ADB says 64 million could drop below poverty line

A new study from the Asian Development Bank looks at the effects of rising food prices in the region. The ADB says that another 64 million people could be pushed below the poverty line because of the record high food prices. So far in 2011, Asian prices for most basic food staples climbed by an average of 10 percent.

From the Hindustan Times, we find out more about what the ADB says in their report.

"For poor families in developing Asia, who already spend more than 60 per cent of their income on food, higher food prices further reduce their ability to pay for medical care and their children's education," ADB chief economist Changyong Rhee said.

The report said the fast and persistent rise in the cost of many Asian food staples since the middle of last year, coupled with crude oil reaching a 31-month high in March, are a serious setback for the region, which has rebounded rapidly and strongly from the global economic crisis.

As per the report, if the global food and oil price hikes seen in early 2011 persist for the remainder of the year, economic growth in the region could be reduced by up to 1.5 percentage points.

"Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia," Rhee added.

The short-term outlook looks bleak, as food prices are likely to continue with their upward trend because of factors such as production shortfalls, rising demand for food from more populous and wealthier developing countries and shrinking available agricultural land, the report said.

ADB is warning governments to prepare for climate change migration

A new study from the Asian Development Bank says that South Asia needs to prepare for migrations due to climate change. The report from the ADB says the migration will not be from hot to cool areas, but from rural to urban areas. They warn that governments should have a international cooperative body in place to help control the migration.

From Reuters Alert Net, writer Thin Lei Win breaks down the report for us.

The region faces particular threats from climate change-related sea level rise and storm surges, cyclones and typhoons, flooding and water stress, according to the authors of Climate Change and Migration in Asia and the Pacific

However, contrary to conventional portrayals of climate displacement - throngs of refugees seeking shelter across borders - the report says most migration in the region will be within national boundaries, and primarily from rural to urban areas. The movement, the bulk of which will involve poor people, is likely to be influenced by social, political and economic changes as well as climate pressures, the report’s authors said.

In addition, the events most likely to propel millions to leave their homes permanently will be gradual environmental changes such as desertification and sea-level rise rather than sudden disasters, said Bart W. Edes, director of ADB's division on poverty reduction, gender and social development.

“Although the extreme weather events capture the attention of people, it’s the slow onset, where eventually you can no longer grow crops in the area or you can no longer live along the coast because the coast has moved inland, that will drive people away more permanently,” he told AlertNet.

Still, scientists predict extreme events, which have displaced millions in Pakistan, China, Australia and Philippines in the past year alone, are likely to increase and add to migration pressures.

Many countries are not well placed to tackle growing migration issues, according to the report, part of an ADB program on migration driven by changing weather patterns.

“No international cooperation mechanism has been set up to manage these migration flows, and protection and assistance schemes remain inadequate, poorly coordinated, and scattered,” the report says. It urges urges national governments and the international community to “urgently address this issue in a proactive manner."

According to Edes, the lack of action on migration policy is in part driven by a lack of funding. Until recently, he said, migration plans could not be funded as part of climate change adaptation because migration was considered a failure of adaptation.

Development partnership for India extended until 2013

A development partnership for India will continue into the year 2013. The Asian Development Bank and the UK's Department for International Development will continue to give grants to India to help in poverty fighting projects.

From The Hindu Business Line we read more about the money involved and what it's intended for.

The Asian Development Bank (ADB) and the UK Department for International Development have entered into a new five-year strategic partnership to fight poverty in India.

The British government would provide a grant of £14 million for the partnership.

In a statement today, ADB said the five-year partnership would run from 2009 to 2013 and would be supported by £14 million funding from the UK government.
...

DFID has provided $50.58 million in grant co-financing since the collaboration began in 2001. DFID India’s head Michael Anderson said the partnership would directly benefit the poor by building roads, improving irrigation and developing cities in the poorest Indian states.

Asian Development Bank releases it's 2009 "Key Indicators" report

The Asian Development Bank released the 2009 version of it's "Key Indicators" report. The report notes the many ways the global economic slowdown has hurt poverty reduction efforts in the continent.

The report pays special attention to small business and ways to help them fuel growth. The bank uses part of the report to focuses on small business because it says that a majority of Asians are employed in such companies.

From the Forbes article on the report, writer Teresa Cerojano details some of the economic indicators described within. You can download the full report from this link.

In 19 Asian economies, including the most populous China and India, more than 10 percent of people live on less than $1.25 a day and more than 10 percent are malnourished. This is despite the region's success over the last 15 years in cutting the number of poor from one in two to around one in four, the report said.

Nepal is the worst off with 55.1 percent of its population surviving on less than $1.25 a day. In China and India, 15.9 percent and 41.6 percent of the population live below the poverty line, respectively.

Income gap remains wide in many other countries.

