent of $20.0 million contributions
through an innovative swap-for-development modality
whereby outstanding loan repayment obligations from
Pakistan to Norway will be converted into a grant.
ARRANGEMENTS TO SIMPLIFY
DOCUMENTATION AND
NEGOTIATIONS FOR COFINANCING
COLLABORATIONS
In 2002, a General Operational Arrangement on Cofinancing
was entered into with the Netherlands to simplify the nego-
tiation and finalization of cofinancing documentation and
requirements. In 2006, ADB entered into a similar arrangement
with Sweden whereby a Framework Agreement on Operational
Arrangement was signed between Sweden and ADB.
24
JAPAN FUND FOR POVERTY
REDUCTION
The Japan Fund for Poverty Reduction was established in
May 2000 as a trust fund to support poverty reduction
and social development activities that can add substantial
value to ADB projects. Since 2000, Japan has contributed
$360.4 million in total. To date, $244.3 million for 90
projects has been approved, of which 18 projects valued
at $69.9 million were approved in 2006. This includes two
projects amounting to $3.5 million that were cancelled in
2006 (www.adb.org/JFPR; Statistical Annex 27). A number
of projects have been completed, and these have been
the subject of knowledge-sharing sessions organized by
the Office of Cofinancing Operations. The Operations
Evaluation Department will evaluate the Japan Fund for
Poverty Reduction in 2007.
JAPAN FUND FOR INFORMATION
AND COMMUNICATION
TECHNOLOGY
The Japan Fund for Information and Communication
Technology was established in July 2001 to assist devel-
oping member countries bridge the digital divide to help
reduce poverty. The fund had an initial contribution of
¥1.3 billion (about $10.7 million) for a 3-year period.
While the fund has been fully committed, most of the
projects are still under implementation and the Office of
Cofinancing Operations continues to provide administra-
tive support. Two projects totaling $0.97 million were
approved in 2006, bringing total commitments to $10.4
million.
JAPAN FUND FOR PUBLIC POLICY
TRAINING
The Japan Fund for Public Policy Training was established
in March 2004 as a trust fund to enhance developing
member countries’ capacity building for public policy
management focusing on regional economies in transi-
tion. Since its inception, Japan has contributed about
$22.0 million in total, out of which, $2.4 million had been
spent on program support.
 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.

PricewaterhouseCoopers
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
FINANCIAL STATEMENTS

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
ASIAN DEVELOPMENT BANK­—ORDINARY CAPITAL RESOURCES
BALANCE SHEET
31 December 2004 and 2003
Expressed in Thousands of United States Dollars (Note B)

LIABILITIES, CAPITAL, AND RESERVES

FINANCIAL STATEMENTS
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
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF INCOME AND EXPENSES
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS

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

The accompanying notes are an integral part of these financial statements (OCR-8).

28
 OCR-3
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES

FINANCIAL STATEMENTS
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.
The accompanying notes are an integral part of these financial statements (OCR-8).
29
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF CHANGES IN CAPITAL AND RESERVES
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Notes B and K)

Cumulative Accumulated
FINANCIAL STATEMENTS

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
Change in SDR value of
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) –
Allocation of 2004 net income
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

FINANCIAL STATEMENTS
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
Comprehensive income
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) –
Change in SDR value of
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
Change in SDR value of
capital transferred to
Asian Development Fund (3,577) (3,577)
Change in notional maintenance
of value (Note K) (86,794) (86,794)
Allocation of 2005 net income
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)

For the Years Ended 31 December 2006 and 2005
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)

The accompanying notes are an integral part of these financial statements (OCR-8).

31
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
SUMMARY STATEMENT OF LOANS
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

Undisbursed Loans
Loans Balances of Not Yet Total Percent of
Borrowers/Guarantors Outstanding1 Effective Loans2 Effective Loans Total Loans
FINANCIAL STATEMENTS

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

FINANCIAL STATEMENTS

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

ASIAN DEVELOPMENT BANK­—ORDINARY CAPITAL RESOURCES
SUMMARY STATEMENT OF BORROWINGS
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

Borrowings Swap Arrangements2

Principal Outstanding1 Payable (Receivable)3
FINANCIAL STATEMENTS

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

Twelve Months Five Years
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

FINANCIAL STATEMENTS
$    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

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER
31 December 2006
Expressed in Thousands of United States Dollars (Note B)
SUBSCRIBED CAPITAL VOTING POWER
Number of Percent Par Value of Shares Number of Percent
FINANCIAL STATEMENTS

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

FINANCIAL STATEMENTS
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.

The accompanying notes are an integral part of these financial statements (OCR-8).

37

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS AND LIMITATIONS Article 12, paragraph 3 of the Charter provides
ON LOANS, GUARANTEES AND EQUITY
FINANCIAL STATEMENTS
INVESTMENTS
Nature of Operations
The Asian Development Bank (ADB), a multilateral develop-
ment finance institution, was established in 1966 with its
headquarters in Manila, Philippines. ADB and its operations
are governed by the Agreement Establishing the Asian
Development Bank (the Charter). Its purpose is to foster
economic development and co-operation in the Asian
and Pacific region and to contribute to the acceleration of
the process of economic development of the developing
member countries (DMCs) in the region, collectively and
individually. With the adoption of its poverty reduction
strategy at the end of 1999, ADB made reducing poverty
in the region its main goal. ADB provides financial and
technical assistance (TA) for projects and programs, which
will contribute to achieving this purpose.
Mobilizing financial resources, including cofinanc-
ing, is an integral part of ADB's operational activities. In
addition, ADB, alone or jointly, administers on behalf of
donors, including members, their agencies and other de-
velopment institutions, funds restricted for specific uses,
which include TA grants as well as regional programs.
ADB's ordinary operations comprise loans, equity
investments, and guarantees. During the years 2001 and
2002, limited technical assistance to member countries
to support high priority TA programs was included. ADB
finances its ordinary operations through borrowings,
paid-in capital, and reserves.
Limitations on Loans, Guarantees, and
Equity Investments
Article 12, paragraph 1 of the Charter provides that the
total amount outstanding of loans, equity investments,
and guarantees made by ADB shall not exceed the total of
ADB's unimpaired subscribed capital, reserves, and surplus,
exclusive of the special reserve. At 31 December 2006, the
total of such loans, equity investments, and guarantees
aggregated approximately 71.1% (68.3% – 2005) of the
total subscribed capital, reserves, and surplus as defined.
38
OCR-8
that equity investments shall not exceed 10% of the
unimpaired paid-in capital together with reserves and
surplus, exclusive of the special reserve. At 31 December
2006, such equity investments represented approximately
7.7% (5.6% – 2005) of the paid-in capital, reserves, and
surplus, as defined.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Functional Currencies and Reporting Currency
The currencies of members are all functional currencies
as these are the currencies of the primary economic
environment in which ADB generates and expends cash.
The reporting currency is the United States dollar (USD),
and the financial statements are expressed in thousands
of current United States dollars.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
purposes. This allows transactions in currencies other
than USD to be translated to the reporting currency using
exchange rates applicable at the time of transactions. At
the end of each accounting month, translation of assets,
liabilities, capital, and reserves denominated in non-USD
are adjusted using the applicable rates of exchange at the
end of the reporting period. These translation adjustments,
other than those relating to the non-functional currencies
(Note M) and to the maintenance of Special Drawing Right
(SDR) capital values (Notes K and L), are charged or credited
to “Accumulated translation adjustments” and reported in
“CAPITAL AND RESERVES” as part of “Accumulated other
comprehensive income.”
Valuation of Capital Stock
The authorized capital stock of ADB is defined in Article
4, paragraph 1 of the Charter "in terms of United States
dollars of the weight and fineness in effect on 31 January
1966" (the 1966 dollar) and the value of each share is

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
defined as 10,000 1966 dollars. The capital stock had
historically been translated into the current United States
dollar (ADB's 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 this basis was $1.20635 per 1966 dollar.
Since 1 April 1978, at which time the Second Amendment
to the Articles of Agreement of the International Monetary
Fund (IMF) came into effect, currencies no longer have par
values in terms of gold. Pending ADB's selection of the
appropriate successor to the 1966 dollar, the capital stock
has been valued for purposes of these financial statements
in terms of the SDR at the value in current United States
dollars as computed by the IMF, with each share valued at
SDR10,000.
As of 31 December 2006, the value of the SDR in
terms of the current United States dollar was $1.5044
($1.42927 – 2005) giving a value for each share of ADB's
capital equivalent to $15,044.00 ($14,292.70 – 2005).
However, ADB could decide to fix the value of each share
at $12,063.50 based on the 31 March 1978 par value of
the United States dollar in terms of gold.
Derivative Financial Instruments
Effective 1 January 2001, ADB reported all derivative
transactions in accordance with Statement of Financial
Accounting Standards (FAS) No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” along
with its amendments, collectively referred as FAS 133. FAS
133 requires that derivative instruments be recorded in
the Balance Sheet as either assets or liabilities measured
at fair value. The initial application of FAS 133 gave rise to
a transition loss of $81,657,000 in other comprehensive
income and a gain of $34,656,000 was reported in net
income. The amount recorded in other comprehensive
income as transition loss is being reclassified into earnings
in the same period or periods in which the underlying
transactions affect earnings.
In applying FAS 133 for purposes of financial state-
ment reporting, ADB has elected not to define any qualifying
hedging relationships. Rather, all derivative instruments,
as defined by FAS 133, have been marked to fair value,
and all changes in fair value have been recognized in net
income. ADB has elected not to define any qualifying
OCR-8
CONTINUED
hedging relationships, not because economic hedges do
not exist, but rather because the application of FAS 133
FINANCIAL STATEMENTS
hedging criteria does not make fully evident ADB’s risk
management strategies.
In February 2006, the Financial Accounting Standards
Board issued FAS 155, “Accounting for Certain Hybrid
Financial Instruments, an amendment of FASB Statements
No. 133 and 140.” ADB has decided to early adopt the
provisions which allow hybrid financial instruments that
contain embedded derivatives requiring bifurcation under
FAS 133 to be measured at fair value, effective 1 January
2006. With this, FAS 133 as presented in ADB’s financial
statements incorporates the provisions of FAS 155.
ADB issues hybrid instruments, i.e. structured debts,
to lower its cost of borrowings, which are generally fully
hedged through derivative transactions. However, this
hedging relationship is not fully captured in the financial
statements, because under FAS 133, the derivative transac-
tions and the embedded derivatives of the hybrid instru-
ments are required to be measured at fair value, while
the contractual debts are reported at their carrying value.
This asymmetric treatment of the fair value measurement
has caused undue volatility in net income.
With the adoption of FAS 155, ADB measures and
reports any of its qualified bifurcable structured debts and
their corresponding derivatives at fair value with changes
in fair value recognized in net income. This consistent
accounting treatment would fully capture the economic
hedging relationship between the hybrid instruments
and their derivatives. The cumulative effects of FAS 155,
upon its adoption on 1 January 2006, are reported as
net increase in Ordinary Reserves, Cumulative Revaluation
Adjustments, and net Accumulated Other Comprehensive
Income of $118,571,000, comprising of gross gains and
losses of $126,276,000 and $7,705,000, respectively.
Investments
All investment securities and negotiable certificate of
deposits held by ADB other than derivative instruments
are considered by Management to be “Available for Sale”
and are reported at estimated fair value, which represents
their fair market value. Time deposits are reported at cost,
which is a reasonable estimate of fair value. Unrealized
39

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
gains and losses are reported in "CAPITAL AND RESERVES"
as part of “Accumulated other comprehensive income.”
FINANCIAL STATEMENTS
Realized gains and losses are included in income from
investments and are measured by the difference between
amortized cost and the net proceeds of sales. With respect
to exchange traded futures, realized gains or losses are re-
ported based on daily settlement of the net cash margin.
Interest income on investment securities and time
deposits is recognized as realized and reported, net of
amortizations of premiums and discounts.
Securities Transferred Under Securities Lending
Arrangement and Securities Purchased Under
Resale Arrangement
ADB accounts for transfers of financial assets in accordance
with FAS 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a re-
placement of FAS 125." In general, transfers are accounted
for as sales when control over the transferred assets has
been relinquished. Otherwise the transfers are accounted
for as repurchase/resale agreements and collateralized
financing arrangements. Securities transferred under se-
curities lending arrangements are recorded as assets and
reported at estimated fair value and the cash collateral
received is recorded as a liability. Securities received under
resale arrangements are not recorded on ADB’s balance
sheet and are not re-pledged under securities lending
arrangements. ADB monitors the fair value of the securi-
ties received under resale arrangements, and if necessary,
requires additional collateral.
Loans
ADB's loans are made to or guaranteed by members, with
the exception of nonsovereign loans, and have maturities
ranging between 3 and 30 years. ADB requires its borrow-
ers to absorb exchange risks attributable to fluctuations in
the value of the currencies which it has disbursed. Loan
interest income and loan commitment fees are recognized
on accrual basis. In line with ADB's principle of cost pass
through pricing, any variation in the actual cost of bor-
rowings is passed to LIBOR-based borrowers as surcharge
or rebate.
40
OCR-8
It is the policy of ADB to place loans in non-accrual
status for which principal, interest, or other charges are
overdue by six months. Interest and other charges on
non-accruing loans are included in income only to the
extent that payments have been received by ADB. ADB
maintains a position of not taking part in debt resched-
uling agreements with respect to sovereign loans. In
the case of nonsovereign loans, ADB may agree to debt
rescheduling only after alternative courses of action have
been exhausted.
ADB determines that a loan is impaired and there-
fore subject to provisioning when principal or interest is
in arrears for one year for sovereign loans (unless there is
clear and convincing evidence warranting the deferment
or acceleration of such provisioning) and six months for
nonsovereign loans. If the present value of expected future
cash flows discounted at the loan’s effective interest rate
is less than the carrying value of the loan, a valuation
allowance is established with a corresponding charge to
provision for loan losses.
ADB’s periodic evaluation of the adequacy of the
provision for loan losses is based on its past loan loss
experience, known and inherent risks in existing loans,
and adverse situations that may affect a borrower’s abil-
ity to repay.
In December 2006, the Board approved the appli-
cation of the concept of expected loss for nonsovereign
credit exposure to establish loss provision and loss reserve,
the same concept that was applied to sovereign opera-
tions in 2004. In line with generally accepted accounting
principles, the amount of expected loss pertaining to
credit exposures that are impaired and rated substandard
or worse is charged to the income statement, following
the discounted cash flow method described above, while
those that are better are recorded as loss reserve in the
equity section of the balance sheet. The implementation
resulted to a decrease of $28,218,000 to the provision
for losses of nonsovereign loans, with the corresponding
decrease to the expense account. Any adjustment to loan
loss reserve following this new methodology is subject to
the approval of the Board of Governors.
Effective 2000, ADB levies front-end fees on all new
sovereign loans. These fees are deferred and amortized
over the life of the loans after offsetting deferred direct

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
loan origination costs. In 2004, ADB waived the entire
front-end fee on all new sovereign loans approved during
the year. Subsequently, the policy was extended to cover
the period up to June 2007.
ADB levies a commitment charge on the undisbursed
balance of effective loans. Unless otherwise provided by
the loan agreement, the charges take effect commenc-
ing on the 60th day after the loan signing date and are
credited to loan income.
Guarantees
ADB extends guarantees to sovereign and nonsovereign
borrowers. Guarantees are regarded as outstanding
when the underlying financial obligation of the borrower
is incurred. ADB would be required to perform under its
guarantees if the payments guaranteed were not made by
the debtor, and the guaranteed party called the guarantee
by demanding payments from ADB in accordance with the
term of the guarantee.
Prior to 1 January 2003, guarantees in the absence
of any call, were not reflected in the financial statements
but disclosed as a note to the financial statements (Note
F) in accordance with the provisions of FASB No. 5, Ac-
counting for Contingencies. FASB Interpretation No. 45
(FIN 45), “Guarantor’s Accounting and Disclosure Require-
ments for Guarantees, Including Indirect Guarantees of
Indebtedness to Others,” which came into effect in 2003,
requires the recognition of two types of liabilities that are
associated with guarantees: (a) the stand-by ready obli-
gation to perform, and (b) the contingent liability. ADB
recognizes at the inception of a guarantee, a liability for
the stand-by ready obligation to perform on guarantees
issued and modified after 31 December 2002. The liability
is included in “Miscellaneous liabilities.”
Front-end fee income on guarantees received is de-
ferred and amortized over the term of the guarantee contract
and the unamortized balance of deferred front-end fee of
guarantee is included in “Miscellaneous liabilities.”
Equity Investments
All equity investments are considered as “Available for
Sale” and are reported at estimated fair value.
OCR-8
CONTINUED
Investments in equity securities with readily de-
terminable market price are reported at fair value, with
FINANCIAL STATEMENTS
unrealized gains and losses excluded from net income
and reported in “CAPITAL AND RESERVES” as part of
“Accumulated other comprehensive income.”
Investments in equity securities without readily de-
terminable fair values are reported at cost or at impaired
value, for investments where the impairment is deemed
other than temporary. These investments are assessed
each quarter to reflect the amount that can be realized
using valuation techniques appropriate to the market and
industry of each investment. To the extent that the fair
values of these investments are below the base cost, the
amount of expected loss is charged to loss reserve in the
equity section of the balance sheet. When impairment
is identified and is deemed to be other than temporary,
the equity investment is written down to the impaired
value, which becomes the new cost basis of the equity
investments. Impairment losses are not reversed for sub-
sequent recoveries in the value of the equity investments,
until it is sold.
ADB applies the equity method of accounting to
investments where ADB has the ability to exercise signifi-
cant influence, limited partnerships (LLPs) with larger than
3% ownership, and to certain limited liability companies
(LLCs) that maintain a specific ownership account for
each investor.
Variable Interest Entities
In January 2003, FASB issued FIN 46, “Consolidation of
Variable Interest Entities – an interpretation of ARB No.
51, Consolidated Financial Statements.” FIN 46 requires
an entity to consolidate and provide disclosures for any
Variable Interest Entities (VIE) for which it is the primary
beneficiary. An entity that will absorb a majority of VIE’s
expected losses or receive a majority of expected residual
return is deemed to be the primary beneficiary of the VIE.
Variable interests can arise from equity investments, loans,
and guarantees. ADB is required to disclose information
about its involvement in VIE where ADB holds significant
variable interest (Note S).
41

