Why in the News?
India has strongly objected to the Asian Development Bank’s (ADB) decision to provide an $800 million loan to Pakistan under its Resource Mobilisation Reform Programme.
About the Asian Development Bank (ADB):
- Established: 1966, following a UN-led conference on Asian Economic Cooperation.
- Headquarters: Manila, Philippines
- Status: Official Observer at the United Nations
- Objectives:
- To reduce poverty in Asia and the Pacific.
- To promote inclusive and environmentally sustainable growth and regional economic integration.
- Functions:
- Provides loans (hard and soft), grants, and technical assistance.
- Offers direct funding to private sector projects with social benefits.
- Supports countries through policy dialogues, co-financing, and advisory services.
- Funding Sources:
- Issues bonds on global capital markets.
- Receives member contributions, loan repayments, and retained earnings.
- Membership and Shareholding:
- 67 members: 48 from Asia-Pacific.
- Major shareholders: Japan and USA (each 15.607%), China (6.444%), India (6.331%), Australia (5.786%).
- Climate Goals:
- Aims to mobilize $100 billion for climate finance between 2019 and 2030.
- Promotes sustainable development initiatives such as green fuel projects, including one in Pakistan funded partly by ADB.
India’s concerns over ADB Funding:
- India emphasized that Pakistan’s defense spending has risen significantly even as its tax-to-GDP ratio fell from 13% in 2017-18 to 9.2% in 2022-23.
- This tax ratio is significantly below the Asia-Pacific average of 19%, suggesting poor revenue collection and financial mismanagement.
- India stressed to ADB that it expects strict oversight mechanisms to be implemented to avoid diversion of funds.
- India has previously opposed financial aid to Pakistan at other fora like the International Monetary Fund (IMF) and is reportedly preparing a dossier to request Pakistan’s re-entry into the FATF grey list.
| [UPSC 2024] Which one of the following launched the ‘Nature Solutions Finance Hub for Asia and the Pacific’?
(a) The Asian Development Bank (ADB) * (b) The Asian Infrastructure Investment Bank (AIIB) (c) The New Development Bank (NDB) (d) The International Bank for Reconstruction and Development (IBRD) |
Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024