More than 30 percent of Tajikistan's population suffers from hunger, as do 20-30 percent of the people in Armenia, Bangladesh, Cambodia, Mongolia, India, Pakistan, Sri Lanka and East Timor, the ADB said.

Among the so-called U.N. Millennium Development Goals is cutting in half extreme poverty and hunger by 2015 and reducing maternal mortality by three-quarters over the same period.

The report said that Asia faces serious challenges in meeting goals linked to sanitation and maternal deaths, which remain unacceptably high in countries such as Afghanistan, Nepal and Laos.

About 1,800 out of every 100,000 Afghan women die in childbirth while more than a quarter of urban households in 13 countries still lack access to improved sanitation, the bank said.

$500 million loaned to the Philippines for economic stimulus

The Asian Development Bank is lending money to nations to help with their own economic stimulus programs, and the first such loan went the Philippines. $500 million dollars will be lent to the country. The ADB started the program because many governments were having trouble raising money as credit markets have been very tight during the global recession.

From the Peninsula On-Line, reporter Roel Landingin tells us more details about the loan program.

The bank said it had received applications for more than the $3bn available, with Bangladesh, Indonesia, Kazakhstan, Pakistan, Sri Lanka and Vietnam also requesting help.

Bangladesh, like the Philippines, has asked for the maximum $500m. The International Monetary Fund is allocating special drawing rights worth $735m to Dhaka to strengthen its foreign exchange reserves amid the global downturn, a fund official told Reuters yesterday.

The Philippines is struggling to fund its stimulus measures, which include labour-intensive infrastructure projects and increased cash transfers, amid falling government revenues and a widening budget deficit. The economy shrank 2.3 percent quarter-on-quarter in the January-March period and the government sharply cut its full-year growth forecast in June to only just 0.8-1.8 percent, from the previous target of 3.1-4.1 percent. Manila warned of the budget deficit reaching as much as 250bn pesos ($5.2bn), equivalent to 3.5 percent of gross domestic product, because of revenue shortfalls.

Yesterday, the ADB said the new loan would “help close the government’s budget financing gap for this year”.

A group of NGOs say the Asian Development Bank does more harm than good

Recently the Asian Development Bank pledged to triple it's lending to help Asian poverty. During the global recession the bank wanted to do more to prevent the effects the recession will have in creating many more poor people. They felt the best way to do this was to increase the number of projects the bank lends to.

However, a group on Non-Governmental Organizations has blasted the ADB, saying their anti-poverty projects do more harm than good. They claim that their projects displace people from their homes, hurt the environment, and does not lift people out of poverty.

From this IRIN story that we found in Reuters Alert Net, we learn more about what this group of NGOs have to say.

But the NGO Forum on ADB, a network of 250 activist groups that has been monitoring the bank's activities since 1992, called the move "irresponsible and dangerous", alleging the region had experienced forced displacement and environmental degradation caused by ADB-funded projects.

The NGO Forum said the capital increase was largely designed for private sector clients and big infrastructure, and numerous studies had shown that such financing did not benefit the poorest.

"If not managed well, this 200 percent general capital increase could easily translate into a more than 200 percent increase in social and environmental harm," Red Constantino, executive director of the NGO Forum, said in a statement.

According to the International Accountability Project, a global development watchdog, at current rates, approximately 15 million people in the world every year are forcibly displaced from their homes, communities and lands to make way for large development projects such as mines, dams, power plants, infrastructure and plantations.

In Nepal, 20,000 people will be forced to move from their land to make way for the planned ADB-funded West Seti Hydropower Project in the northwest, said Ratan Bandari, whose family will be among those relocated if the project goes ahead.

"We're not provided with any information about the project, except from reports," Bandari told IRIN at the ADB annual meeting on the Indonesian island of Bali from 2 to 5 May.

"There's no internal investment in the project. There are so many problems. There's no information and there's no meaningful consultation with the locals," he said.

Kuroda said the bank had done its best to make its projects environmentally sustainable.

"We have appropriate accountability mechanisms through which any complaints regarding environmental safeguards, resettlement issues could be resolved appropriately," Kuroda told a news conference on 2 May in Bali.

"I think ADB has learned quite a lot from past experiences and we have made substantial progress and I must say most of our infrastructure projects actually improve the environment," he said.

An analysis of the Asian Development Bank's mission

With the announcement of more money for loans, the Asian Development Bank begins it's annual meeting to set policy for the upcoming year. The bank has had trouble pleasing it's critics after the economic expansions in China and India, and now the global depression.

From Forbes comes this analysis of the bank from reporter Stephen Wright.

Just two years ago, the Asian Development Bank was struggling with an identity crisis of sorts as a wave of new prosperity called into question its basic mission: lifting millions out of extreme poverty.