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Property, Furniture, and Equipment
FINANCIAL STATEMENTS
Property, furniture, and equipment are stated at cost and,
except for land, depreciated over estimated useful lives
on a straight-line basis. Maintenance, repairs, and minor
betterments are charged to expense.
Borrowings
Borrowings are generally reported on the balance sheet at
their carrying book value, adjusted for any unamortized
discounts or premium. As part of its borrowing strategy,
ADB issues various types of contractual obligations, which
include structured debts containing embedded derivatives
in order to minimize the cost of borrowings. ADB simulta-
neously enters into currency and/or interest rate swaps to
fully hedge the debt.
Upon the adoption of FAS 155 on 1 January 2006,
ADB no longer bifurcates and fair values the embedded
derivatives (the debt was valued at its carrying book value)
in the structured debt portfolio that meet the bifurcation
criteria under FAS 133. Instead, ADB measures and reports
at fair value any structured debt that contains embedded
derivatives that would otherwise be bifurcated under FAS
133, with changes in fair value reported in net income.
Accounting Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the end
of the year and the reported amounts of revenues and
expenses during the year. The actual results could differ
from those estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
42
OCR-8
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation. The standard did not impact
ADB’s financial statements as of 31 December 2006 in
relation to the adoption of FAS 155 and FAS 158 since
both pronouncements provided specific provisions for the
transition.
In February 2006, the Financial Accounting Standards
Board issued FAS 155, “Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133
and 140,” which is effective for all financial instruments
acquired or issued after September 15, 2006. This allows
financial instruments that contain embedded derivatives
requiring bifurcation under FAS 133 to be reported at fair
value. ADB opted to early adopt FAS 155 effective 01 January
2006 and the cumulative effect of adopting the new policy
is an increase in equity of $118,571,000.
In September 2006, FASB issued FAS 157, “Fair Value
Measurements.” This statement emphasizes the definition
of fair value (FV) for financial reporting purposes to mean a
market-based measure and not an entity-specific measure.
It also prescribes methods for measuring FV including a FV
hierarchy that ranks the quality and reliability of informa-
tion used in FV measurements giving the highest priority to
quoted prices in active markets and the lowest to unobserv-
able 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 issued after 31
December 2007.
Also in September 2006, FASB issued FAS 158, “Em-
ployers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R).” This statement improves
financial reporting by requiring an employer to recognize
the overfunded or underfunded status of a defined benefit
postretirement plan as an asset or liability in its statement of
financial position and to recognize changes in that funded
status in the year in which the changes occur through
comprehensive income of a business entity. This statement
also improves financial reporting by requiring an employer
to measure the funded status of a plan as of the date of its
year-end statement of financial position, with limited excep-

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
tions. Although ADB, being an employer without publicly
traded equity securities, is not required to adopt this until
the end of the fiscal year ending after June 15, 2007, ADB
opted to early adopt FAS 158 for the fiscal year ended 31
December 2006 (Note O).
In December 2006, the Board of Directors approved the
paper on “Review of Loss Provisioning Policy for Nonsover-
eign Operations.” This paper reviews ADB’s loss provisioning
policy for private sector operations, and proposes a revision
to the provisioning policy for all nonsovereign operations
of OCR. These operations include loans, guarantees, equity
investments, and other interventions that are not guaranteed
by a sovereign, and that do not allow ADB to accelerate
repayments upon default of any other loan or guarantee
between ADB and that sovereign. This revision brought
about changes to the current loss provision estimates, which
resulted in the release of $33,532,000 provision for losses
to 2006 net income. This will also bring about the estab-
lishment of loan loss reserve for nonsovereign operations,
as an allocation of net income subject to the approval of
the Board of Governors, which management estimates to
be $30,500,000.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments that
may be carried at fair value. It offers an irrevocable option
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.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, ADB
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."
Reclassification
Certain reclassifications of prior year’s amounts and infor-
mation have been made to conform to the current year’s
presentation. These include the reclassification of exchange
gain from translation of non-functional currencies from
“Revenue from Other Sources – net” to “Net Unrealized
OCR-8
CONTINUED
Losses” in the Statement of Income and Expenses
(OCR-2), and the reporting of “Comprehensive income for
FINANCIAL STATEMENTS
the year” in the Statement of Changes in Capital and Reserves
(OCR-4) to present it gross of the appropriation of guaran-
tee fees, which was reported as a separate line item.
NOTE C—RESTRICTIONS ON USE OF CURRENCIES
AND DEMAND OBLIGATIONS OF MEMBERS
In accordance with Article 24, paragraph 2(i) of the Charter,
the use by ADB or by any recipient from ADB of certain
currencies may be restricted by members to payments for
goods or services produced and intended for use in their
territories. With respect to the currencies of 44 DMCs for
2006 (42 – 2005), cash in banks (due from banks) and
demand obligations totaling $63,381,000 ($51,124,000
– 2005) and $172,396,000 ($170,856,000 – 2005),
­respectively, may be, but are not currently so restricted.
In accordance with Article 24, paragraphs 2(i) and
(ii) of the Charter, one member (one – 2005) has re-
stricted the use by ADB or by any recipient from ADB of
its currency to payments for goods or services produced
in its territory. As such, cash in banks (due from banks)
and investments totaling $20,000 ($19,000 – 2005) and
$2,965,000 ($2,824,000 – 2005), respectively, have been
restricted. None of the demand obligations held by ADB
in 2006 was restricted (nil – 2005).
NOTE D—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
approved by the Board of Directors in 1999, and reviewed
in 2006. The review endorsed a portfolio strategy that is
largely consistent with the 1999 approach. ADB is restricted
by its Investment Authority to invest in government and
government-related debt instruments and in time deposits.
In the US dollar portfolio only and up to limited amounts,
investments may be made in corporate bonds rated A or
better, AAA-rated asset-backed securities, and AAA-rated
mortgage-backed securities. Securities may be lent and
borrowed.
43

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
In addition, ADB may purchase and sell exchange
traded financial futures and option contracts, and enter
FINANCIAL STATEMENTS
into currency and interest rate swaps, and forward rate
agreements. Exposure to interest rate risk may be adjusted
within defined bands to reflect changing market condi-
tions. These adjustments are made through the purchase
and sale of securities, and financial futures. Accordingly,
financial futures are held for risk management purposes. At
31 December 2006, the notional amount of outstanding
purchase and sales futures contracts were $115,700,000
and $31,700,000, respectively, ($103,750,000 and
$27,700,000 – 2005).
Included in “Other securities” as of 31 December
2006 were corporate bonds and other obligations of banks
amounting to $2,896,471,000 ($2,653,610,000 – 2005)
and asset/mortgage-backed securities of $735,709,000
($716,429,000 – 2005).
The currency compositions of the investment portfolio
as of 31 December 2006 and 2005 expressed in United
States dollars are as follows:
Currency 2006 2005
Australian dollar $   396,798,000 $   351,594,000
Canadian dollar 239,893,000 232,121,000
Euro 734,178,000 656,701,000
Japanese yen 1,621,421,000 2,765,649,000
Pound sterling 286,273,000 254,016,000
Swiss franc 250,470,000 224,222,000
United States dollar 8,755,071,000 6,071,043,000
Others 480,328,000 557,411,000
Total $12,764,432,000 $11,112,757,000
The estimated fair value and amortized cost of the
investments by contractual maturity at 31 December 2006
are as follows:
Estimated Amortized
Fair Value Cost
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
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
Total $12,764,432,000 $12,806,433,000
44
OCR-8
Additional information relating to investments in
government and government-guaranteed obligations
and other securities are as follows:
2006 2005
As of 31 December:
Amortized cost $6,668,502,000 $   7,448,978,000
Estimated fair value 6,626,502,000 7,404,944,000
Gross unrealized gains 11,870,000 13,214,000
Gross unrealized losses (53,870,000) (57,248,000)
For the years ended
31 December:
Change in net unrealized
gains (losses) from
prior year 2,034,000 (33,165,000)
Proceeds from sales 3,082,284,000 11,265,412,000
Gross gain on sales 8,404,000 18,941,000
Gross loss on sales (75,151,000) (21,025,000)
As of 31 December 2006, gross unrealized losses
amounted to $53,870,000 ($57,248,000 – 2005) from
government and government-guaranteed obligations,
corporate bonds and mortgage/asset-backed securities,
resulting from the market movement. There were 27
government and government-guaranteed obligations
(16 – 2005), 39 corporate obligations (52 – 2005), 217
mortgage/asset-backed security positions (78 – 2005)
that sustained unrealized losses for over one year, rep-
resenting 10.87% (12.05% – 2005) of the investments.
Comparative details for 2006 and 2005 are shown on
the next page.
Asset/Mortgage-backed Securities: Asset/Mortgage-
backed securities are instruments whose cash flow is
based on the cash flows of a pool of underlying assets or
mortgage loans managed by a trust.
Exchange Traded Futures: Futures are contracts for de-
layed delivery of securities or money market instruments in
which the seller agrees to make delivery at a specified future
Initial margin requirements are met with cash or securities,
in cash. ADB generally closes out open positions prior to
maturity. Therefore, cash receipts or payments are limited
to the change in market value of the future contracts.
 OCR-8
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005 CONTINUED

One year or less Over one year Total

For the year 2006 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses

FINANCIAL STATEMENTS
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

One year or less Over one year Total

For the year 2005 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses

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

Loans
ADB does not currently sell its loans, nor does it believe
there is a comparable market for its loans. The estimated
fair value of all loans is based on the estimated cash
flows from principal repayments, interest and other
for ADB’s borrowing cost plus lending spread. The es-
timated fair value of sovereign loans is not generally
affected by credit risks based on ADB’s experience with
its borrowers.
The carrying amount and estimated fair value of
loans outstanding at 31 December 2006 and 2005 are
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
based on a multicurrency fixed lending rate system under
which loans carried interest rates fixed at the time of loan
approval for the entire life of the loans. Effective 1 July
1986, ADB adopted a multicurrency pool-based variable
lending rate system. In addition, in July 1992, ADB intro-
duced a United States dollar pool-based variable lending
rate system, and in November 1994, a market-based lending
rate system was made available to financial intermediaries
of sovereign and nonsovereign borrowers.
Commencing 1 July 2001, ADB offered LIBOR-based
loans (LBLs) in the following currencies – Euro, Japanese yen,

45

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
and United States dollar. The new LBL lending facility offers
borrowers the flexibility of (i) choice of currency and interest
FINANCIAL STATEMENTS
rate basis; (ii) options to link repayment schedules to actual
disbursements for financial intermediary borrowers; (iii) change
the original loan terms (currency and interest rate basis) at
any time during the life of the loan; and (iv) options to cap
or collar the floating lending rate at any time during the life
of the loan. LBL terms are available for all loans for which the
invitation to negotiate is issued on or after 1 July 2001. With
the introduction of LBLs, all other loan windows are no longer
offered to borrowers. In November 2002, ADB offered local
currency loans (LCLs) to nonsovereign borrowers. In August
2005, ADB also offered LCLs to sovereign borrowers.
In 2006, ADB received prepayments for 24 loans (12
loans – 2005) amounting to $460,314,000 ($597,423,000
– 2005) and collected prepayment premiums of $7,236,000
($16,457,000 – 2005) which have been included in "Other
income from loans.” Eighty-four percent of the prepaid
amounts in 2006 were pool-based single currency US dollar
and Japanese Yen loans and fixed rate multicurrency loans
compared to 95% for pool-based single currency US dollar
loans in 2005.
Lending Spread and Front-End Fee
Since 1988, ADB has charged front-end fees for non-
sovereign loans. Effective 1 January 2000, ADB levies
front-end fee of 1% for sovereign loans for which the loan
negotiations are completed after that date. In addition,
a flat commitment fee of 0.75% is charged for new pro-
gram loans and a progressive commitment fee of 0.75%
is maintained for project loans. Effective 1 January 2000,
the lending spread applied to all outstanding pool-based
sovereign loans and new sovereign market-based loans
was increased from 0.4% to 0.6%.
In 2004, the Board of Governors approved the waiver
of the entire 1% front-end fee on all new sovereign loans
approved during 1 January 2004 to 30 June 2005 (waiver
of 50 basis points on sovereign loans approved in 2003)
and waiver of 20 basis points of the lending spread on
sovereign loans outstanding from 1 July 2004 – 30 June
2005 for borrowers that do not have loans in arrears.
Subsequently, the policy was extended to cover the period
up to June 2007.
46
OCR-8
The front-end fees received for the year ended 31
December 2006 were $4,293,000 ($11,714,000 – 2005).
Administrative expenses relating to direct loan origination
of $28,434,000 for the year ended 31 December 2006
($24,481,000 – 2005) were deferred and offset against
front-end fees earned. The excess, if any, is amortized
over the life of each loan.
Undisbursed loan commitments and an analysis of
loans by borrowing member countries as of 31 December
2006 are shown in OCR-5. The carrying amounts of loan
outstanding by loan products at 31 December 2006 and
2005 are as follows:
2006 2005
Sovereign Loans
Fixed rate multicurrency loans $      27,377,000 $    148,881,000
Pool-based single currency
(JPY) loans 3,367,414,000 3,889,612,000
Pool-based single currency
(US$) loans 8,219,478,000 8,933,196,000
LIBOR-based loans 13,694,950,000 9,960,837,000
25,309,219,000 22,932,526,000
Less: Provision for loan losses (6,116,000) (2,300,000)
Unamortized direct loan
origination cost
(front-end fee) 17,656,000 (9,255,000)
11,540,000 (11,555,000)
Sub-total 25,320,759,000 22,920,971,000
Nonsovereign Loans
Pool-based single currency
(JPY) loans 2,611,000 5,282,000
Fixed rate loans 22,269,000 51,150,000
LIBOR-based loans 734,744,000 469,539,000
Local currency loans 122,887,000 110,833,000
882,511,000 636,804,000
Less: Provision for loan losses (22,223,000) (77,164,000)
Unamortized front-end fee (3,641,000) (1,822,000)
(25,864,000) (78,986,000)
Sub-total 856,647,000 557,818,000
Total $26,177,406,000 $23,478,789,000
Loans in Non-accrual Status
Two sovereign loans were in non-accrual status as of 31
December 2006 (one – 2005). The principal outstanding at
that date was $6,116,000 ($2,300,000 – 2005) of which
 OCR-8
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005 CONTINUED

$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
loans for the year ended 31 December 2006. The accumu-
lated interest and other charges on these loans that were
not recognized as income as of 31 December 2006 totaled
$1,158,000 ($846,000 – 2005).
Six nonsovereign loans were in non-accrual status
as of 31 December 2006 (ten – 2005). The principal
outstanding at that date was $29,741,000 ($49,162,000
– 2005) of which $21,820,000 ($40,585,000 – 2005) was
overdue. Loans in non-accrual status resulted in $7,784,000
($11,096,000 – 2005) not being recognized as income
from nonsovereign loans for the year ended 31 December
2006. The accumulated interest and other charges on
these loans, net of loan charges of $40,455,000 waived
and written off due to foreclosure of 3 Philippine loans
on 19 June 2006, that were not recognized as income as
of 31 December 2006 would have totaled $20,168,000
($52,839,000 – 2005).
Loan Loss Provision
FINANCIAL STATEMENTS
decreased significantly during the year to $22,223,000
from $77,164,000 in 2005, as a result of the revised pro-
visioning methodology adopted in 2006 and foreclosure
of 3 Philippine loans (Notes B and M).
Information pertaining to loans which were subject
to loan loss provisions at 31 December 2006 and 2005
are as follows:
2006 2005
Loans not subject to
loss provisions $26,155,874,000 $23,487,887,000
Loans subject to
loss provisions 35,856,000 81,443,000
Total $26,191,730,000 $23,569,330,000
Average amount of
loans subject to
loss provisions $   35,856,000 $   88,184,000
Related interest income
on such loans
recognized in the year $      69,000 $    1,209,000
Cash received on related
interest income on
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
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

Loans administered by ADB on behalf of participat- NOTE F—GUARANTEES

ing institutions as at 31 December 2006 and 2005 are
FINANCIAL STATEMENTS

as follows: ADB extends guarantees to public sector and private sec-

2006
No.of
Amount Loans
Sovereign loans $577,636,000 38
Nonsovereign loans 295,290,000 11
Total $872,926,000 49
2005
No.of to indemnify ADB for any payments it makes under the
Amount Loans
Sovereign loans $802,678,000 40
Nonsovereign loans 107,609,000 10
Total $910,287,000 50
During the year ended 31 December 2006, a total of
$989,000 ($965,000 – 2005) was received as compensation
for arranging and administering such loans. This amount
has been included in “Income from other sources.”
tor borrowers. Such guarantees include (i) partial credit
guarantees where only certain principal and/or interest
payments are covered; and (ii) political risk guarantees,
which provide coverage against well-defined sovereign
risks. While counterguarantees from the host government
are required for all public sector guarantees, guarantees
for private sector projects may be provided with or without
a host government counterguarantee. A counterguaran-
tee takes the form of a member government agreement
guarantee. In the event that a guarantee is called, ADB has
the contractual right to require payment from the govern-
ment, on demand, or as ADB may otherwise direct.
Guaranteed payments under partial credit guarantees
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
in debt service default to the guaranteed lender.
The committed and outstanding amounts of these
guarantee obligations as of 31 December 2006 and 2005
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

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
None of these amounts were subject to call as of
31 December 2006 and 2005. The committed amount
represents the maximum potential amount of undis-
counted future payment that ADB could be required
to make, inclusive of standby portion for which ADB is
committed but not currently at risk. The outstanding
amount represents the guaranteed amount utilized under
the related loans, which have been disbursed as of the
end of a reporting period, exclusive of the standby por-
tion. ADB estimates that the present value of guarantees
outstanding at 31 December 2006 was $825,363,000
($755,306,000 – 2005).
As of 31 December 2006, a total liability of
$10,544,000 ($15,839,000 – 2005) relating to stand-by
ready obligation for five partial credit risk guarantees (one
– 2005) and two political risk guarantees (three – 2005)
has been included in "Miscellaneous liabilities" on the
balance sheet.
NOTE G—EQUITY INVESTMENTS
In 2005, ADB adopted the provision of Emerging Issues
Task Force 03-16 which requires the investments in
limited liability companies that have the characteristics
of a partnership to be accounted for using the equity
method.
ADB's investments in equity securities issued by pri-
vate enterprises located in DMCs include $123,081,000
investments in limited partnership and limited liability
companies which are accounted for on the equity method
($87,427,000 – 2005).
Accumulated net unrealized gains on equity invest-
ments reported at market value were $268,882,000 at
31 December 2006 ($110,331,000 – 2005) and were
reported in “CAPITAL AND RESERVES” as part of “Ac-
cumulated other comprehensive income.”
As of 31 December 2006, there were eight (seven
– 2005) equity investments which were reported at fair
value totaling $389,976,000 ($134,248,000 – 2005).
None of these (two – 2005) sustained unrealized losses
as of year end.
Approved equity investment facility that has not
been disbursed was $391,618,000 at 31 December
2006 ($309,528,000 – 2005).
OCR-8
CONTINUED
NOTE H—DERIVATIVE INSTRUMENTS
FINANCIAL STATEMENTS
The fair value of outstanding currency swap agreements
and interest rate swap agreements is determined at the
estimated amount that ADB would receive or pay to termi-
nate the agreements using market-based valuation models.
The basis of valuation is the present value of expected cash
flows based on observable market data.
Interest rate swaps: Under a typical interest rate
swap agreement, one party agrees to make periodic
payments based on a notional principal amount and an
interest rate that is fixed at the outset of the agreement.
The counterparty agrees to make floating rate payments
based on the same notional principal amount. The terms
of ADB's interest rate swap agreements usually match the
terms of particular borrowings.
Currency swaps: Under a typical currency swap
agreement, one party agrees to make periodic payments
in one currency while the counterparty agrees to make
periodic payments in another currency. The payments may
be fixed at the outset of the agreement or vary based
on interest rates. A receivable is created for the currency
swapped out, and a payable is created for the currency
swapped in. The terms of ADB's currency swap agreements
usually match the terms of particular borrowings.
Included in Receivable/Payable from Swaps-Others
are interest rate and currency swaps that ADB has entered
into for the purpose of hedging specific investments and
loans. The loan related swaps were executed to better
align the composition of certain outstanding loans with
funding sources and provide borrowers with financial risk
management tools.
NOTE I—PROPERTY, FURNITURE, AND EQUIPMENT
In 1991, under  the terms of an agreement with the
Philippine Government, ADB returned the former headquar-
ters premises, which had been provided by the Government.
In accordance with the agreement as supplemented by a
memorandum of understanding, ADB was compensated
$22,657,000 for the return of these premises. The com-
pensation is in lieu of being provided premises under the
49

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
agreement and accordingly, is deferred and amortized over
the estimated life of the new headquarters building as a
FINANCIAL STATEMENTS
reduction of occupancy expense. The amortization for the
year ended 31 December 2006 amounted to $354,000
($337,000 – 2005) reducing depreciation expense for the
new headquarters building from $4,471,000 ($4,471,000
– 2005) to $4,117,000 ($4,134,000 – 2005). At 31
December 2006, the unamortized deferred compensation
balance (included in "ACCOUNTS PAYABLE AND OTHER
LIABILITIES - Miscellaneous") was $8,766,000 ($8,639,000
– 2005). At 31 December 2006, accumulated depreciation
for property, furniture, and equipment was $136,254,000
($124,312,000 – 2005).
NOTE J—BORROWINGS
The key objective of ADB’s borrowing strategy is to raise
funds at the lowest possible cost for the benefit of its
borrowers. ADB uses financial derivative instruments in
connection with its borrowing activities to increase cost
efficiency, while achieving risk management objectives.
Currency swaps enable ADB to raise operationally needed
currencies in a cost-efficient way and to maintain its bor-
rowing presence in major capital markets. Interest rate
swaps are used generally to reduce interest rate mismatches
arising from lending operations.
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
Capital Stock
The authorized capital stock of ADB as of the end of 2006
consists of 3,534,230 shares (3,509,728 – 2005), all of
which have been subscribed by members (3,509,728
– 2005). Of the subscribed shares, 3,285,655 (3,262,876
– 2005) are "callable" and 248,575 (246,852 – 2005) are
"paid-in." The "callable" share capital is subject to call by
ADB only as and when required to meet ADB's obligations
incurred on borrowings of funds for inclusion in its Ordinary
Capital Resources (OCR) or on guarantees chargeable to
such resources. The "paid-in" share capital has been paid
50
OCR-8
or is payable in installments, partly in convertible curren-
cies and partly in the currency of the subscribing member
which may be convertible. In accordance with Article 6,
paragraph 3 of the Charter, ADB accepts non-negotiable,
non-interest-bearing demand obligations in satisfaction
of the portion payable in the currency of the member,
provided such currency is not required by ADB for the
conduct of its operations. The settlement of such amounts
is not determinable and, accordingly, it is not practicable
to determine a fair value for these receivables.
As of 31 December 2006, all matured install-
ments amounting to $3,724,424,000 ($3,517,201,000
– 2005) were received. Installments not due aggregating
$15,138,000 ($10,980,000 – 2005) are as follows:
For the Year ending 31 December:
2007 $5,976,000 2008 $5,976,000 2009 $3,186,000
Capital Transferred to Asian Development Fund
Pursuant to the provisions of Article 19, paragraph 1(i) of
the Charter, the Board of Governors has authorized the
setting aside of 10% of the unimpaired "paid-in" capital
paid by members pursuant to Article 6, paragraph 2(a)
of the Charter and of the convertible currency portion
paid by members pursuant to Article 6, paragraph 2(b) of
– 2005) expressed in terms of the SDR on the basis of
$1.5044 ($1.42927 – 2005) per SDR ($57,434,000 in
terms of $1.20635 per 1966 dollar—Note B), were allo-
cated and transferred to the Asian Development Fund.
Maintenance of Value of Currency Holdings
Prior to 1 April 1978, the effective date of the Second
Amendment to the IMF Articles, ADB implemented main-
tenance of value (MOV) in respect of holdings of member
currencies in terms of 1966 dollars, in accordance with the
provisions of Article 25 of the Charter and relevant resolu-
tions of the Board of Directors. Since then, settlement of
MOV has been put in abeyance.

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
In as much as the valuation of ADB's capital stock and
the basis of determining possible MOV obligations are still
under consideration, notional amounts have been calculated
provisionally as receivable from or payable to members in
order to maintain the value of currency holdings in terms
of the SDR. In view thereof, the notional MOV amounts
of receivables and payables are offset against one another
and shown as net notional amounts to maintain value of
currency holdings in the “CAPITAL AND RESERVES” portion
of the Balance Sheet. The carrying book value for such
receivables and payables approximates its fair value.
The net notional amounts as of 31 December
2006 consisted of (a) the increase of $655,080,000
($497,298,000 – 2005) in amounts required to maintain
the value of currency holdings to the extent of matured
and paid capital subscriptions due to the increase in the
value of the SDR in relation to the United States dollar
during the period from 1 April 1978 to 31 December
2006 and (b) the net decrease of $17,819,000 (decrease
of $88,807,000 – 2005) in the value of such currency
holdings in relation to the United States dollar during the
same period. In terms of receivable from and payable to
members, they are as follows:
2006 2005
Notional MOV Receivables $841,500,000 $791,945,000
Notional MOV Payables 168,601,000 205,840,000
Total $672,899,000 $586,105,000
Membership
As of 31 December 2006, ADB is owned by 66 member
countries, 47 countries from the region and 19 countries
from outside the region (OCR-7). During 2006, Brunei
Darussalam and Ireland subscribed to 12,462 and 12,040
shares, respectively, of ADB’s capital stock.
NOTE L—RESERVES
Ordinary Reserve and Net Income
Under the provisions of Article 40 of the Charter, the Board
of Governors shall determine annually what part of the
OCR-8
CONTINUED
net income shall be allocated, after making provision for
reserves, to surplus and what part, if any, shall be distri­
FINANCIAL STATEMENTS
buted to the members.
In May 2006, the Board of Governors approved the
allocation of 2005 net income of $105,202,000 and additions
from Cumulative Revaluation Adjustments account and Loan
Loss Reserve of $308,743,000 and $36,900,000, respectively,
to Surplus for $320,000,000 ($40,000,000 – 2005), to
­Ordinary Reserve for $70,845,000 ($37,917,000 – 2005), to
the Asian Development Fund (ADF) for $40,000,000 and to
the Technical Assistance Special Fund (TASF) for $20,000,000
($288,000,000, $40,000,000 and $32,000,000 to Asian
Tsunami Fund (ATF), ADF and TASF, respectively – 2005).
The restatement of the capital stock for purposes of
these financial statements on the basis of the SDR instead
of the 1966 dollar (Note B) resulted in a net charge of
$31,533,000 to the Ordinary Reserve during the year ended
31 December 2006 (credit of $54,061,000 – 2005). That
charge is the increase in the value of the matured and paid
capital subscriptions caused by the change during the year
in the value of the SDR in relation to the United States
dollar not allocated to members as notional maintenance
of value adjustments in accordance with resolutions of
the Board of Directors.
Cumulative Revaluation Adjustments Account
In May 2002, the Board of Governors approved the alloca-
tion of net income representing the cumulative net unreal-
ized gains (losses) on derivatives, as required by FAS 133 to
a separate category of Reserves - "Cumulative Revaluation
Adjustments Account." During the year, the 2005 net
unrealized losses on derivatives of $308,743,000 offset
by the reversal of $101,429,000 cumulative losses conse-
quent to the adoption of FAS 155 resulted to a decrease
of the balance of the Cumulative Revaluation Adjustments
account at 31 December 2006 (increase of $40,963,000
– 2005) to $27,519,000 ($234,833,000 – 2005).
Special Reserve
The Special Reserve includes commissions on loans and
guarantee fees on guarantees set aside pursuant to
Article 17 of the Charter. Special Reserve assets consist
51

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
of term deposits and government and government-guar-
anteed obligations and are included under the heading
FINANCIAL STATEMENTS
"INVESTMENTS." For the year ended 31 December 2006,
guarantee fees amounting to $4,169,000 ($4,090,000
– 2005) were appropriated to Special Reserve.
Loan Loss Reserve
In 2004, the Board of Directors approved the creation of
Loan Loss Reserve through an allocation of $218,800,000
out of prior year net income. The Loan Loss Reserve forms
part of Capital and Reserves to be used as a basis for capi-
tal adequacy against the estimated expected loss in ADB’s
sovereign loans and guarantees portfolio. In December
2006, the Board of Directors approved the adoption of
this policy to nonsovereign credit exposures.
In 2006, the estimated loan loss reserve requirement
was $130,100,000 resulting to a decrease of $36,900,000.
The estimated expected loss is determined using ADB’s
credit risk model net of loan loss provisions taken up in ac-
cordance with generally accepted accounting principles.
Pursuant to the adoption of the new provisioning
methodology for nonsovereign operations which was ap-
proved in 2006, management’s estimate of the loan loss
reserve for nonsovereign operations is $30,500,000. This
will be established as an allocation of net income subject
to the approval of the Board of Governors.
Surplus
Surplus represents funds for future use to be determined by
the Board of Governors. In the first half of 2006, the Board
of Governors approved the allocation of $320,000,000
out of 2005 net income to Surplus ($40,000,000 – 2005).
In June 2006, unutilized amounts from Asian Tsunami Fund
of $10,000,000 was transferred back to surplus to be
earmarked for use to support post-disaster management,
rehabilitation, immediate construction, and urgent vital
development activities in earthquake-affected regions in
Indonesia.
52
OCR-8
Comprehensive Income
Comprehensive income has two major components: net
income and other comprehensive income comprising
gains and losses affecting equity that, under generally
accepted accounting principles, are excluded from net in-
come. Other comprehensive income includes such items as
the effects of the implementation of FAS 133, unrealized
gains and losses on available-for-sale securities and listed
equity investments, currency translation adjustments, and
pension and post-retirement liability adjustment.
NOTE M—INCOME AND EXPENSES
Total income from loans for the year ended 31 December
2006 was $1,210,071,000 ($1,036,329,000 – 2005). The
average yield on the loan portfolio during the year was
4.98% (4.35% – 2005), excluding premium received on
prepayment and other loan income. Premium on prepaid
loans collected during 2006 amounted to $7,236,000
($16,457,000 – 2005).
Total income from investments including net realized
losses on sales, net unrealized losses on derivatives, and
interest earned for securities transferred under securi-
ties lending and resale arrangements for the year ended
31 December 2006 was $563,249,000 ($371,357,000
– 2005). The annualized rate of return on the average
investments held during the year, based on the portfolio
held at the beginning and end of each month, was 4.18%
(2.96% – 2005) excluding unrealized gains and losses on
investments and 4.27% (2.44% – 2005) including unreal-
ized gains and losses on investments.
Income from other sources primarily includes divi-
dends received for the year ended 31 December 2006
amounting to $8,952,000 ($3,409,000 – 2005), share in the
net gain of equity investments of $32,338,000 ($3,497,000
– 2005) accounted for on the equity method, and income
received as executing agency of $11,611,000.
Total interest expense incurred for the year ended
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).

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Administrative expenses (other than those pertain-
ing directly to ordinary operations and special operations)
for the year ended 31 December 2006 were apportioned
between OCR and ADF in proportion of the relative vol-
ume of operational activities of each fund. Of the total
administrative expenses of $346,336,000 ($335,921,000
– 2005), $190,233,000 ($175,751,000 – 2005) was ac-
cordingly charged to ADF. The balance of administrative
expenses after allocation was reduced by the deferral of
direct loan origination costs of $28,434,000 ($24,481,000
– 2005) related to new loans that became effective for
the year ended 31 December 2006 (Notes B and E).
During 2005, the Bank offered an enhanced separa-
tion program to eligible staff to resign before their normal
retirement date. Administrative expenses for 2006 include
the $6,711,000 ($4,661,000 – 2005) termination benefits
for staff who accepted the program.
Following the approval by the Board of Directors in
June 2003 of the resumption of direct net income allocation
to TASF to finance technical assistance (TA) operations,
no new TA commitments during the year were charged
to OCR current income as "TECHNICAL ASSISTANCE TO
MEMBER COUNTRIES." Accordingly, the write-back in the
amount of $1,220,000 ($3,446,000 – 2005) for the year
represented cancellations of the undisbursed amounts of
completed TA projects committed in prior periods.
As of 31 December 2006, the net cumulative amount
of TA commitments that had been charged to OCR net
income in the prior years amounted to $68,531,000
($69,751,000 – 31 December 2005) out of which
$63,804,000 ($60,020,000 – 2005) had been disbursed.
For the year ended 31 December 2006, write-back of
provision for losses of $32,515,000 ($3,477,000 – 2005)
corresponded to net $36,331,000 write-back of provision
for nonsovereign loans offset by $3,816,000 provision
for one sovereign loan. The amount of write-back for
nonsovereign loans resulted from the revised provision-
ing methodology adopted in 2006 (Notes B and E), and
repayments during the year.
Other expenses of $3,767,000 ($4,248,000 – 2005)
included non-borrowings related financial expenses such as
fees paid to external asset managers and bank charges.
Net unrealized losses incorporate $3,008,000 net gain
($500,000 net loss – 2005) from the translation adjust-
OCR-8
CONTINUED
ments of financial instruments denominated in non-func-
tional currencies (South African Rand and Mexican Peso),
FINANCIAL STATEMENTS
and net unrealized losses on derivatives of $138,479,000
($308,743,000 – 2005), which were made up of:
2006 2005
Unrealized(losses)gains on:
Hybrid financial instruments* $      (8,948,000) $       –
Borrowings related swaps (132,219,000)    (55,522,000)
Investments related swaps (9,858,000) (3,925,000)
Loan related swaps 8,629,000 258,000
Embedded derivatives in
structured borrowings* – (241,700,000)
FX Forward 5,522,000 (3,548,000)
Amortization of the FAS 133
transition adjustment (1,605,000) (4,306,000)
Total $(138,479,000) $(308,743,000)
* Figures are not comparable due to the adoption of FAS 155 in 2006,
which allows fair valuation of structured borrowings as a whole. In
2005, only the embedded derivatives of the structured borrowings
are fair valued, as required by FAS 133.
NOTE N—OTHER ASSETS AND
LIABILITIES–MISCELLANEOUS
At 31 December 2006 and 2005, ADB had the following
receivables from/payables to special funds and trust funds
resulting from administrative arrangements and operating
activities:
2006 2005
Amounts receivable from:
Asian Development Fund
(Note M) $25,970,000 $32,064,000
Technical Assistance
Special Fund 97,000 –
Japan Special Fund 125,000 109,000
Asian Tsunami Fund 253,000 –
Asian Development Bank
Institute Special Fund 254,000 177,000
Staff Retirement Plan – 584,000
Agency Trust Funds (net) 686,000 –
Total $27,385,000 $32,934,000
Amounts payable to:
Technical Assistance
Special Fund $      – $   24,000
Staff Retirement Plan 451,000 –
Agency Trust Funds (net) – 328,000
Total $   451,000 $      352,000
53