Now, as Asia sputters amid the global slowdown, the problem facing much of the region is no longer ensuring the fruits of rising affluence are spread evenly - but eking out any growth at all.

Armed with a much bigger war chest, the ADB - which starts its annual meeting in Bali, Indonesia, on Saturday - is renewing its pledge to fight poverty and preparing to take a bigger role in the region.

That might seem good news for Asia, but it's not universally welcomed. Some critics say its financing would be better left to the private sector while activists fault ADB-funded projects for harming the very people they aim to help.

On Thursday, the bank's 67 member countries approved a tripling of the ADB's capital to $165 billion, expanding the lender's ability to fight the global economic crisis and finance infrastructure and other projects in partnership with the private sector.

"We must do all we can to prevent the reversal of hard-won gains for our region in social and economic development, and in poverty reduction," ADB President Haruhiko Kuroda said in a statement.

On the sidelines of the meeting, the Association of Southeast Asian Nations along with China, Japan and South Korea are likely to approve enlarging an emergency currency pool to $120 billion - and make the funds easier to access in a crisis.

Asian Development Bank to boost lending

Another one of the big banks has made an announcement to boost lending to fight off the global recession. The Asian Development Bank says they will boost lending by $165 billion dollars, that triples their normal efforts.

From this Associated Press article that we found in Newsday, we find more details on the decision from the banks board of directors.

The Manila-based bank's board of governors said an overwhelming majority of the ADB's 67 member countries voted to endorse the 200 percent increase to ADB's current $55 billion of capital.

"This substantial increase is a resounding vote of confidence from our shareholders for what we can achieve as a premier development partner in the region," ADB President Haruhiko Kuroda said. "We must do all we can to prevent the reversal of hard-won gains for our region in social and economic development, and in poverty reduction."

The decision comes just before the ADB's annual meeting in Bali, Indonesia, on May 2-5.

The capital boost allows the ADB to substantially increase its support to countries affected by the global downturn and to provide an additional $10 billion over the next few years for crisis-related assistance.

ADB estimates the financial crisis will add 60 million people this year in developing Asia to those already trapped in extreme poverty and another 100 million in 2010. Those are in addition to 903 million Asians already living on $1.25 or less a day.

How the global recession will impact Asia

The Asian Development Bank has released a study that examines the effect the global recession will have in Asia. The bad news is, that it will increase the already high level of poverty in the region. The good news is, that many economies in Asia are isolated enough from the global financial system that their economies will continue to grow.

From IPS, reporter Prime Sarmiento unpacks the report for us.

The AsDB study, presented at a forum here earlier this month, expects a 6.7 percent growth for South Asia in 2009. This may be modest compared to the 8.6 percent growth posted in 2007, but still implies that the AsDB does not expect the sub-region to fall into recession anytime soon.

Participants at the forum were agreed that the poor, especially in countries like Nepal and Bangladesh, whose economies depend heavily on remittances from its nationals working abroad, were likely to be worst hit.

"While some countries in South Asia have had relatively less exposure to the crisis from the adverse impacts of capital flows, more than half of the 900 million people in developing Asia who survive on 1.25 US dollars a day live in the sub-region, so any tempering of growth is a serious cause for concern," AsDB president Haruhiko Kuroda said at the forum

In a speech delivered at the forum, Arun Shourie, member of India's parliament and former minister of public sector divestment, noted that behind all the macroeconomic data are people who will lose their livelihoods or cannot send their children to school.

South Asia may be home to some of the world's growing economies but positive fundamentals have not done much to improve the plight of the sub-continent's poor.

India, one of Asia's economic powerhouses, has posted an impressive eight to nine percent growth in the past few years. But 30 percent of India's one billion populace subsists on less than two dollars a day.

The situation is worse in poorer economies like Nepal and Bangladesh where nearly 40 percent of the population live below the poverty level, experts at the forum said. The crisis will further intensify inequities with the wealthy remaining unscathed and the poor suffering more.

$35 million in food aid misused in Cambodia

An emergency food aid project in Cambodia has been tainted by corruption. The Asian Development Bank says that 35 million dollars (US) in aid has been abused. Many poor Cambodians have complained that rice from the food aid program has not been given out fairly.

In this "breaking news" story found in The Straits Times from Malaysia, the people blame village chiefs for giving it out to better off friends.

The Straits Times November 6th

Up to three hundred Cambodians complained to the ADB that they had not received rice handouts while village chiefs have registered relatives and political supporters for the project, the bank said.

'I think that some people have been left out. Some of the village chiefs have not followed procedures properly,' the ADB's Piseth Long, implementation officer for the project, told AFP.

'Procedures need to be followed for the targeted people - the 20 per cent poorest should receive aid,' he said, adding that the bank was reviewing how many complaints were genuine and attempting to get aid to those who deserve it.

Cambodian human rights groups have said more than 1,000 poor families in several provinces have complained of corruption by village chiefs in the rice distribution project.

Mr Piseth Long, however, stopped short of saying that fraud had been found in the process and noted that 'to a certain extent the project has fulfilled its goal' of handing out rice to the poorest of the poor.

The project began last month to help hundreds of thousands of impoverished Cambodians in rural areas and slums over the next three years amid soaring inflation, food and fuel prices.

Cambodia gets $35 million in emergency food aid

from the Boston Globe

PHNOM PENH, Cambodia --The Asian Development Bank announced Wednesday $35 million in emergency food aid to ease the burden of soaring food prices among some of Cambodia's poorest people.

The assistance will provide free rice, seed and fertilizer to 500,000 Cambodians, the poorest of the poor among the country's 14 million people, the bank said.

The recipients include slum residents in the capital, Phnom Penh, and farmers in seven provinces around the country's Tonle Sap lake.

"When the food price inflation spike came, these communities were already in a fragile state. It drove them more sharply over the edge into food poverty," said Arjun Goswami, the bank's country director.

The program will run through September 2011.

Over the past year rice prices in Cambodia have doubled, the ADB said in a statement. It added that the price of meat and fish has risen 30 to 50 percent, and farmers have been hit hard by an almost tripling in fertilizer prices.

About one-in-three Cambodians live below the national poverty line of just 45 cents a day.

Mahfuz Ahmed, the bank official in charge of the food project, said that of Cambodia's 14 million people, about 2.6 million sometimes go hungry and suffer from malnutrition.

Link to full article. May expire in future.

Asian Development Bank Introduces New Way to Measure Poverty in Asia

from the Voice of America

The Asian Development Bank says that Asian countries can eradicate poverty by 2020. With economic growth in Asia the bank has developed a new method to measure poverty. They say the changes can help with policy and compare levels from country to country. - Kale

By Claudia Blume

The Asian Development Bank has developed a new benchmark to measure poverty in Asia. The ADB says in a region that has seen stellar growth rates and rising income inequality, its new Asian poverty line can help policy makers measure and compare poverty levels. Claudia Blume reports from Hong Kong.

Living on one dollar or less a day - that is how poverty is commonly measured around the world. But the Asian Development Bank thinks that in Asia a new benchmark is needed that reflects the region's rapid economic growth and growing income disparities.

In Hong Kong on Wednesday, the non-profit lender introduced its new Asian Poverty Line, which defines poverty as living on $1.35 a day. The ADB arrived at that figure by taking the median of the national poverty lines of 16 developing countries in Asia in 2005.

The U.S. dollar-denominated poverty line is not based on market exchange rates, but on purchasing power parity figures, which use baskets of goods to compare purchasing power across countries. The ADB says it developed a new set of measurements for their study that only compare the prices of goods and services purchased by the poor.

ADB chief economist Ifzal Ali says the bank collected data on where the poor shop, what they buy and on the quantity and quality of their purchases.

"Both you and a poor person might consume rice every day but you would consume a much higher quality of rice than a poor person who would eat coarse rice," he said.

The ADB says different measurements effect estimates of the scope of poverty in Asia. If the traditional method is used, which measures the average purchasing power of all people in a country - including the rich - there are more than one billion poor people in the region. By using the new measurement which only focuses on the poor, the figure drops to 800 million.

Ifzal Ali says it is the first time that a cross-country comparison of poverty lines has been done in Asia. He says by looking at the report, policy makers can determine where they stand compared with other countries in the region.

Ali says the Asian Poverty Line and the new, poor-focused purchasing power measurement can also help predict how inflation will affect the poor in the region. He says the ADB analyzed the likely effect of a 10 percent increase in grains, and a 10 percent increase of general food prices on poverty figures.

"The report shows that if you have a 10 percent increase in - say - cereal prices, the number of poor would go up by 36 million almost immediately. If on the other hand food prices went up - this is going from cereals to food - it would increase by about 85 million people," he said.


Link to full article. May expire in future.

Poverty fighting in the Philippines a daunting task

from the Manila Times

This article shows the results of an ADB report that measures assistance programs in the Philippines. - Kale

By, Darwin G. Amojelar

The Asian Development Bank (ADB) said the Philippines' next assistance program remains "daunting" owing to high poverty levels and weak investments.

In its Country Assistance Program Evaluation Report, the Manila-based lender said its assistance program over the past five years, or from 2003 to 2007, has been successful in meeting its more selective objectives, despite the need for improvements.

"However, the larger context for the next country strategy continues to be daunting. Poverty is high. Progress toward Millennium Development Goals is slow and lagging in key areas, and government expenditures for related social and economic services are still low compared to needs," the ADB said.