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Included in Miscellaneous Liabilities at 31 December
2006 is the amount of $1,101,000 received from Georgia
FINANCIAL STATEMENTS
as payment of the convertible currency portion of its first
installment payment under membership subscription to
ADB’s capital stock. The amount was recorded as Deferred
Credits pending completion of the remaining requirements
for effectivity of its membership.
NOTE O—STAFF RETIREMENT PLAN AND contributions of $25,000,000 ($33,635,000 – 2005).
POSTRETIREMENT MEDICAL BENEFITS
Staff Retirement Plan
ADB has a contributory defined benefit Staff Retirement
Plan (the Plan). Every employee, as defined under the Plan,
shall, as a condition of service, become a participant from
the first day of service, provided that at such a date, the
employee has not reached the normal retirement age of 60.
The Plan applies also to members of the Board of Directors
who elect to join the Plan. Retirement benefits are based
on length of service and highest average remuneration
during two years of eligible service. The Plan assets are
segregated and are not included in the accompanying
Balance Sheet. The costs of administering the Plan are
absorbed by ADB, except for fees paid to the investment
managers and related charges, including custodian fees,
which are borne by the Plan.
Participants hired on or before 30 September 2006
are required to contribute 9 1/3% of their salary to the
Plan, while those hired after that date do not anymore
contribute to the plan. Participants may also make additional
voluntary contributions. ADB's contribution is determined
at a rate sufficient to cover that part of the costs of the
Plan not covered by the participants' contributions.
54
OCR-8
Expected Contributions
The expected amount of contributions to the Plan for 2007
amounts to $58,763,000 ($66,287,000 – 2005) represent-
ing ADB’s contributions of $21,422,000 ($20,627,000
– 2005), based on budgeted contribution rate of 16%
(16% – 2005), participants’ mandatory contributions of
$12,341,000 ($12,025,000 – 2005) and discretionary
Investment Strategy
Contributions in excess of current benefits payments are
invested in international financial markets and in a vari-
ety of investment vehicles. The Plan employs six external
asset managers and one global custodian who function
within the guidelines established by the Plan’s Investment
Committee. The investment of these assets, over the long
term, is expected to produce higher returns than short-
term investments. The investment policy incorporates the
Plan’s package of desired investment return and tolerance
for risk, taking into account the nature and duration of
the Plan’s liabilities. The Plan’s assets are diversified among
different markets and different asset classes. The use of
derivatives for speculation, leverage or taking risks is
prohibited. Selected derivatives are used for hedging and
transactional efficiency purposes.
The Plan’s investment policy is periodically reviewed
and revised to reflect the best interest of the Plan’s par-
ticipants and beneficiaries. The current policy, adopted
in January 2003, specifies an asset-mix structure of 70%
of assets in equities and 30% in fixed income securities.
At present, investments of the Plan’s assets are divided
into three categories: US equity, Non-US equity, and US
fixed income.

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
As of 31 December 2006 and 2005, the breakdown
of the fair value of plan assets held is as follows:
2006
Amount Percentage
Equity Securities the long-term rate of return on the assets to be 8%.
US $ 536,100,000
Non-US 377,825,000
913,925,000 74.0%
Fixed Income Securities 319,265,000 25.8
Other Assets(Liabilities) – net 2,156,000 0.2
Total $1,235,346,000 100.0%
2005
Amount Percentage
Equity Securities remain broadly the same, year to year.
US $ 471,767,000
Non-US 300,554,000
772,321,000 71.4%
Fixed Income Securities 299,334,000 27.7
Other Assets(Liabilities) – net 9,478,000 0.9
Total $1,081,133,000 100.0%
All investments excluding time deposits are valued
using market prices. Time deposits are reported at cost
which is a reasonable estimate of fair value. Fixed income
securities include US government and government guar-
anteed obligations, corporate bonds and time deposits.
OCR-8
CONTINUED
Other assets include forward exchange contracts in
various foreign currencies transacted to hedge currency
FINANCIAL STATEMENTS
exposure in the investment portfolio, which are reported
at fair value.
For the year ended 31 December 2006, the net return
on the Plan assets was 12.9% (8.0% – 2005). ADB expects
Assumptions
The assumed overall rate of return takes into account long-
term return expectations of the underlying asset classes
within the investment portfolio mix, and the expected
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
in investment policy or market environment, the assumed
investment return of 8% on the Plan’s assets is expected to
Postretirement Medical Benefits Plan
In 1993, ADB adopted a cost-sharing plan for retirees’
medical insurance premiums. Under the plan, ADB is
obligated to pay 75% of the Group Medical Insurance
Plan premiums for retirees, including retired members of
the Board of Directors, and their eligible dependents who
elected to participate. The cost-sharing plan is currently
unfunded.
Generally accepted accounting principles require an
actuarially determined assessment of the periodic cost of
postretirement medical benefits.
55
 OCR-8
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

The following table sets forth the pension and postretirement medical benefits at 31 December 2006 and
2005:
FINANCIAL STATEMENTS

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
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005 CONTINUED

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.

FINANCIAL STATEMENTS
benefits was assumed for the valuation as at 31 December

Pension Benefits Postretirement Medical Benefits

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-
sion plan as of 31 December 2006 was $1,237,070,000
($1,133,559,000 – 2005).
The estimated net loss and prior service cost for the
defined benefit pension plans that will be amortized from
accumulated other comprehensive income into net periodic
benefit cost over the next fiscal year are $2,569,000 and
$4,079,000, respectively. The estimated net loss and prior
service credit for the other postretirement benefits plan that
will be amortized from accumulated other comprehensive
income into net periodic benefit cost over the next fiscal
year are $3,304,000 and $(8,646,000), respectively.
A one-percentage-point change in assumed health
care trend rates would have the following effects:
Estimated Future Benefits Payments
The following table shows the benefit payments expected
to be paid in each of the next five years and subsequent
five years. The expected benefit payments are based on the
same assumptions used to measure the benefit obligation
at 31 December 2006:
Postretirement
Pension Benefits Medical Benefits
2007 $  56,760,000 $   3,902,000
2008 58,099,000 4,548,000
2009 60,380,000 5,220,000
2010 63,281,000 5,902,000
2011 68,013,000 6,605,000
2012-2016 398,349,000 43,737,000

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
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

Adjustments

Pension Postretirement
Before FAS 158 Benefits Medical Benefits After FAS 158
FINANCIAL STATEMENTS

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

Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Additional fair value information, including methods
used to estimate certain values, is included in the notes
referenced in the above table.
Fair value of a financial instrument is defined as the
amount at which the instrument could be exchanged in
a current transaction between willing parties, other than
in a forced or liquidation sale.
If available, quoted market values are used to
determine fair values. Financial instruments for which
market quotations are not readily available are valued
using valuation models. The basis of valuation is the
present value of expected cash flows based on observ-
able market data.
NOTE Q—CREDIT RISK
ADB is exposed to risk if the borrowers fall in arrears on
payments. ADB manages country risk for lending opera-
tions through continuous monitoring of creditworthiness
of the borrowers and rigorous capital adequacy framework.
Guarantees involve elements of credit risk which are also
not reflected on the balance sheet. Credit risk represents
the potential loss due to possible nonperformance by obli-
gors and counterparties under the terms of the contract.
As of 31 December 2006, ADB has a significant
concentration of credit risk to Asian and the Pacific region
associated with loan and guarantee products with credit
exposure determined based on fair value of loans and
outstanding guarantees amounting to $28,398,987,000
($26,138,798,000 – 2005).
ADB undertakes derivative transactions with its eligible
counterparties and transacts in various financial instru-
ments as part of liquidity and asset/liability management
purposes that may involve credit risks. For all securities,
ADB manages credit risks by following the guidelines set
forth in the Investment Authority (Note D).
ADB has a potential risk of loss if the swap counter-
party fails to perform its obligations. In order to reduce
such credit risk, ADB only enters into long-term swap
transactions with counterparties eligible under ADB's
swap guidelines which include a requirement that the
counterparties have a credit rating of A-/A3 or higher
and requires certain counterparties with executed Credit
Support Annex, to provide collateral in form of cash or
OCR-8
CONTINUED
other approved liquid securities based on mark-to-market
exposure.
FINANCIAL STATEMENTS
As of 31 December 2006, ADB had received collateral
of $371,063,000 ($213,954,000 – 2005) in connection
with the swap agreements. ADB has also entered into
master swap agreements which contain legally enforce-
able close-out netting provisions for all counterparties
with outstanding swap transactions.
NOTE R—SPECIAL AND TRUST FUNDS
ADB's operations include special operations, which are
financed from special fund resources, consisting of the
Asian Development Fund, the Technical Assistance Special
Fund, Japan Special Fund, the Asian Development Bank
Institute Special Fund, the Asian Tsunami Fund, and the
Pakistan Earthquake Fund.
The OCR and special fund resources are at all times
used, committed, and invested entirely separate from each
other. The Board of Governors may approve allocation of
the net income of OCR to special funds, based on the
funding and operational requirements of the funds. The
administrative and operational expenses pertaining to the
OCR and special funds are charged to the respective special
funds. The administrative expenses of ADB are allocated
amongst OCR and special funds and are settled on a
regular basis between the OCR and the special funds.
In addition, ADB, alone or jointly with donors,
administers on behalf of the donors, including members
of ADB, their agencies and other development institu-
tions, projects/programs supplementing ADB's operations.
Such projects/programs are funded with external funds
administered by ADB and with external funds not under
ADB's administration. ADB charges administrative fees
for external funds administered by ADB. The funds are
restricted for specific uses including technical assistance to
borrowers and technical assistance for regional programs.
The responsibilities of ADB under these arrangements
range from project processing to project implementation
including the facilitation of procurement of goods and
services. These funds are held in trust with ADB, and
are held in a separate investment portfolio, which is not
commingled with ADB’s funds, nor are they included in
the assets of ADB.
59
 OCR-8
Asian Development Bank—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

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:
FINANCIAL STATEMENTS

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
of $8,666,000 ($2,297,000 – 2005) was recorded as
compensation for administering projects/programs under
Trust Funds. The amount has been included in "Revenue
from Other Sources – net."
NOTE S—VARIABLE INTEREST ENTITIES
As of 31 December 2006, ADB did not identify any VIE in
which ADB is the primary beneficiary, requiring consolida-
tion in OCR financial statements. ADB may hold significant
variable interests in VIE, which requires disclosures.
FIN 46 does not require application of VIE created
before 31 December 2003, if after making exhaustive ef-
fort, it is unable to obtain the information necessary to
(i) determine whether the entity is a VIE; (ii) determine
whether the entity is variable interest entity’s primary ben-
eficiary, or (iii) perform accounting required to consolidate
the variable interest entity for which it is determined to
be the primary beneficiary. As of 31 December 2006,
this provision of FIN 46 no longer applies to any private
sector enterprise where ADB has outstanding loans and
guarantees since required information became available.
In 2005, this applied to 14 entities where ADB’s maxi-
mum exposure to losses as a result of its involvement was
$312,268,000. ADB recognized $19,137,000 income from
these entities last year.
The review of ADB’s loan, equity investments, and
guarantee portfolio, has identified 2 (4 – 2005) invest-
ments in VIEs in which ADB is not the primary beneficiary,
but in which it is reasonably possible that ADB could be
deemed to hold significant variable interest. ADB’s total
investment in these entities, comprising disbursed and
committed but undisbursed balances, corresponded to
the maximum exposure to loss totaling $108,130,000 as
of 31 December 2006 ($95,175,000 – 2005). Based on
the most recent available information from these VIEs, the
assets of these VIEs totaled $309,182,000 ($347,216,000
– 2005).

60
 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

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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007
61
 ADF-1
ASIAN DEVELOPMENT BANK­­—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
ASSETS
FINANCIAL STATEMENTS

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
SECURITIES PURCHASED UNDER
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
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF REVENUE AND EXPENSES
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
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

The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

63
 ADF-3
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS

CASH FLOWS FROM OPERATING ACTIVITIES

Interest charges on loans received $    180,161 $    178,667
Interest on investments received 257,448 209,440
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)
Net Cash Provided by Operating Activities 209,294 218,772
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of investments 280,321 166,824
Maturities of investments 106,576,155 73,307,627
Purchases of investments (107,321,357) (73,953,089)
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
Due from Banks at Beginning of Year 21,557 8,701
Due from Banks at End of Year $      2,602 $    21,557
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) –
Net Cash Provided by Operating Activities $    209,294 $   218,772
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.
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

64
 ADF-4
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF CHANGES IN FUND BALANCES
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

Accumulated
Transfers Other

FINANCIAL STATEMENTS
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
Comprehensive income
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
Change in SDR value of
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
Comprehensive income
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)

For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

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

The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

65
 ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE SUMMARY STATEMENT OF LOANS
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

Undisbursed Loans
Loans Balances of Not Yet Total Percent of
FINANCIAL STATEMENTS

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).
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

66
 ADF-5

MATURITY OF EFFECTIVE LOANS

FINANCIAL STATEMENTS
Twelve Months Five Years
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
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF RESOURCES
31 December 2006
Expressed in Thousands of United States Dollars (Note B)

Effective            Effective Amounts

Amounts         Amounts Committed Not Yet Amounts
FINANCIAL STATEMENTS

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.
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).
68

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS
The Asian Development Fund (ADF) was established on 28
June 1974 to more effectively carry out the special opera-
tions of the Asian Development Bank (ADB) by providing
resources on concessional terms which are made avail-
able almost exclusively to the least developed borrowing
countries.
The resources of ADF have been subsequently aug-
mented by eight replenishments, the most recent of which
became effective in April 2005 consisting of $3,302,547,000
in contributions from donors and $3,700,000,000 from in-
ternal resources to cover the operational requirements for
the four-year period from January 2005. Under the new
replenishment, ADB is authorized to provide financing in
the form of grants for projects and programs of high de-
velopmental priority. During the year, an allocation in the
amount of $40,000,000 ($40,000,000 – 2005) was made
to ADF from the 2005 net income of ADB’s Ordinary Capital
Resources (OCR).
In November 2005, the Board of Governors approved
a resolution to adopt a full-fledged SDR approach to improve
ADF currency management practices. This will facilitate re-
source administration and operational planning to benefit
borrowers. The currency management framework for ADF
loans was implemented on 1 January 2006. In this connec-
tion, ADB is authorized to convert ADF resources held in
various currencies into Euro, Pound sterling, ­Japanese yen,
and United States dollar (USD), the currencies which con-
stitute the Special Drawing Rights (SDR); to value disburse-
ments, repayments, and loan charges in terms of SDR; and
to determine in case of withdrawal of a Contributor from
ADF or the termination of ADF, the value of Contributors’
paid-in contributions and the value of all other resources of
the Fund in terms of SDR.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
In May 2001, the Board of Directors approved the adop-
tion of the special purpose financial statements for ADF.
Due to the nature and organization of ADF, these financial
statements have been prepared for the specific purpose
of reflecting the sources and applications of member
ADF-7
subscriptions and are presented in US dollar equivalents at
the reporting dates. With the adoption of the special pur-
FINANCIAL STATEMENTS
pose financial statements, loan loss provisioning has been
eliminated. With the exceptions of the aforementioned,
the ADF financial statements are prepared in accordance
with accounting principles generally accepted in the United
States of America.
Functional Currencies and Reporting Currency
The implementation of the full-fledged SDR framework is
expected to change the primary economic environment
of ADF. However, until this process is completed, and a
significant change in the primary economic environment
becomes evident, the currencies of contributing member
countries are functional currencies as these represent the
currencies of the primary economic environment in which
ADF generates and expends cash. The reporting currency
is USD, and the special purpose financial statements are
expressed in thousands of current United States dollars.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
purposes. This allows transactions in currencies other
than USD to be translated to the reporting currency using
exchange rates applicable at the time of transactions. At
the end of each accounting month, translation of assets,
liabilities, and amounts available for operational commit-
ments denominated in non-USD are adjusted using the
applicable rates of exchange at the end of the reporting
period. Translation adjustments relating to set-aside
resources (Note I) are recorded as notional amounts receiv-
able from or payable to OCR. All other translation adjust-
ments except those relating to the maintenance of SDR
loans, are charged or credited to “Accumulated translation
adjustments” and reported in “FUND BALANCES” as part
of “Accumulated other comprehensive income.”
Investments
Investment securities and negotiable certificate of deposits
held as of 31 December 2006 are classified as “Available
69

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
for Sale” while those held as of 31 December 2005 were
classified as “Held-to-Maturity” or “Available for Sale.”
FINANCIAL STATEMENTS
Investments are classified as “Held-to-Maturity” when
ADB has the intent to hold until maturity and are carried
at amortized cost. Investments classified as “Available for
Sale” are reported at estimated fair value, which represents
their fair market value. Unrealized gains and losses are
reported in "FUND BALANCES" as part of “Accumulated
other comprehensive income.” Realized gains and losses
are measured by the difference between amortized cost
and the net proceeds of sales. Time deposits are reported
at cost, which is a reasonable estimate of fair value.
Interest income on investment securities and time de-
posits is recognized as realized and reported, net of amorti-
zations of premiums and discounts.
Securities Transferred Under Securities Lending
Arrangement and Securities Purchased Under
Resale Arrangement
ADF accounts for transfers of financial assets in accordance
with FAS 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a re-
placement of FAS 125." In general, transfers are accounted
for as sales when control over the transferred assets has
been relinquished. Otherwise the transfers are accounted
as repurchase/resale agreements and collateralized financ-
ing arrangements. Securities transferred under securities
lending arrangements are recorded as assets and reported
at estimated fair value, and the cash collateral received is
recorded as a liability. Securities received under resale ar-
rangements are not recorded on ADF’s balance sheets and
are not re-pledged under securities lending arrangements.
ADB monitors the fair value of the securities received under
resale arrangements, and if necessary, requires additional
collateral.
Loans
Loan interest income is recognized on accrual basis. It is
the policy of ADF to place in non-accrual status loans made
to eligible borrowing member countries if the principal
or interest with respect to any such loans is overdue by
70
ADF-7
six months. Interest on non-accruing loans is included in
revenue only to the extent that payments have actually
been received by ADF. ADB maintains a position of not
taking part in debt rescheduling agreements with respect
to sovereign loans. In the case of nonsovereign loans,
ADB may agree to debt rescheduling only after alternative
courses of action have been exhausted. When ADB decides
that a particular loan is no longer collectible, the entire
amount is expensed during the period.
Contributed Resources
Contributions by donors are included in the financial
statements as amounts committed and are reported in
“Contributed Resources” as part of “FUND BALANCES”
from the date Instruments of Contribution are deposited
and related formalities are completed.
Contributions are generally received in the currency of
the contributor either in cash or notes.
Under ADF IX, contributors have the option to pay
their contributions under accelerated note encashment
(ANE) program and receive a discount. ADF invests the cash
generated from this program and the investment income is
used to finance operations. The related contributions are re-
corded at the full undiscounted amount, and the discount
is amortized over the standard encashment period of 10
years.
Advanced Payments on Contributions
Payments received in advance or as qualified contributions
that cannot be made available for operational commit-
ment are recorded as advance payments and included
under “Liabilities.”
Grants and Undisbursed Commitments
Grants are recognized in the financial statements when
the related grant is approved and becomes effective.
Upon completion of a project or cancellation of a grant,
any undisbursed amount is written back as a reduction in
the grants for the year and the corresponding undisbursed
commitment is eliminated accordingly.

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
Accounting Estimates
The preparation of special purpose financial statements in
conformity with generally accepted accounting principles
requires Management to make reasonable estimates and
assumptions that affect the reported amounts of assets,
liabilities, and fund balances as at the end of the year and
the reported amounts of revenue and expenses during the
year. The actual results could differ from those estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation. The standard does not apply to
ADF’s financial statements as of 31 December 2006.
In September 2006, FASB issued FAS 157, “Fair Value
Measurements,” which emphasizes the definition of fair
value (FV) for financial reporting purposes to mean a mar-
ket-based measure and not an entity-specific measure. It
also prescribes methods for measuring FV including a FV
hierarchy that ranks the quality and reliability of informa-
tion used in FV measurements giving the highest priority
to quoted prices in active markets and the lowest to unob-
servable inputs. This statement expands disclosure require-
ments 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 issued after
31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments that
may be carried at fair value. It offers an irrevocable option
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.
ADF-7
CONTINUED
Special Purpose Statement of Cash Flows
FINANCIAL STATEMENTS
For the purposes of the Special Purpose Statement of Cash
Flows, ADF considers that its cash and cash equivalents are
limited to "DUE FROM BANKS."
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
approved by the Board of Directors in 1999, and reviewed
in 2006. The review endorsed a portfolio strategy that
is largely consistent with the 1999 approach. ADB is re-
stricted by its Investment Authority to invest in government
and government-related debt instruments and in time
deposits. In the US dollar portfolio only and up to limited
amounts, investments may be made in corporate bonds
rated A or better, AAA-rated asset-backed securities, and
AAA-rated mortgage-backed securities. Securities may be
lent or borrowed.
In relation to the adoption of a full-fledged SDR ap-
proach, as discussed in Note B, the investments which were
classified as “Held-to-Maturity” had been reclassified to
“Available for Sale” as the securities held in non-SDR cur-
rencies were sold and replaced by investments in any of the
SDR currencies. A net loss of $470,000 was realized from
the conversion exercises during the period ended 31 De-
cember 2006. The net unrealized gains on the outstanding
ANE portfolio amounted to $1,079,000.
The currency composition of the investment portfo-
lio as of 31 December 2006 and 2005 expressed in United
States dollars are as follows:
Currency 2006 2005
Australian dollar $    60,574,000 $1,170,029,000
Canadian dollar 82,050,000 947,873,000
Euro 2,340,451,000 1,726,303,000
Japanese yen 320,779,000 –
Pound sterling 920,062,000 928,774,000
United States dollar 2,660,972,000 496,135,000
Others 439,000 264,066,000
Total $6,385,327,000 $5,533,180,000
71
 ADF-7
Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005

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-
FINANCIAL STATEMENTS

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
during the year, including securities transferred under se-
curities lending arrangement and securities purchased un-
der resale arrangement, based on the portfolio held at the
beginning and end of each month, was 3.98% (3.54% –
2005) excluding unrealized gains and losses on investment
securities, and 4.02% (3.41% – 2005) including unrealized
gains and losses on investments.
As of 31 December 2006, gross unrealized losses
amounted to $2,430,000 ($4,107,000 – 2005) from gov-
ernment and government-guaranteed obligations and cor-
porate bonds, resulting from market movements. There are
twenty positions in 2006 (eleven – 2005) that sustained
unrealized losses for over one year, representing only 5.0%
(2.2% – 2005) of the investments. Comparative details for
2006 and 2005 are as follows:

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 $       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

One year or less Over one year Total

For the year 2005 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses

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

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE D—LOANS AND LOAN LOSS PROVISION
Loans
Prior to 1 January 1999, loans of ADF were extended to
eligible borrowing member countries, which bore a service
charge of 1% and required repayment over periods rang-
ing from 35 to 40 years. On 14 December 1998, the Board
of Directors approved an amendment to ADF loan terms,
as follows: (i) for loans to finance specific projects, the ma-
turity was shortened to 32 years including an 8-year grace
period; (ii) for program loans to support sector develop-
ment, the maturity was shortened to 24 years including an
8-year grace period; and (iii) all new loans bear a 1% inter-
est charge during the grace period, and 1.5% during the
amortization period, with equal amortization. The revised
ADF lending terms took effect on 1 January 1999 for loans
for which formal loan negotiations were completed on or
after 1 January 1999. ADF requires borrowers to absorb
exchange risks attributable to fluctuations in the value of
the currencies disbursed.
ADB believes that there is no comparable market, nor
ADB intends to sell ADF loans. The use of market data to
arrive at the loan at fair value will give meaningless results.
As such, the fair value of loans is determined using an entry
value method. Under this method, fair value is determined
based on the terms at which a similar loan would currently
be made by ADB to a similar borrower. For such loans, fair
value approximates the carrying amount. The estimated
fair value of loans is not affected by credit risks because
the amount of any such adjustment is not considered to
have a material effect based on ADB's experience with its
borrowers.
Undisbursed loan commitments and an analy-
sis of loans by country as of 31 December 2006 are
shown in ADF-5.
The principal amount outstanding of sovereign
loans in non-accrual status as of 31 December 2006
was $487,877,000 ($461,263,000 – 2005) of which
$175,526,000 ($150,301,000 – 2005) was overdue. Loans
in non-accrual status resulted in $4,933,000 ($4,880,000
– 2005) not being recognized as income from loans for
the year ended 31 December 2006. The accumulated in-
ADF-7
CONTINUED
terest on these loans that was not recognized as income
as of 31 December 2006 would have totaled $43,335,000
FINANCIAL STATEMENTS
($38,067,000 – 2005). The loans in non-accrual status as
of 31 December 2006 were 28 loans to Myanmar (same in
2005) and 5 loans made to the Republic of Marshall Islands
(nil – 2005).
No nonsovereign loans were outstanding as of 31 De-
cember 2006 ($5,186,000 – 2005), and there was neither
undisbursed loan commitment nor loan in non-accrual sta-
tus outstanding in both years.
NOTE E—DUE FROM CONTRIBUTORS
Included in “Due from contributors” are notes of contribu-
tors and contributions receivable. Notes of contributors are
nonnegotiable, noninterest-bearing and, subject to certain
restrictions imposed by applicable Board of Governors'
resolutions, encashable by ADB at par upon demand.
ADB currently expects that the notes outstanding at
31 December 2006 will be encashed in varying amounts
over an eight-year period ending 31 December 2014.
The fair value of notes of contributors is determined
using an entry value method, whereby fair value is deter-
mined based on the terms at which notes are currently be-
ing accepted from contributors. On this basis, the fair value
of outstanding notes of contributors approximates their
carrying amount.
NOTE F—PAYABLE TO RELATED FUNDS
The OCR and special fund resources are at all times used,
committed, and invested entirely separate from each other.
The administrative and operational expenses pertaining
to the OCR and ADF are allocated based on operational
activities and are settled regularly. Under ADF IX and third
regularized replenishment of Technical Assistance Special
Fund (TASF), a specific portion of the total contributions
are to be allocated to TASF. ADF receives all contributions
of members and subsequently transfers TASF’s portion to
TASF.
ADF’s outstanding payables as of 31 December 2006
comprised a payable to OCR representing administration
charges of $25,971,000 ($32,064,000 – 2005) and a pay-
73

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
able to TASF of $2,650,000 ($4,714,000 – 2005) represent-
ing contributions from donors incorporated in ADF IX for
FINANCIAL STATEMENTS
the third regularized replenishment of TASF.
NOTE G—CONTRIBUTED RESOURCES/
OTHER LIABILITIES
As of 31 December 2006, Instruments of Contributions
from 27 donors (21 donors in 2005) were received for
ADF IX. Of these, contributions totaling $1,367,390,000
($525,776,000 – 2005), including amortized discount of
$2,700,000 ($620,000 – 2005) at translated amounts
were received and recorded in “Contributed Resources.”
The contributions as of 31 December 2006 do not
include   11,550,000 ($15,245,000 equivalent) contribu-
tions received from Ireland pending receipt of the Instru-
ment of Contribution. This has been temporarily recorded in
Deferred Credits and included in “Other liabilities.” As of 31
December 2005, $33,647,000 contributions received from
France was similarly classified.
NOTE H—ADMINISTRATIVE EXPENSES AND of $12,063.50 per share, Set-Aside Resources would have
ADMINISTRATION CHARGE
Administrative expenses represent administration charge
from OCR which is an apportionment of all administrative
expenses of ADB (other than those pertaining directly to
ordinary operations and special operations), in the propor-
tion of the relative volume of operational activities of each
fund.
NOTE I—SET-ASIDE RESOURCES
Pursuant to the provisions of Article 19, paragraph
1(i) of the Articles of Agreement Establishing the Asian
Development Bank (the Charter), the Board of Governors
has authorized the setting aside of 10% of the unimpaired
"paid-in" capital paid by member countries pursuant to
Article 6, paragraph 2(a) of the Charter and of the convert-
ible currency portion paid by member countries pursuant
to Article 6, paragraph 2(b) of the Charter as of 28 April
1973, to be used as a part of the Special Funds of ADB.
The capital so set aside was allocated and transferred from
the OCR to ADF as Set-Aside Resources.
74
ADF-7
The capital stock of ADB is defined in Article 4, para-
graph 1 of the Charter, "in terms of United States dollars of
the weight and fineness in effect on 31 January 1966" (the
1966 dollar). Therefore, Set-Aside Resources had historically
been translated into the current United States dollar (ADB's
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
this basis was $1.20635 per 1966 dollar. Since 1 April 1978,
at which time the Second Amendment to the Articles of
Agreement of the International Monetary Fund (IMF) came
into effect, currencies no longer had par values in terms of
gold. Pending ADB's selection of the appropriate successor
to the 1966 dollar, the Set-Aside Resources have been val-
ued for purposes of the accompanying financial statements
in terms of the Special Drawing Right (SDR), at the value
in current United States dollars as computed by the IMF.
As of 31 December 2006, the value of the SDR in terms
of the current United States dollar was $1.5044 ($1.42927
– 2005). On this basis, Set-Aside Resources amounted to
$71,624,000 ($68,047,000 – 2005). If the capital stock of
ADB as of 31 December 2006 had been valued in terms
been $57,434,000.
NOTE J—COMPREHENSIVE INCOME
Comprehensive income has two major components:
revenue (less than) in excess of expenses and other com-
prehensive income. Other comprehensive income includes
unrealized gains and losses on “Available for Sale” securi-
ties and currency translation adjustments.
NOTE K—GRANTS AND UNDISBURSED
COMMITMENTS
The ADF IX introduced financing in the form of grants for
the first time. As of 31 December 2006 and 2005, 16 grants
amounting to $274,910,000 and 19 grants amounting
to $246,640,000 were approved, respectively. Of which,
$346,540,000 ($24,000,000 – 2005) became effective.
The fair value of undisbursed commitments approxi-
mates the amount of undisbursed commitments because
ADB expects that grants will be made for all projects/pro-
grams covered by the commitments.

Asian Development Bank—asian development Fund
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE L—FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
If available, quoted market values are used to deter-
mine fair values. Financial instruments for which market
quotations are not readily available are valued using valu-
ADF-7
ation models. The basis of valuation is the expected cash
flows discounted based on observable market data.
FINANCIAL STATEMENTS
See Notes C, D, E, and K for discussions relating to
investments, loans, due from contributors, and undisbursed
commitments. In all other cases, the carrying amounts of
ADF's assets, liabilities, and fund balances are consid-
ered to approximate fair values for all significant financial
instruments.
75
 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 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-
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 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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007

76
 TASF-1
Asian Development Bank—Technical Assistance Special Fund
STATEMENT OF FINANCIAL POSITION
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
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
Asian Development Bank—Technical Assistance Special Fund
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
FINANCIAL STATEMENTS

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

The accompanying notes are an integral part of these financial statements (TASF-6).

78
 TASF-3
Asian Development Bank—Technical Assistance Special Fund
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Contributions received $   77,869 $   71,354
Interest on investments received 11,287 6,908
Cash received from other activities 408 1,638
Technical assistance disbursed (68,617) (67,576)
Financial expenses paid (6) (13)

Net Cash Provided by Operating Activities 20,941 12,311

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of investments 3,213,586 8,490,973
Purchases of investments (3,234,103) (8,502,974)
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)

Due from Banks at Beginning of Year 1,493 1,600

Due from Banks at End of Year $    1,828 $    1,493

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

Net Cash Provided by Operating Activities $   20,941 $   12,311

The accompanying notes are an integral part of these financial statements (TASF-6).

79
 TASF-4
Asian Development Bank—Technical Assistance Special Fund
STATEMENT OF RESOURCES
31 December 2006
Expressed in Thousands of United States Dollars (Note B)

Contributions Direct
Committed Voluntary Regularized Total
FINANCIAL STATEMENTS

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.

The accompanying notes are an integral part of these financial statements (TASF-6).

80
 TASF-5
Asian Development Bank—Technical Assistance Special Fund
SUMMARY STATEMENT OF TECHNICAL ASSISTANCE APPROVED AND EFFECTIVE
For the Year Ended 31 December 2006
Expressed in Thousands of United States Dollars (Note B)

Project
Project Implementation/

FINANCIAL STATEMENTS
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).
The accompanying notes are an integral part of these financial statements (TASF-6).