"Private capital formation is low compared to neighbors," it added.

The regional lender said the country's export base is narrow and its value-added low. Furthermore, the private sector perceives the need to control corruption, raise infrastructure spending, and education outcomes to improve the country's competitiveness, the ADB said, adding this should be financed by a strengthened revenue effort.

The reforming energy sector has yet to achieve wider competition and lower electricity rates, while investment rates are low and governance concerns continue to influence investor confidence.

Adding to these constraints are global factors such as slowing growth, a credit squeeze, high oil and food prices, and rising inflation. Hence, in the coming years, the Philippines will face significant development challenges, the ADB said.

"To address the constraints to growth and poverty reduction, the Philippines will need to continue to exercise fiscal discipline and further expand its fiscal space; more widely institute good governance; accelerate infrastructure, education, and other social service development; support expansion and diversification of the economic base; and make access to development opportunities more equitable," the lender said.

ADB: High food prices affect poor most, cause more poverty

from Inquirer

By Doris Dumlao
Philippine Daily Inquirer

MANILA, Philippines -- For every 10 percent increase in food prices, about 2.3 million more Filipinos fall into poverty, a new study by an Asian Development Bank economist suggests.

The conclusion of a new research paper -- “Has Inflation Hurt the Poor? Regional Analysis in the Philippines” authored by ADB economist Hyun Son -- was that inflation was hitting poor Filipino consumers harder than the more affluent ones.

"Specifically, the poor are highly sensitive to the price changes in food, particularly staple food items such as rice,” the study said.

"In addition, concerns over rising food prices are surmounting because such increase can undermine the gains from poverty reduction and human development that developing countries have experienced for the last decade or so,” it added.

Estimates on the price elasticity of poverty by commodity in the Philippines suggested that a 10 percent increase in non-food prices -- such as fuel and utilities -- would drive an additional 1.7 million people into poverty.

Separating the impact of specific commodity increases, the study said a 10 percent increase in the price of rice would force an additional 660,000 Filipinos into poverty.

An increase in fuel prices of 10 percent was also seen driving more people into poverty, but with a smaller headcount of 160,000.

The study showed that since 2003, the price increases in the Philippines have led to greater sufferings for the poorest segment of the population.

The effects of rising food prices were observed to be different across households.

"Rising food prices may lead to income gains for net producers. However, many urban and rural poor who are food consumers and not necessarily producers suffer the most from rising food prices,” the study said.

“Thus, with increasing food prices, some will gain and some will lose,” it said.

Using household surveys and detailed price data, the study analyzed the impacts of higher food prices on the average standard of living and on poverty for the Philippines. The study showed the dominating effect of rising food prices on poverty over the period of 2003-06.

“In particular, the severity of poverty rose by 16.8 percent while the standard of living declined by about 1 percent over the period,” the study said.

The study also suggested that the decline in the standard of living due to food price increases was particularly greater for the poorest of the poor.

“At worse, these households struggling to meet the minimum standards of living might have no choice but to cut down their expenditures on health and children's education,” the study said.

“Hence, safety measures will be required particularly for the poorest of the poor to be able to cushion the negative impact of higher food prices on their spending,” it said.

The study thus proposed an alternative price index for the poor that takes into account the consumption patterns of the poor.

Finally, the study found that the increase in food prices has been the major factor causing high inflation in the Philippines in recent periods. The non-food items of consumption have played a relatively minor role.

“It is wiser thus to direct government policies towards stabilizing food prices,” the study said. “Given these current trends moreover, monetary policy may not be an effective tool to combat rising inflation. Such policies may push the economy into recession, which will hurt the poor even more.”

The surge in the country's inflation rate to a three-year high of 8.3 percent in April has put the Bangko Sentral ng Pilipinas under more pressure to tighten monetary policy.

During the BSP's latest quarterly inflation briefing Thursday, top BSP officials said there were indications that demand pressures, and not just supply shocks, were also contributing to the sharp increases in consumer prices and that the central bank would have a role to play in cooling inflation and managing people's expectations.

BSP Deputy Governor Diwa Guinigundo said: “We're looking at two things. First, we're looking at the second-round effects. If there are wage adjustments and transport fare adjustments, even in terms of utilities charges, once you see an early sign of evidence of second round effects, I think monetary policy will have a good scope for addressing inflation.”

The second trigger, Guinigundo said, was the role of the inflation expectations channel in managing actual inflation.

Asian Development Bank rethinks its strategy for reducing poverty

from the International Herald Tribune

By Patrick Blum

MADRID: Against a background of record rice prices that threaten to destabilize the fast-growing economies of Asia, the Asian Development Bank is rethinking its long-term strategy for reducing poverty at a two-day meeting in Madrid this week.

Rajat Nag, managing director of the bank, says dealing with the food crisis is an urgent priority.