81

Asian Development Bank—Technical Assistance Special Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS
FINANCIAL STATEMENTS
The Technical Assistance Special Fund (TASF) was estab-
lished to provide technical assistance on a grant basis to
developing member countries of the Asian Development
Bank (ADB) and for regional technical assistance. TASF
resources consist of direct voluntary contributions by
members, allocations from the net income of Ordinary
Capital Resources (OCR) and Asian Development Fund
(ADF) contributions, and revenue from investments and
other sources.
NOTE B—SUMMARY OF SIGNIFICANT Securities Purchased Under Resale Arrangements
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the TASF are presented on the
basis of those for not-for-profit organizations.
TASF reports contributed cash and other assets as
unrestricted asset as these are made available without
conditions other than for the purpose of pursuing the
objectives of the TASF.
Functional and Reporting Currency
The financial statements are expressed in thousands of cur-
rent United States dollars. The United States dollar is the
functional and reporting currency, representing the currency
of the primary economic operating environment of TASF.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
purposes. This allows transactions denominated in non-
US dollar to be translated to the reporting currency using
exchange rates applicable at the time of transactions.
Contributions included in the financial statements during
the year are recognized at applicable exchange rates as of
the respective dates of commitment. At the end of each
accounting month, translation of assets, liabilities, and
uncommitted balances which are denominated in non-US
dollar are adjusted using the applicable rates of exchange
82
TASF-6
at the end of the reporting period. These translation
adjustments are accounted for as exchange gains or losses
and are credited or charged to operations.
Investments
All investment securities held by TASF are reported at esti-
mated fair value, which represents their fair market value.
Realized and unrealized gains and losses are included in
revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
TASF accounts for transfer of financial assets in accordance
with FAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities – a re-
placement of FAS 125.” In general, transfers are accounted
for as sale under FAS 140 when control over the transferred
assets has been relinquished. Otherwise, the transfers are
accounted for as repurchase/resale arrangements and
collateralized financing arrangements. Securities received
under resale arrangement are not recorded on TASF’s bal-
ance sheet and are not re-pledged under securities lending
arrangements. ADB monitors the fair value of the securi-
ties received under resale arrangements, and if necessary,
requires additional collateral.
Contributions
The contributions from donors and the allocations from
OCR net income are included in the financial statements,
from the date of effectivity of the contribution agreement,
and the Board of Governors’ approval, respectively.
Technical Assistance to Member Countries and
Undisbursed Commitments
Technical assistance is recognized in the financial state-
ments when the related project is approved and becomes
effective. Upon completion or cancellation of a TA project,
any undisbursed amount is written back as a reduction
in technical assistance for the year and the corresponding
undisbursed commitment is eliminated accordingly.

Asian Development Bank—Technical Assistance Special Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and
liabilities and uncommitted balances as at the end of the
year and the reported amounts of revenue and expenses
during the year. The actual results could differ from those
estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation. The standard does not apply to
TASF’s financial statements as of 31 December 2006.
In September 2006, FASB issued FAS 157, “Fair
Value Measurements,” which emphasizes the definition
of fair value (FV) for financial reporting purposes to mean
a market-based measure and not an entity-specific meas-
ure. It also prescribes methods for measuring FV includ-
ing a FV hierarchy that ranks the quality and reliability of
information used in FV measurements giving the highest
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,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be
issued after 31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments that
may be carried at fair value. It offers an irrevocable option
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.
TASF-6
CONTINUED
Statement of Cash Flows
FINANCIAL STATEMENTS
For the purposes of the Statement of Cash Flows, the TASF
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB seeks
the highest possible return on its investments. Investments
are governed by the Investment Authority approved by the
Board of Directors in 1999, and reviewed in 2006. The re-
view endorsed a portfolio strategy that is largely consistent
with the 1999 approach. ADB is restricted by its Investment
Authority to invest in government and government-related
debt instruments and in time deposits. In the US dollar
portfolio only and up to limited amounts, investments may
be made in corporate bonds rated A or better, AAA-rated
asset-backed securities, and AAA-rated mortgage-backed
securities.
The currency composition of the investment portfolio
as of 31 December 2006 and 2005 expressed in United
States dollars are as follows:
Currency 2006 2005
Australian dollar $    18,204,000 $ 12,840,000
Canadian dollar 162,726,000 156,567,000
Euro – 20,573,000
United States dollar 86,657,000 61,238,000
Others 8,052,000 2,946,000
Total $275,639,000 $254,164,000
The annualized rate of return on the average invest-
ments held during the year, based on the portfolio held at
the beginning and end of each month was 4.34% (2.95%
– 2005).
There were no outstanding securities purchased under
resale arrangements as of 31 December 2006 and 2005.
83

Asian Development Bank—Technical Assistance Special Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE D—CONTRIBUTIONS AND
UNCOMMITTED BALANCES
FINANCIAL STATEMENTS
Since inception in 1967, direct contributions have been
made by 29 member countries. India made direct and vol-
untary contribution of Rs2.25 million ($50,000 equivalent)
in 2006.
In 1986, 1992, and 2005, the Board of Governors of
ADB, in authorizing replenishments of the ADF, provided
for allocations to the TASF in aggregate amounts equivalent
to $72,000,000, $140,000,000, and $221,000,000, to be
used for technical assistance to ADF borrowing developing
member countries and for regional technical assistance.
In 2006, $20,000,000 was allocated out of OCR net
income to TASF bringing the accumulated allocation out
of OCR net income to $683,000,000.
Some of the direct contributions received can be
subject to restricted procurement sources, while some are
given on condition that the technical assistance be made
on a reimbursable basis. The total contributions received
for the years ended 31 December 2006 and 2005 were
without restrictions.
Uncommitted balances comprised of amounts which
have not been committed by ADB as at 31 December 2006
and 2005. These balances include approved TA projects/
programs that are not yet effective.
NOTE E—UNDISBURSED COMMITMENTS
Undisbursed commitments are denominated in United States
dollars and represent effective ongoing grant-financed TA
projects/programs which are not yet disbursed as of the
end of the year. During 2006, an amount of $9,393,000
($11,339,000 – 2005) representing completed and can-
celed TA projects has been written back as a reduction in
technical assistance of the period and the corresponding
undisbursed commitment has been eliminated. The fair
value of undisbursed commitments approximates the
amounts undisbursed, because ADB expects that grants will
be made for all projects/programs covered by the commit-
ments. For technical assistance approved prior to 1 January
2002, and provided as a project preparatory grant leading
to an ADB loan, the amount of grant exceeding $250,000
84
TASF-6
are refunded by the borrower through the loan proceeds
under the terms of that ADB loan. Refinanced amount of
$147,000 ($677,000 – 2005) was charged to such loans
and credited to revenue from other sources of the TASF
during the year ended 31 December 2006. All project
preparatory technical assistance (PPTA) funded from TASF
and OCR current income approved on or after 1 January
2002 are no longer subject to cost recovery.
NOTE F­—OTHER ASSETS AND MISCELLANEOUS
LIABILITIES
The OCR and special fund resources are at all times used,
committed, and invested entirely separate from each other.
Under ADF IX and the third regularized replenishment of
TASF, a specific portion of the total contributions are to be
allocated to TASF. ADF receives all contributions of mem-
bers and subsequently transfers TASF’s portion to TASF.
Regional technical assistance projects and programs may
be combined activities between special and trust funds.
Interfund accounts are settled on a regular basis between
TASF and the other funds.
The interfund account balances included in other
assets and miscellaneous liabilities are as follows:
2006 2005
Receivable from:
OCR $    – $   24,000
ADF 2,650,000 4,714,000
JSF 5,000 9,000
Agency Trust Funds 26,000 12,000
Total $2,681,000 $4,759,000
Payable to:
OCR $   97,000 $     –
Agency Trust Funds 14,000 90,000
Total $  111,000 $   90,000
At 31 December 2005, miscellaneous liabilities in-
cluded advanced contribution of $2,398,000 (  2,026,000)
from the Government of France for the TASF’s third regu-
larized replenishment, which was formally acknowledged
in January 2006.

Asian Development Bank—Technical Assistance Special Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
TASF-6
See Notes C and E for discussions with respect to
investments and undisbursed commitments, respectively.
FINANCIAL STATEMENTS
In all other cases, the carrying amounts of TASF's assets,
liabilities, and uncommitted balances are considered
to approximate fair values for all significant financial
­instruments.
85
 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 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
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-
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 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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007

86
 JSF-1
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF FINANCIAL POSITION
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

JSF JSF

FINANCIAL STATEMENTS
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

LIABILITIES AND UNCOMMITTED BALANCES

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
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

JSF JSF
FINANCIAL STATEMENTS

Regular & Regular &

ACCSF Supplementary Total ACCSF Supplementary Total

CHANGES IN UNRESTRICTED NET ASSETS

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

88
 JSF-3
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

CASH FLOWS FROM OPERATING ACTIVITIES

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)

CASH FLOWS FROM INVESTING ACTIVITIES

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.

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

89

Asian Development Bank—JAPAN SPECIAL Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS
FINANCIAL STATEMENTS
The Japan Special Fund (JSF) was established in March
1988 when Japan and the Asian Development Bank (ADB)
entered into a financial arrangement whereby Japan agreed
to make an initial contribution and ADB became the admin-
istrator. The purpose of JSF is to help developing member
countries (DMCs) of ADB restructure their economies and
broaden the scope of opportunities for new investments,
thereby assisting the recycling of funds to DMCs of ADB.
While JSF resources are used mainly to finance technical
assistance (TA) operations, these resources may also be
used for equity investment operations in ADB's DMCs.
Under the agreement between ADB and Japan, ADB may
invest the proceeds of JSF pending disbursement.
In March 1999, the Board approved the acceptance
and administration by ADB of the Asian Currency Crisis Sup-
port Facility (ACCSF) to assist Asian currency crisis-affected
member countries (CAMCs). Funded by Japan, ACCSF was
established within JSF to assist in the economic recovery of
CAMCs through interest payment assistance (IPA) grants,
TA grants, and guarantees. With the general fulfillment of
the purpose of the facility, Japan and ADB agreed to ter-
minate the ACCSF on 22 March 2002. The ACCSF account
is to be kept open until the completion of all TA disburse-
ments and the settlement of all administrative expenses.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of JSF are presented on the basis
of those for not-for-profit organizations and as unre-
stricted and temporarily restricted net assets. ACCSF funds
are separately reported in the financial statements.
JSF reports the contributions of cash and other assets
as restricted support if they are received with donor stipu-
lations that limit the use of the donated assets. When the
donor restriction expires, that is, when a stipulated time or
purpose restriction is accomplished, temporarily restricted
net assets are reclassified to unrestricted net assets and
reported in the Statement of Activities and Changes in Net
Assets as “NET ASSETS RELEASED FROM RESTRICTIONS.”
90
JSF-4
Functional and Reporting Currency
The financial statements are expressed in thousands of cur-
rent United States dollars. The United States dollar is the
functional and reporting currency, representing the currency
of the primary economic operating environment of JSF.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
purposes. This allows transactions denominated in non-
US dollar to be translated to the reporting currency using
exchange rates applicable at the time of transactions.
Contributions included in the financial statements during
the year are recognized at applicable exchange rates as of
the respective dates of commitment. At the end of each
accounting month, translation of assets, liabilities, and
uncommitted balances which are denominated in non-US
dollar are adjusted using the applicable rates of exchange
at the end of the reporting period. These translation ad-
justments are accounted for as exchange gains or losses
and are credited or charged to operations.
Investments
All investment securities held by JSF are reported at esti-
mated fair value, which represents their fair market value.
Realized and unrealized gains and losses are included in
revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
Interest on investment securities and time deposits
are recognized as realized and reported, net of amortiza-
tions of premium and discounts.
Securities Purchased Under Resale Arrangements
JSF accounts for transfer of financial assets in accord-
ance with FAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities – a
replacement of FAS 125.” In general, transfers are
accounted for as sale under FAS 140 when control over
the transferred assets has been relinquished. Otherwise,
the transfers are accounted for as repurchase/resale ar-

Asian Development Bank—JAPAN SPECIAL Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
rangements and collateralized financing arrangements.
Securities received under resale arrangement are not re-
corded on JSF’s balance sheet and are not re-pledged un-
der securities lending arrangements. ADB monitors the fair
value of the securities received under resale arrangements,
and if necessary, requires additional collateral.
Contributions
Contributions by Japan are included in the financial state-
ments from the date indicated by Japan that funds are
expected to be made available. Contributions which are
restricted by the donor for specific TA projects/programs
or for IPA grants are classified as temporarily restricted
contributions. Those without any stipulation as to spe-
cific use are accounted for and reported as unrestricted
contributions.
Technical Assistance and Undisbursed Commitments
Technical assistance is recognized in the financial state-
ments when the related project is approved and becomes
effective. Upon completion of a TA project or cancellation
of a grant, any undisbursed amount is written back as a
reduction in the TA for the year and the corresponding
undisbursed commitment is eliminated accordingly.
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and li-
abilities as at the end of the year and the reported amounts
of income and expenses during the year. The actual results
could differ from those estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
JSF-4
CONTINUED
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
FINANCIAL STATEMENTS
of retained earnings and adjusting prior year balances for
comparative presentation. The standard does not apply to
JSF’s financial statements as of 31 December 2006.
In September 2006, FASB issued FAS 157, “Fair Value
Measurements,” which emphasizes the definition of fair
value (FV) for financial reporting purposes to mean a mar-
ket-based measure and not an entity-specific measure. It
also prescribes methods for measuring FV including a FV
hierarchy that ranks the quality and reliability of informa-
tion used in FV measurements giving the highest prior-
ity 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,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be
issued after 31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments that
may be carried at fair value. It offers an irrevocable option
to carry the vast majority of financial assets and liabilities
at fair value, with changes in fair value recorded in earn-
ings. This statement will be effective for financial state-
ments to be issued after 31 December 2007.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, the JSF
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
approved by the Board of Directors in 1999, and reviewed
in 2006. The review endorsed a portfolio strategy that is
largely consistent with the 1999 approach. ADB is restricted
by its Investment Authority to invest in government and
government-related debt instruments and in time deposits.
91

Asian Development Bank—JAPAN SPECIAL Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
In the US dollar portfolio only and up to limited amounts,
investments may be made in corporate bonds rated A or
FINANCIAL STATEMENTS
better, AAA-rated asset-backed securities, and AAA-rated
mortgage-backed securities.
The investment portfolios of both JSF and ACCSF as
of 31 December 2006 and 2005 are comprised of United
States dollars holdings. Other securities consisted of cor-
porate bonds.
The annualized rates of return on the average invest-
ments held under ACCSF and JSF funds during the year,
based on the portfolio held at the beginning and end of
each month were 4.96% and 4.89%, respectively (3.20%
and 3.25%, respectively – 2005).
There were no outstanding securities purchased
under resale arrangements as of 31 December 2006 and
2005.
NOTE D—OTHER ASSETS AND LIABILITIES
The Ordinary Capital Resources (OCR) and special fund
resources are at all times used, committed, and invested
entirely separate from each other. The administrative
and operational expenses pertaining to OCR and special
fund resources are charged to the respective funds. The
administrative expenses of JSF are settled on a regular
basis between OCR and JSF. Regional technical assistance
projects and programs may be combined activities between
special and trust funds. Interfund accounts are settled on a
regular basis between JSF and the other funds.
The interfund balances between other funds, which
are included in other assets and liabilities are as follows:
2006 2005
Amounts Receivable
by JSF from ACCSF $ 70,000 $149,000
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
NOTE E—UNDISBURSED COMMITMENTS
Undisbursed commitments are denominated in United
States dollars and represent TA projects/programs which
have become effective but not yet disbursed. During 2006,
an amount of $5,946,000 representing completed and
partially canceled TA projects ($7,145,000 – 2005) have
been written back as a reduction in technical assistance
for the year, and the corresponding undisbursed commit-
ments have been eliminated.  $420,000 ($847,000 – 2005)
of this amount corresponds to ACCSF. The fair value of
undisbursed commitments approximates the amounts
outstanding, because ADB expects that disbursements
will substantially be made for all the projects/programs
covered by the commitments.
NOTE F—CONTRIBUTIONS AND
UNCOMMITTED BALANCES
All contributions for the years ended 31 December 2006
and 2005 were received during the respective years.
Effective 31 December 2002, all remaining tem-
porarily restricted net assets under JSF were transferred
and integrated into the unrestricted regular net assets,
as concurred by Japan, in order to optimize the use of
JSF. Similarly, Japan lifted the restriction over the use of
net accumulated investment income, which under the
original terms of agreement between ADB and Japan, may
only be used for defraying JSF's administrative expenses.
Japan agreed to use the net accumulated investment in-
come as additional resources for funding future ADB's TA
­operations.
Uncommitted balances comprised of amounts which
have not been committed by ADB as at 31 December 2006
and 2005. These balances include approved TA projects/
programs that are not yet effective.
 JSF-4
Asian Development Bank—JAPAN SPECIAL Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

As of 31 December 2006 and 2005 these balances are as follows:

FINANCIAL STATEMENTS
2006 2005
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

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-
maining available as of 31 December 2006 corresponds to
funds under ACCSF of $27,418,000 ($26,895,000 – 2005)
to cover completion of TA disbursements and the amount
of net accumulated investment income of $5,431,000
($3,891,000 – 2005) for settlement of all administrative
expenses.
Net assets reverted back to temporarily restricted as-
sets under ACCSF relate to savings on financially complet-
ed technical assistance net of amount from accumulated
investment income, released from restrictions to defray
the administrative expenses of ACCSF.
NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
See Notes C and E for discussions relating to invest-
ments and undisbursed commitments. In all other cases,
the carrying amounts of JSF's assets, liabilities, and uncom-
mitted balances are considered to approximate fair values
for all significant financial instruments.