"In the immediate, we have to concentrate on the food side. We have to find ways to deal with this. The poor must have access to income, have the necessary purchasing power" to buy food, he said during an interview ahead of the meeting.

Unlike in parts of Africa, the food crisis in Asia is not so much about availability of supplies — there are adequate food stocks — but more about prices, he said.

As part of the immediate response, targeted income support for the poor might be needed, Nag said. "We have to be flexible. In a crisis it's important to make sure the poor are able to buy food."

In the longer term, it will also be necessary to look at under-investment in agriculture and related areas like infrastructure, rural markets and access roads. All this will require governments to spend more, which could strain public finances, he said.

The bank is ready to help. "This could affect the fiscal situation, and we will have to see what we can do to provide assistance. We have to take a long-term view, work with governments to see how we can help them on the fiscal side, to give them budget support," Nag said.

The food crisis is only one of the problems confronting the region. Despite brisk economic growth, averaging about 6 percent annually across the Asia-Pacific region in recent years, more than 600 million people still live in absolute poverty, surviving on less than $1 a day.

According to the bank's statistics, almost half of the world's poor live in South Asia alone. In China, 452 million people earn less than $2 a day, a figure that reaches 868 million in India. Child malnutrition is high and almost half of the children in Afghanistan, Bangladesh, India and Nepal are undernourished. Some 1.9 billion people in the region do not have access to basic sanitation.

Widespread poverty remains the most pressing problem in the region. Many people have had little or no access to the benefits of economic growth, or access to social services. At least 500 million, or almost one-third of the regional labor force of 1.7 billion workers, are unemployed or underemployed.

"Large numbers of people are being left behind or left out," according to a strategy report prepared by the development bank. Growing wealth, paradoxically, has exacerbated inequalities and economic disparities within and among countries.

There are fears that a global downturn could undo progress made in recent years and that many of those who have gained from rising standards of living could be at risk. Unrest and political instability could follow.

"People who have done well in recent years could suddenly find themselves slipping below the poverty line," Nag warned.

No one knows what the full impact of the U.S. and global downturn will be, but growth expectations in the United States and Europe have already been revised downward for this year.

So far Asia has appeared immune to the crisis, but even the optimists acknowledge that the region cannot escape completely untouched by global developments.

Pilar L'Hotelerie, the associate director general for international affairs at Banco de España, the Spanish central bank, said that while Asian economies would be influenced by developments in the United States and the global economy, they were in a better position now than they were during the financial crisis a decade ago.

But Asia's success could also be a source of weakness. Its share of global exports has soared to 27 percent, up from 16 percent in the 1980s, increasing the region's potential vulnerability. The Asian Development Bank estimates that by 2020 the region could account for one-third of world trade.

"Given the heavy export orientation of most economies, there will probably be spillovers through the trade channel, in other words, a reduction in the demand for exports," L'Hotelerie said. "However, given the large increase in intraregional trade in the area, increased south-south trade linkages and the robustness of domestic demand in Asian countries over the past few years, Asia may be in a relatively good position this time around."

Alicia Garcia-Herrero, chief economist for emerging markets at Banco Bilbao Vizcaya Argentaria in Hong Kong, said that while exports were vulnerable, there were signs that Asian exporters might already be shifting some of their focus from the U.S. market to other emerging markets and Europe.

"Exports are the most obvious channel in which Asia could be affected, but what we see in the export market here is relatively good and what we see in the rest of the economy is even better," Garcia-Herrero said. "There are big infrastructure plans in India, in the Philippines and other countries. They are all stepping up these investments and that will help uphold their economies."

"I don't think they will escape completely, even China will be affected, but Asian growth has been so strong in 2007 they have a lot of leeway," she added. "So what happens from now is from a huge base. It's fortunate to have a slowdown in the economy when you're at the peak of your economic cycle."

The financial turmoil has had little impact to date on emerging Asian markets, though small open economies could be more at risk.

"Asia in general with few outstanding exceptions has remained largely on the sidelines in terms of exposure to U.S. subprime risks or to complex products," L'Hotelerie, the Spanish central bank economist, said. "External positions are sound, financial vulnerabilities have been reduced, and Asia is also more closed financially than other emerging market regions. Therefore, also on this front, vulnerabilities look relatively contained."

While growth in the region may slow, it will remain at enviably high rates this year and pick up again in 2009, according to the Asian Development Outlook report published by the development bank in March.

Asia, excluding Japan, had its highest growth rate in almost two decades in 2007, with an average 8.7 percent rise in gross domestic product. For this year, the report projected growth of 7.6 percent, only slightly below the average of the past 5 years.

Still, Nag said the bank was "increasingly concerned about energy and food prices."

Garcia-Herrero said, "Asia is not used to inflation; people don't know how to hedge against it."