93
 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 statements of financial position and the related state-
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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007

94
 ADBISF-1
ASIAN DEVELOPMENT BANK­­—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF FINANCIAL POSITION
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
ASSETS

DUE FROM BANKS (Note B) $   696 $   699

INVESTMENTS (Notes B, C, and D)

Time deposits 5,044 1,274

SECURITIES PURCHASED UNDER

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

LIABILITIES AND UNCOMMITTED BALANCES

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

UNCOMMITTED BALANCES (ADBISF-2)

Unrestricted net assets 17,408 16,839

TOTAL $20,675 $19,604

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

95
 ADBISF-2
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
FINANCIAL STATEMENTS

CHANGES IN UNRESTRICTED NET ASSETS

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

0 Less than 1 thousand.

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

96
 ADBISF-3
ASIAN DEVELOPMENT BANK­—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
CASH FLOWS FROM OPERATING ACTIVITIES
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

CASH FLOWS FROM INVESTING ACTIVITIES

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

0 Less than 1 thousand.

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

97

Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS
FINANCIAL STATEMENTS
In 1996, the Asian Development Bank (ADB) approved the
establishment of the Asian Development Bank Institute
(the Institute) in Tokyo, Japan as a subsidiary body of ADB.
The Institute commenced its operations upon the receipt
of the first funds from Japan on 24 March 1997, and it
was inaugurated on 10 December 1997. The Institute’s
funds may consist of voluntary contributions, donations,
and grants from ADB member countries, non-government
organizations, and foundations. The objectives of the
Institute, as defined under its Statute, are the identification
of effective development strategies and capacity improve-
ment for sound development management in developing
member countries.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the Institute are presented on
the basis of those for not-for-profit organizations.
The Institute reports donors’ contributed cash and
other assets as unrestricted support as these are made
available to the Institute without conditions other than for
the purposes of pursuing the objectives of the Institute.
Functional and Reporting Currency
The functional currency of the Institute is the Japanese yen.
The reporting currency is the United States dollar, and the
financial statements are expressed in thousands of current
United States dollars.
Translation of Currencies
Assets, liabilities, and uncommitted balances are translated
from the functional currency to the reporting currency at
the applicable rates of exchange at the end of a reporting
period. Commitments included in the financial statements
during the year are recognized at the applicable exchange
rates as of the respective dates of commitment. Revenue
and expense amounts in currency other than the United
98
ADBISF-4
States dollar are translated for each semi-monthly period
generally at the applicable rates of exchange at the be-
ginning of each period; such practice approximates the
application of average rates in effect during the period.
Translation adjustments are accounted for as exchange
gains or losses and are credited or charged to operations.
Investments
All investment securities held by the Institute are reported
at estimated fair value which represents their fair market
value. Realized and unrealized gains and losses are included
in revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
Securities Purchased Under Resale Arrangement
ADBI accounts for transfers of financial assets in accord-
ance with FAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities
– a ­ replacement of FAS 125.” In general, transfers are
accounted for as sale under FAS 140 when control over
the transferred assets has been relinquished. Otherwise,
the transfers are accounted for as repurchase/resale
agreements and collateralized financing arrangements.
Securities received under resale arrangements are not
recorded on ADBI’s balance sheet.
Property, Furniture, and Equipment
Property, furniture, and equipment are stated at cost and
depreciated over their estimated useful lives using the
straight-line method. Maintenance, repairs and minor
betterments are charged to expense.
The Institute distinguishes between capital leases and
operating leases based on the objective of the expenditure.
Expenditures amounting to more than $30,000 for a single
asset or a combination of assets forming an integral part
of a separate asset are capitalized.
Contributions
Contributions from donors are included in the financial
statements from the date committed.

Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Accounting Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and li-
abilities as at the end of the year and the reported amounts
of revenue and expenses during the year. Actual results
could differ from those estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation.
In September 2006, FASB issued FAS 157, “Fair Value
Measurements.” This statement emphasizes the definition
of fair value (FV) for financial reporting purposes to mean
a market-based measure and not an entity-specific meas-
ure. It also prescribes methods for measuring FV including
a FV hierarchy that ranks the quality and reliability of
information used in FV measurements giving the highest
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,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be
issued after 31 December 2007.
Also in September 2006, FASB issued FAS 158, “Em-
ployers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans, an amendment of FASB Statements
No. 87, 88, 106, and 132(R).” This statement improves
financial reporting by requiring an employer to recognize
the overfunded or underfunded status of a defined benefit
postretirement plan as an asset or liability in its statement
of financial position and to recognize changes in that
funded status in the year in which the changes occur
through comprehensive income of a business entity. This
ADBISF-4
CONTINUED
statement also improves financial reporting by requiring
an employer to measure the funded status of a plan as
FINANCIAL STATEMENTS
of the date of its year-end statement of financial position,
with limited exceptions. Although ADBI, being an employer
without publicly traded equity securities, is not required
to adopt this until the end of the fiscal year ending after
June 15, 2007, ADB opted to early adopt FAS 158 for
the fiscal year ended 31 December 2006.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable
option 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.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, the
Institute considers that its cash and cash equivalents are
limited to "DUE FROM BANKS.”
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB
administers the Institute’s investments and seeks the high-
est possible return on its investments. Investments are gov-
erned by the Investment Authority approved by the Board
of Directors in 1999, and reviewed in 2006. The review
endorsed a portfolio strategy that is largely consistent with
the 1999 approach. ADB is restricted by its Investment
Authority to invest in government and government-related
debt instruments and in time deposits.
The investment portfolio was composed wholly
of investments denominated in Japanese yen as of 31
December 2006 and 2005. All such investments are due
within one year. The total investment income reported
as of 31 December 2006 consisted of interest income
earned during the year.
The annualized rate of return on the average in-
vestments held during the year including receivable for
securities purchased under resale arrangement, based
99

Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
on the portfolio held at the beginning and end of each
month was 0.136% (0.002% – 2005).
FINANCIAL STATEMENTS
As of 31 December 2006, ADBI did not hold any
investments in an unrealized loss position.
NOTE D—FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
The carrying amounts for all significant financial
instruments in the Institute’s Statement of Financial Posi-
tion are considered to approximate fair values.
NOTE E—LEASED ASSETS
The Institute leases office space and other assets. The
minimum rental payments required under operating leases
that have initial or non-cancelable lease terms in excess of
one year at 31 December 2006 are as follows:
Year ending 31 December Minimum future rentals
2007 $128,000
2008 55,000
2009 9,000
On 6 January 2006, the Institute concluded an
agreement regarding the lease of a server, which requires
ADBI to pay a total amount of $205,000 over the period
of 60 months for the lease of the server.
NOTE F—CONTRIBUTIONS
In 2006, the Government of Japan committed its 11 th
contribution to ADBI amounting to ¥1,340,988,000
($11,263,000 equivalent), which was transferred to the
Fund on 15 January 2007. The amount contributed was
reported in 31 December 2006 balance sheet as “Due
from Contributors.”
100
ADBISF-4
NOTE G—DUE TO AND DUE FROM ADB
Other Assets include amounts due from ADB of $4,000
as of 31 December 2006 ($4,000 – 2005). Accounts pay-
able and other liabilities include amounts due to ADB of
$254,000 and $177,000 at 31 December 2006 and 2005,
respectively.
NOTE H—STAFF RETIREMENT PLAN AND
POSTRETIREMENT MEDICAL BENEFITS
Staff Retirement Plan
The Institute participates in the contributory defined benefit
Staff Retirement Plan (the Plan) of ADB. Every employee,
as defined under the Plan, shall, as a condition of service,
become a participant from the first day of service, provided
that at such a date, the employee has not reached the
normal retirement age of 60. Retirement benefits are
based on length of service and highest average remunera-
tion during two years of eligible service. The Plan assets
are segregated and are not included in the accompanying
Balance Sheet. The costs of administering the Plan are
absorbed by ADB, except for fees paid to the investment
managers and related charges, including custodian fees,
which are borne by the Plan.
Participants hired on or before 30 September 2006
are required to contribute 9 1/3% of their salary to the
Plan while those hired after that date do not anymore
contribute to the plan. Participants may also make additional
voluntary contributions. ADBI's contribution is determined
at a rate sufficient to cover that part of the costs of the
Plan not covered by the participants' contributions.
Expected Contributions
The expected amount of contributions to the Plan for 2007,
based on the Institute’s contribution rate for the coming
year of 16%, and the participants’ mandatory contribution
are $115,300 and $67,300, respectively (2005 – $154,000
and $90,000).
 ADBISF-4
Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005 CONTINUED

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
invested in international financial markets and in a vari-
ety of investment vehicles. The Plan employs six external
asset managers and one global custodian who function
within the guidelines established by the Plan’s Investment
Committee. The investment of these assets, over the long
term, is expected to produce higher returns than short-
term investments. The investment policy incorporates the
Plan’s package of desired investment return, and tolerance
for risk, taking into account the nature and duration of
the Plan’s liabilities. The Plan’s assets are diversified among
different markets and different asset classes. The use of
FINANCIAL STATEMENTS
transactional efficiency purposes.
The Plan’s investment policy is periodically reviewed
and revised to reflect the best interest of the Plan’s par-
ticipants and beneficiaries. The current policy, adopted in
January 2003, specifies an asset-mix structure of 70% of
assets in equities and 30% in fixed income securities.
At present, investments of the Plan’s assets are
divided into three categories: US equity, Non-US equity,
and US fixed income.
As of 31 December 2006 and 2005, the breakdown
of the fair value of plan assets held is as follows:

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
income securities include US government and govern-
ment guaranteed obligations, corporate bonds and time
deposits. Other assets include forward exchange contracts
in various foreign currencies transacted to hedge currency
exposure in the investment portfolio, which are reported
at fair value.
For the year ended 31 December 2006 the net return
on the Plan assets was 12.9% (8% – 2005). ADB expects
the long-term rate of return on the assets to be 8%.
The assumed overall rate of return takes into account long-
term return expectations of the underlying asset classes
within the investment portfolio mix, and the expected
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
in investment policy or market environment, the assumed
investment return of 8% on the Plan’s assets is expected to
remain broadly the same, year to year.

101
 ADBISF-4
Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

Postretirement Medical Benefits Plan Generally accepted accounting principles require an

actuarially determined assessment of the periodic cost of
FINANCIAL STATEMENTS

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

Pension Benefits Postretirement Medical Benefits
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
Asian Development Bank—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005

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

FINANCIAL STATEMENTS
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
plan as of 31 December 2006 was $4,041,000 ($3,169,000
– 2005).
A one-percentage-point change in assumed health
care cost trend rates would have the following effects:
five years. The expected benefit payments are based on the
same assumptions used to measure the benefit obligation
at 31 December 2006:
Postretirement
Pension Benefits Medical Benefits

2007 $ 325,000 $ 5,000

1-Percentage- 1-Percentage- 2008 89,000 5,000
Point Increase Point Decrease
Effect on total service and
interest cost components $ 8,000 $  (6,000)
Effect on postretirement
benefit obligation 47,000 (36,000)
Estimated Future Benefits Payments
The following table shows the benefit payments expected
to be paid in each of the next five years and subsequent
2009 96,000 6,000
2010 140,000 7,000
2011 146,000 7,000
2012-2016 1,164,000 44,000
Incremental Effects of FAS 158
The following table shows the incremental effects
of the application of FAS 158 on the individual Balance
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
 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 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—Asian Tsunami Fund at
31 December 2006 and 2005, and the results of its activities and changes in net assets and its
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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007

104
 ATF-1
Asian Development Bank—ASIAN TSUNAMI Fund
STATEMENT OF FINANCIAL POSITION
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
ASSETS

DUE FROM BANKS (Note B) $   283 $   553

INVESTMENTS (Notes B, C, and G)

Time deposits 474,185 513,338

ACCRUED REVENUE 761 1,936

ADVANCES FOR GRANTS (Note B) 41,900 43,036

TOTAL $517,129 $558,863

LIABILITIES AND UNCOMMITTED BALANCES

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)

Unrestricted net assets 19,482 6,344

TOTAL $517,129 $558,863

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

105
 ATF-2
Asian Development Bank—ASIAN TSUNAMI Fund
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
Expressed in Thousands of United States Dollars (Note B)

2006 2005
FINANCIAL STATEMENTS

CHANGES IN UNRESTRICTED NET ASSETS

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

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

106
 ATF-3
Asian Development Bank—ASIAN TSUNAMI Fund
STATEMENT OF CASH FLOWS
For the Year Ended 31 December 2006 and For the Period 11 February to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Contributions received $        – $    604,893
Interest on investments received 26,357 11,846
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 Cash (Used in) Provided by Operating Activities (39,422) 513,891

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of investments 10,727,068 15,884,225
Purchases of investments (10,687,916) (16,397,563)

Net Cash Provided by (Used in) Investing Activities 39,152 (513,338)

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

TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:

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

Adjustments to reconcile increase in net assets
to net cash (used in) provided by operating activities:
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

Net Cash (Used in) Provided by Operating Activities $   (39,422) $    513,891

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

107

Asian Development Bank—ASIAN TSUNAMI Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A­—NATURE OF OPERATIONS
FINANCIAL STATEMENTS
The Asian Tsunami Fund (ATF) was established on 11
February 2005 in response to the special circumstances
surrounding the developing member countries (DMCs) that
were stricken by the effects of the tsunami on 26 December
2004. The purpose of ATF is to provide emergency grant
financing promptly and effectively to affected DMCs in the
form of technical assistance (TAs) and investment projects
to support reconstruction, rehabilitation, and associated
development activities following the tsunami disaster.
ATF will serve as a dedicated source of grant financing
to support priority rehabilitation and reconstruction needs
on a multi-sector basis. Resources from the Fund will be
available to central governments and other suitable entities
including, non-governmental organizations.
ATF’s resources may consist of allocations from the net
income of Ordinary Capital Resources (OCR) and contribu-
tions from bilateral, multilateral, and individual sources.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the ATF are presented on the
basis of those for not-for-profit organizations.
ATF reports donor’s contributions of cash and other
assets as unrestricted asset as these are made available
to ATF without conditions other than for the purposes of
pursuing its objectives.
Functional and Reporting Currency
The financial statements are expressed in thousands of
current United States dollars. The United States dollar is
the functional and reporting currency, representing the
currency of the primary economic operating environment
of ATF.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
108
ATF-4
purposes. This allows transactions denominated in non-
US dollar to be translated to the reporting currency using
exchange rates applicable at the time of transactions.
Contributions included in the financial statements during
the year are recognized at applicable exchange rates as of
the respective dates of commitment. At the end of each
accounting month, translation of assets, liabilities, and
uncommitted balances which are denominated in non-US
dollar are adjusted using the applicable rates of exchange
at the end of the reporting period. These translation
adjustments are accounted for as exchange gains or losses
and are credited or charged to operations.
Investments
All investment securities held by ATF are reported at esti-
mated fair value, which represents their fair market value.
Realized and unrealized gains and losses are included in
revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
Contributions
The contributions from donors and the allocations from
OCR net income are included in the financial statements,
from the date of effectivity of the contribution agreement,
and the Board of Governors’ approval, respectively.
Grants and Undisbursed Commitments
Grants are recognized in the financial statements when
the related project is approved and becomes effective.
Upon completion of the project or cancellation of a grant,
any undisbursed amount is written back as a reduction
in grants for the year and the corresponding undisbursed
commitment is eliminated accordingly.
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and
liabilities and uncommitted balances as at the end of the

Asian Development Bank—ASIAN TSUNAMI Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
year and the reported amounts of revenue and expenses
during the year. The actual results could differ from those
estimates.
Accounting and Reporting Developments
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation. The standard does not apply to
ATF’s financial statements as of 31 December 2006.
In September 2006, FASB issued FAS 157, “Fair
Value Measurements,” which emphasizes the definition of
fair value (FV) for financial reporting purposes to mean a
market-based measure and not an entity-specific measure.
It also prescribes methods for measuring FV including
a FV hierarchy that ranks the quality and reliability of
information used in FV measurements giving the highest
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,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be
issued after 31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable
option 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.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, ATF
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."
ATF-4
CONTINUED
Reclassification
FINANCIAL STATEMENTS
The amount of $40,000,000 that was returned to OCR
in 2005 was reclassified in ATF–2 and ATF–3 from
“Contributions” and “Contributions received,” respectively,
to “Transfer to OCR” to conform to the current year’s
presentation.
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters, ADB seeks
the highest possible return on its investments. Investments
are governed by the Investment Authority approved by the
Board of Directors in 1999, and reviewed in 2006. The re-
view endorsed a portfolio strategy that is largely consistent
with the 1999 approach. ATF is restricted by its Investment
Authority to invest in government and government-related
debt instruments and in time deposits. In the US dollar
portfolio only and up to limited amounts, investments may
be made in corporate bonds rated A or better, AAA-rated
asset-backed securities, and AAA-rated mortgage-backed
securities.
All investments comprised of holdings in time deposits
denominated in United States dollar as of 31 December
2006 and 2005. The reported total investment income
consisted of interest income earned during the year.
The annualized rate of return on the average invest-
ments held during the year, based on the portfolio held
at the beginning and end of each month was 5.01%
(3.46% - 2005).
NOTE D—PAYABLE TO ORDINARY CAPITAL
RESOURCES
The OCR and special fund resources are at all times used,
committed, and invested entirely separate from each other.
The administrative and operational expenses pertaining to
ATF are settled on a regular basis between OCR and ATF.
As of 31 December 2006, $253,000 ($102,000 – 2005)
was payable to OCR.
109

Asian Development Bank—ASIAN TSUNAMI Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE E—UNDISBURSED COMMITMENTS
FINANCIAL STATEMENTS
Undisbursed commitments are denominated in United
States dollars and represent grants not yet disbursed. The
fair value of undisbursed commitments approximates the
amounts outstanding, because ADB expects that disburse-
ments will substantially be made for all the projects/pro-
grams covered by the commitments.
NOTE F—CONTRIBUTIONS AND
UNCOMMITTED BALANCES
In April and May 2005, ADB contributed $600,000,000 to
ATF. Contributions were also received from Australia and
Luxembourg amounting to $3,796,000 and $1,000,000,
respectively. In November 2005, following the establish-
ment of Pakistan Earthquake Fund (PEF) in response to
the special circumstances surrounding the 8 October
2005 earthquake in Pakistan, unutilized ATF fund of
$40,000,000 was transferred back to OCR, which was
110
ATF-4
subsequently transferred to PEF. Another $10,000,000
was returned to OCR in June 2006 to be earmarked for
use to support post-disaster management, rehabilitation,
immediate construction, and urgent vital development
activities in earthquake-affected regions in Indonesia.
Uncommitted balances comprised of amounts which
have not been committed by ATF as at end of year.
NOTE G—FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
See Notes C and E for discussions relating to invest-
ments and undisbursed commitments. In all other cases,
the carrying amounts of the ATF's assets, liabilities, and
uncommitted balances are considered to approximate fair
values for all significant financial instruments.
 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 statements of financial position and the related state-
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
31 December 2006 and 2005, and the results of its activities and changes in net assets and its
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.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
7 March 2007

111
 PEF-1
Asian Development Bank—pakistan earthquake Fund
STATEMENT OF FINANCIAL POSITION
31 December 2006 and 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
FINANCIAL STATEMENTS

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

LIABILITIES AND UNCOMMITTED BALANCES

UNDISBURSED COMMITMENTS (Notes B, D, and F) $ 42,500 $    –

UNCOMMITTED BALANCES (PEF-2) (Notes B and E)

Unrestricted net assets 6,046 85,497

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
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
Expressed in Thousands of United States Dollars (Note B)

2006 2005

FINANCIAL STATEMENTS
CHANGES IN UNRESTRICTED NET ASSETS

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

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

113
 PEF-3
Asian Development Bank—pakistan earthquake Fund
STATEMENT OF CASH FLOWS
For the Year Ended 31 December 2006 and For the Period 14 November to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)

2006 2005
FINANCIAL STATEMENTS

CASH FLOWS FROM OPERATING ACTIVITIES
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) –

Net Cash (Used in) Provided by Operating Activities (43,163) 80,065

CASH FLOWS FROM INVESTING ACTIVITIES
Maturities of investments 727,110 79,000
Acquisition of investments (682,520) (158,865)

Net Cash Provided by (Used in) Investing Activities 44,590 (79,865)

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

TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES:

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

Adjustments to reconcile (decrease) increase in net assets
to net cash (used in) provided by operating activities:
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) –

Net Cash (Used in) Provided by Operating Activities $   (43,163) $  80,065

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

114

Asian Development Bank—PAKISTAN EARTHQUAKE Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
NOTE A—NATURE OF OPERATIONS
The Pakistan Earthquake Fund (PEF) was established on 14
November 2005 in response to the special circumstances
confronted by Pakistan resulting from the effects of an
earthquake on 8 October 2005. The objective of the PEF is
to deliver emergency grant financing promptly and effec-
tively to Pakistan for technical assistance and investment
projects to support reconstruction, rehabilitation, and
associated development activities.
PEF resources will be available to the Government
of Pakistan and other suitable entities acceptable to the
Government of Pakistan and ADB, including, where ap-
propriate, non-government organizations.
PEF’s resources may consist of allocations from the net
income of Ordinary Capital Resources (OCR) and contribu-
tions from bilateral, multilateral, and individual sources.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the PEF are presented on the
basis of those for not-for-profit organizations.
PEF reports donor’s contributions of cash and other
assets as unrestricted asset as these are made available
to PEF without conditions other than for the purposes of
pursuing its objectives.
Functional and Reporting Currency
The financial statements are expressed in thousands of cur-
rent United States dollars. The United States dollar is the
functional and reporting currency, representing the currency
of the primary economic operating environment of PEF.
Translation of Currencies
Effective 1 January 2006, ADB adopted the use of daily
exchange rates for accounting and financial reporting
purposes. This allows transactions denominated in non-
US dollar to be translated to the reporting currency using
exchange rates applicable at the time of transactions.
PEF-4
Contributions included in the financial statements during
the year are recognized at applicable exchange rates as of
FINANCIAL STATEMENTS
the respective dates of commitment. At the end of each
accounting month, translation of assets, liabilities, and
uncommitted balances which are denominated in non-US
dollar are adjusted using the applicable rates of exchange
at the end of the reporting period. These translation
adjustments are accounted for as exchange gains or losses
and are credited or charged to operations.
Investments
All investment securities held by PEF are reported at esti-
mated fair value, which represents their fair market value.
Realized and unrealized gains and losses are included in
revenue. Time deposits are reported at cost which is a
reasonable estimate of fair value.
Contributions
The contributions from donors and the allocations from
OCR net income are included in the financial statements,
from the date of effectivity of the contribution agreement,
and the Board of Governors’ approval, respectively.
Grants and Undisbursed Commitments
Grants are recognized in the financial statements when
the related project is approved and becomes effective.
Upon completion of the project or cancellation of a grant,
any undisbursed amount is written back as a reduction
in grants for the year and the corresponding undisbursed
commitment is eliminated accordingly.
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make reasonable estimates and assump-
tions that affect the reported amounts of assets and
liabilities and uncommitted balances as at the end of the
year and the reported amounts of revenue and expenses
during the year. The actual results could differ from those
estimates.
115

Asian Development Bank—PAKISTAN EARTHQUAKE Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
Accounting and Reporting Developments
FINANCIAL STATEMENTS
FAS 154, “Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FAS 3,” became
effective for ADB in 2006. This standard applies to volun-
tary changes in accounting principles and new accounting
pronouncements, which requires, among other things,
reporting the cumulative effect of adopting new account-
ing principles as an adjustment to the opening balance
of retained earnings and adjusting prior year balances for
comparative presentation. The standard does not apply to
PEF’s financial statements as of 31 December 2006.
In September 2006, FASB issued FAS 157, “Fair
Value Measurements,” which emphasizes the definition of
fair value (FV) for financial reporting purposes to mean a
market-based measure and not an entity-specific measure.
It also prescribes methods for measuring FV including
a FV hierarchy that ranks the quality and reliability of
information used in FV measurements giving the highest
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,
especially those using significant unobservable inputs. This
statement will be effective for financial statements to be
issued after 31 December 2007.
In February 2007, FASB issued FAS 159, “Fair value
Option for Financial Assets and Financial Liabilities.” This
statement expands the scope of financial instruments
that may be carried at fair value. It offers an irrevocable
option 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.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, PEF
considers that its cash and cash equivalents are limited to
"DUE FROM BANKS."
NOTE C—INVESTMENTS
The main investment management objective is to maintain
security and liquidity. Subject to these parameters,  ADB seeks
116
PEF-4
the highest possible return on its investments. Investments
are governed by the Investment Authority approved by the
Board of Directors in 1999, and reviewed in 2006. The re-
view endorsed a portfolio strategy that is largely consistent
with the 1999 approach. PEF is restricted by its Investment
Authority to invest in government and government-related
debt instruments and in time deposits. In the US dollar
portfolio only and up to limited amounts, investments may
be made in corporate bonds rated A or better, AAA-rated
asset-backed securities, and AAA-rated mortgage-backed
securities.
The currency compositions of the investment portfolio
as of 31 December 2006 and 2005 expressed in United
States dollars are as follows:
Currency 2006 2005
Pakistan rupee $  3,844,000 $       –
United States dollar 31,436,000 79,865,000
Total $35,280,000 $79,865,000
The annualized rate of return on the average invest-
ments held during the year, based on the portfolio held at
the beginning and end of each month was 5.22% (4.25%
– 2005).
NOTE D—UNDISBURSED COMMITMENTS
Total undisbursed commitments are denominated in
United States dollars and represent effective grant for
projects, which have not been disbursed. The fair value
of undisbursed commitments approximates the amounts
outstanding, because ADB expects that disbursements will
substantially be made for all the projects/programs covered
by the commitments.
NOTE E—CONTRIBUTIONS AND
UNCOMMITTED BALANCES
In November 2005, ADB transferred $80,000,000 from
OCR Surplus to the PEF. In addition, Finland committed
contributions equivalent to $5,379,000.
In 2006, Finland made another commitment
of   5,500,000 ($6,882,000 equivalent), while the Govern-

Asian Development Bank—PAKISTAN EARTHQUAKE Fund
NOTES TO FINANCIAL STATEMENTS
31 December 2006 and 2005
ment of Australia committed A$20,000,000 ($15,036,000
equivalent). During the same year, the Government of Norway
deposited an Instrument of Contribution, which undertakes
to make contributions to the PEF a maximum amount of
$20,000,000, through a debt-for-development swap ar-
rangement with Pakistan. Under this arrangement, Pakistan
shall match the value of debt and debt service cancellation
with an equivalent amount in Pakistan rupees, which shall be
transferred to the Fund as Norway’s contribution. Based on
the Memorandum of Understanding, Norway’s contribution
shall be limited to the actual amount received by ADB. The
contribution is expected to be made in four equal install-
ments of $5,000,000 from 30 November 2006 to 31 May
2008. In 2006, ADB received $5,000,000 equivalent from
this arrangement.
Of the total amounts committed, A$9,300,000
($7,333,000 equivalent) and   3,000,000 ($3,960,000 equiva-
lent) have not yet been received as of 31 December 2006
from Australia and Finland, respectively. These are reported
in the balance sheet as “Due from Contributors.”
Uncommitted balances comprised of amounts which have
not been committed by PEF as at end of year. These balances
include approved grants that are not yet effective.
PEF-4
NOTE F—FAIR VALUE OF FINANCIAL INSTRUMENTS
FINANCIAL STATEMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
See Notes C and D for discussions relating to invest-
ments and undisbursed commitments. In all other cases,
the carrying amount of PEF’s assets, liabilities and uncom-
mitted balances are considered to approximate fair values
for all significant financial instruments.
NOTE G—FUND ADMINISTRATION
The Ordinary Capital Resources (OCR) and special fund
resources are at all times used, committed, and invested
entirely separate from each other. The Board of Governors
may approve allocation of the net income of OCR to special
funds, based on the funding and operational requirements
of the funds. The administrative and operational expenses
pertaining to the PEF are settled on a regular basis between
OCR and PEF.
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

– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.

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
OCR ADF Total Project Costa Approved

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

– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.

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.

120
 Total Date
OCR ADF Total Project Costa Approved

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

China, People’s Republic of

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.
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.

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
Lao People’s Democratic Republic
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.
a Totals may not add up because of rounding.
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
Health, Nutrition, and
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
Water Supply, Sanitation, and
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
(amounts in $ million)

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.
a Totals may not add up because of rounding.

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

China, People’s Republic of

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

DVA = direct value added.

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
Official Com- Source of 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

DVA cofinancing 74.04 170.80 300.00
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

DVA cofinancing 47.06 385.87 134.80
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
assistance fully or partially administered by ADB, and/or cofinancing arranged this year.
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
Official Com- Source of 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
Lao People’s Democratic Republic
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
assistance fully or partially administered by ADB, and/or cofinancing arranged this year.
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
– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.

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

China, People’s Rep. of

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.

Statistical Annex 11
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
 Statistical Annex 12
NONSOVEREIGN LOAN AND EQUITY INVESTMENT APPROVALS BY YEAR, 1983–2006
(amounts in $ million)
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
Statistical Annex 13
NONSOVEREIGN LOAN AND EQUITY INVESTMENT APPROVALS BY COUNTRY, 1983–2006
(amounts in $ million)

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.

Note: Totals may not add up because of rounding.
a Net of full cancellations prior to effectivity.
b Also includes lines of equity and equity underwriting.

135
 Statistical Annex 14
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
(as of 31 December 2006)

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
 Statistical Annex 15
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
 Statistical Annex 16
TECHNICAL ASSISTANCE GRANTS BY COUNTRY AND REGIONAL ACTIVITIES,a 1967–2006, 2005, 2006
(amounts in $ thousand)

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
 Statistical Annex 17
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.

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TA
Type Sector TASF JSF Others Source Total

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

China, People’s Republic of

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
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TA
Type Sector TASF JSF Others Source Total

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
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TA
Type Sector TASF JSF Others Source Total

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

Lao People’s Democratic Republic

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
Type Sector TASF JSF Others Source Total

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
Type Sector TASF JSF Others Source Total

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
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TA
Type Sector TASF JSF Others Source Total

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
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TA
Type Sector TASF JSF Others Source Total

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
 Statistical Annex 18
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
Health, Nutrition, and
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
Water Supply, Sanitation, and
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.

Statistical Annex 19
TECHNICAL ASSISTANCE LOANS AND GRANTS BY SECTOR, 2006
(amounts in $ million)
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
Statistical Annex 20
REGIONAL TECHNICAL ASSISTANCE ACTIVITIES, 2006
(amounts in $ thousand)

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
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TASF JSF Others Source Total

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

TASF JSF Others Source Total

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

TASF JSF Others Source Total

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
Statistical Annex 21
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)
Timor-Leste – – – – – –
Tonga – – – (1.26) (1.37) (1.46)
Turkmenistan – – – – – –
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
 Statistical Annex 22
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)

Timor-Leste – – – – – –
Tonga 1.79 4.14 5.02 (1.26) (1.37) (1.46)

Turkmenistan – – – – – –
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.
b Totals may not add up because of rounding.

156
Statistical Annex 23
ASIAN DEVELOPMENT FUND RESOURCES AND COMMITMENT AUTHORITY

ADF-CONTRIBUTED RESOURCES
($ million; as of 31 December 2006)
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

($ million; as of 31 December 2006)

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.
Note: Totals may not add up because of rounding.
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
 Statistical Annex 24
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
Statistical Annex 25
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

– = nil, ( ) = negative.
a Prior years’ amounts have been restated to conform with the 1995 presentation.

Statistical Annex 26
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

– = nil, ( ) = negative.
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
 Statistical Annex 27
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

Lao People’s Democratic Republic

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
Statistical Annex 28
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

China, People’s Republic of

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
VIE Water Sector Review 50.0

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
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Amount ($ thousand)

Project Name Technical Soft Loan

Assistance Components

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
VIE Water Sector Review 160.0

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)

Project Name Technical Soft Loan

Assistance Components
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
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Amount ($ thousand)

DMC Project Name Technical Soft Loan

Assistance Components

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
Statistical Annex 29
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
Korea, Republic of 128.50 4.18 0.00 0.00 128.50 4.04
Kyrgyz Republic 0.00 0.00 0.00 0.00 0.00 0.00
Lao People’s Democratic Republic 4.43 0.14 0.00 0.00 4.43 0.14
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
Micronesia, Federated States of 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.
b Totals may not add up because of rounding.
165
 Statistical Annex 30
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2006
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
Brunei Darussalam 0.00 0.00 0.00 0.00 0.00 0.00
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
China, People’s Republic of 67.14 7.64 0.00 0.00 67.14 6.92
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
Korea, Republic of 7.08 0.81 0.00 0.00 7.08 0.73
Kyrgyz Republic 10.52 1.20 0.76 0.83 11.27 1.16
Lao People’s Democratic Republic 29.88 3.40 0.36 0.40 30.25 3.12
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
Marshall Islands 0.00 0.00 0.00 0.00 0.00 0.00
Micronesia, Federated States of 2.10 0.24 0.05 0.06 2.15 0.22
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
International Organizations 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

0.00 = data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and manufactured, based on US dollar value equivalent of contract.
b Totals may not add up because of rounding.

166
Statistical Annex 31
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2006
PROJECT LOANS—ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND COMBINED
(amounts in $ million)
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
Brunei Darussalam 0.00 0.00 0.00 0.00 0.00 0.00
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
China, People’s Republic of 843.25 21.35 1.21 0.60 844.46 20.33

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
Korea, Republic of 135.58 3.43 0.00 0.00 135.58 3.26
Kyrgyz Republic 10.52 0.27 0.76 0.37 11.27 0.27
Lao People’s Democratic Republic 34.32 0.87 0.36 0.18 34.68 0.84
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
Marshall Islands 0.00 0.00 0.00 0.00 0.00 0.00
Micronesia, Federated States of 2.10 0.05 0.05 0.03 2.15 0.05
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
International Organizations 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
0.00 = data negligible.
a Represents the country of origin where the goods are mined, produced, grown, and manufactured, based on US dollar value equivalent of contract.
b Totals may not add up because of rounding.

167
 Statistical Annex 32
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
Brunei Darussalam 0.05 0.00 0.00 0.00 0.05 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
China, People’s Republic of 106.43 5.62 32.90 11.25 139.33 6.38
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
Korea, Republic of 82.72 4.37 16.60 5.68 99.32 4.55
Kyrgyz Republic 0.01 0.00 0.17 0.06 0.18 0.01
Lao People’s Democratic Republic 0.04 0.00 0.23 0.08 0.27 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
Marshall Islands 0.00 0.00 0.00 0.00 0.00 0.00
Micronesia, Federated States of 0.00 0.00 1.06 0.36 1.06 0.05
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
International Organizations 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

0.00 = data negligible.

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.
b Totals may not add up because of rounding.

168
Statistical Annex 33
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
0.00 = data negligible.
a Represents the country of origin where the goods are mined, produced, grown, and manufactured, based on US dollar value equivalent of contract.
b Totals may not add up because of rounding.

169
 Statistical Annex 34
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
Brunei Darussalam 0.00 0.00 0.00 0.00 0.00 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
China, People’s Republic of 2.53 1.69 3.56 2.18 4.39 2.82
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
Korea, Republic of 0.09 0.06 0.42 0.26 0.44 0.28
Kyrgyz Republic 0.39 0.26 0.16 0.10 0.36 0.23
Lao People’s Democratic Republic 0.47 0.31 1.67 1.03 0.14 0.09
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
Marshall Islands 0.01 0.01 0.09 0.06 0.08 0.05
Micronesia, Federated States of 0.00 0.00 0.01 0.00 0.02 0.01
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
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL b 149.52 100.00 163.00 100.00 155.70 100.00

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.
b Totals may not add up because of rounding.

170
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