While core inflation for the Asian region has held relatively stable at between 2 percent and 3 percent, headline inflation, which includes food and energy prices, has more than doubled since the beginning of last year, rising to 6.6 percent in March, according to Banco Bilbao Vizcaya Argentaria.

Rising inflation expectations could be a more immediate threat to economic stability than the prospect of a moderate slowdown in growth, the development bank's outlook report warned.

"The risk of an inflation spiral in Asia is palpable and warrants close attention," it said. "Published inflation rates disguise the true extent of underlying inflation pressures due to the presence of subsidies, administrative price controls, and cuts in excise taxes."

The need to provide support for access to food, fuel and power will put pressure on government budgets already strained by a huge demand for investment in crucial areas of the economy — with most countries in the region already running budget deficits.

Taming inflation expectations and reining in fiscal deficits are challenges facing a range of countries, the outlook report said. The private sector can play a part, but financing needs are enormous. According to an internal study by the development bank, the region will need an estimated $4.7 trillion for infrastructure development alone over the next 10 years.

Nag said the bank lent a record $10 billion last year, and he said he expected it to lend a similar amount in 2008, but there is a limit to what it can do.

ADB to meet amid food crisis, growing poverty

from AFP via Google

MANILA (AFP) — The Asian Development Bank holds its annual meeting this weekend reeling from a global food crisis that has led to stinging criticism of its international governors for failing to see it coming.

The soaring price of basic foods such as rice -- the benchmark Thai variety now fetches some 1,000 dollars a tonne, up threefold on a year ago -- has led to a supply crunch that is worrying governments wary of popular unrest.

There are other tough issues facing the bank, notably a simmering internal row among its members over its continuing relevance in a region that has been transformed since the lender was founded 42 years ago.

The United States, which with Japan is the ADB's largest shareholder, took the unprecedented recent step of voting against its long-term strategic plan, which is also on the agenda for the meeting in Spain's capital Madrid.

But a source within the bank, who asked not to be named, said: "While the bank faces a number of critical issues about its role and relevance, all this may be overshadowed by the food crisis."

ADB president Haruhiko Kuroda warned recently that soaring food prices had pushed back Asia's fight against poverty, and that some countries may one day need foreign aid to feed their hungry.

The rises are blamed on higher energy and fertiliser costs, greater global demand, droughts, the loss of rice farmland to biofuel plantations and price speculation.

"The food crisis did not happen overnight," said Shalmali Guttal, a senior associate at Focus on the Global South, a Bangkok-based political and economic advocacy group.

"Asian farmers have been drawing attention to the growing agrarian crisis for years, but no one with the power to change policy listened," she told AFP in a telephone interview.

"Many of us civil society researchers and activists saw this crisis coming, why didn't the ADB and the World Bank?"

While the ADB boasts some "spectacular progress" over the last 40 years in poverty reduction, most notably in China, the region is still home to some 600 million people living on less than a dollar a day -- two thirds of the global population.

"Agriculture has clearly been neglected by governments and international institutions alike for at least two decades and the world is now suffering the results of such neglect," Bruce Tolentino, director for economic reform and development with the Asia Foundation, told AFP.

He said the ADB and others "should have seen this crisis coming."

"But unfortunately it is a weakness common to many institutions, including the ADB, that the left hand doesn't know what the right hand is doing and vice versa."

Based in Manila, the ADB is owned by its 67 member countries -- 48 from the Asia-Pacific region, and 19 from elsewhere around the world.

In 2007, it approved 10.1 billion dollars of loans, 673 million dollars in grant projects, and technical assistance amounting to 243 million.

Since it was established, the ADB has grown from helping Asian governments develop infrastructure projects to promoting the role of the private sector in development.

But some critics say its loan conditions unfairly pressure governments to deregulate and privatize agriculture -- leading to problems such as the rice supply crunch.

Arze Glipo, the convenor of the Asia Pacific Network on Food Sovereignty, which represents farmers' groups, said ADB projects "tended to weaken farmers' livelihood."

She cited a 175-million-dollar loan to the Philippines to finance a grain sector development programme, under which the ADB urged the privatization of the National Food Authority.

The ADB also wanted restrictions on rice imports replaced with a system of tariffs, and cancelled the loan when Manila failed to act, she charged.

That kind of tactic -- "regardless of its costs and consequences" -- is at the very heart of the problem, said Guttal of Focus on the Global South, as it forced governments to change policies to fit in with the ADB's conditions for credits.

Migrant labor helping reduce Asian poverty: ADB

from ABS CBN News

Agence France-Presse

Asia's 54 million migrant laborers are helping reduce widespread poverty, and the region's governments should make it easier for them to move and work, the Asian Development Bank said Wednesday.

In its annual outlook report, the Manila-based ADB said migrant workers in Asia sent back 108.1 billion dollars in remittances to developing regions in 2007, or more than one-third of the global total.

"Migration does raise income levels for many poor," it said. "International migration and remittances contribute importantly to poverty reduction in Asian countries."

Despite those benefits, regulations are still "quite restrictive in most countries and are certainly much less liberal than those governing the movement of goods," the ADB said.

"Regional governments need to cooperate more to further open up their labor markets, promote orderly and managed labor flows, and minimize the transaction costs of migrant workers."

Among the benefits, it said, migration also helps to reduce unemployment pressures in countries with high population growth and lagging economies.

Demographic and structural changes meant Hong Kong, Taiwan, South Korea and Singapore have become important destinations for Asian migrant labor, especially from Southeast Asia, the bank said.

Donors pledge $11.3 bln to ADB to tackle poverty

from Reuters

MADRID, Donors to the Asian Development Bank have pledged $11.3 billion for the four years 2009 to 2012 to replenish the multi-lateral body's key poverty alleviation fund for Asia's poorest countries, the bank said on Friday.

The figure marks a 60 percent increase from the $7 billion donated to the ADB's Asian Development Fund in 2005-2008. The fund provides grants and low interest rate loans to the Asia Pacific region's poorest countries.

The bank, whose board of governors are in Madrid for a four-day annual meeting that starts on Saturday, has drawn criticism from the United States that the bank is failing to focus its work on the very poor and lacks accountability.

Washington is concerned the ADB is channelling too much money to middle income countries like China and India, rather than poorer states.

Critics say the ADB has paid more attention to the amount of funds loaned than the effectiveness of aid.

The ADB, funded by its 67 member countries -- 48 from the Asia-Pacific region, 19 from elsewhere, approved a total of $10.1 billion in low-cost loans in 2007 for projects and technical assistance in poorer countries.

Pakistan was the largest borrower, followed by Vietnam, India, China and Indonesia.

The row between the ADB and the United States has overshadowed the annual meeting which will discuss ways to alleviate the impact of soaring food prices on Asia's poor.

The ADB's "Strategy 2020", which focuses on regional integration, was approved by its board this month despite U.S. opposition.

Soaring food prices set back Asia drive on poverty: ADB president

from the AFP via Google

MANILA (AFP) — Soaring food prices has pushed back Asia's fight against poverty and some countries may eventually need foreign aid to feed their hungry millions, the Asian Development Bank president said Friday.

Haruhiko Kuroda singled out Bangladesh as potentially requiring outside assistance, saying the Manila-based ADB was ready to provide budgetary support to it and other low-income Asian countries that might be required to spend more to help out their poorest citizens.

Kuroda said inflation was the most immediate threat to developing Asia's economic growth and said some economies would do well to allow their currencies to appreciate to put a lid on prices that have impacted heavily on the more than 600 million Asians who still lived on a dollar a day or less.

Vietnam, Cambodia, and the former Soviet republics in central Asia now have double-digit inflation.

"All of them are relatively small countries and that means controlling inflation is very difficult," he told a news conference here.

"Governments are well advised to refrain from using trade measures or price control measures to address this food price inflation issue," he added.

"The best way is to provide targetted income support for the needy poor, particularly in South Asia and in some parts of Southeast Asia," where he said the poorest of the poor spent more than half their income to buy food.

Kuroda said some countries in the region suffered from large fiscal deficits "and may need some help from ADB."

He said the Philippines-based lender was ready to provide loans as budgetary support to provide "targetted assistance to the poor".

While no member country has sought ADB aid, Kuroda said many Asian countries can be considered as "moderate losers" as food import prices rise, and that countries such Bangladesh "may" eventually seek budgetary support.

"The current food price inflation has already affected the pace of poverty reduction in some countries," Kuroda said.

"Poverty reduction has been very rapid in many Asian economies but the current high food price inflation has really affected poor people in the region particularly in low income countries like Bangladesh."

'It's ok to overspend in 2008 to protect poor': ADB official

from ABS CBN News

By CHARO LOGARTA

The Asian Development Bank (ADB) has assured government that it will not mind a breach of its commitment to balance its budget this year, if high commodity prices and a global economic crunch necessitate increased spending.

The government's economic managers have said mitigating measures may be implemented to cushion the impact of higher food and fuel prices on the poor.

They said they were prepared to spend more, if necessary, a move that concerned several analysts and multilateral agencies, including the World Bank.

Need to protect vulnerable

But ADB's Deputy Director-General for Southeast Asia Thomas Crouch told reporters at a press briefing Wednesday that while balancing the budget is an issue of maintaining the country's credibility with investors and donors, it was just as crucial for the government to protect vulnerable sectors.

“There is no absolute reason that 2008 must be the year for fiscal balance for as long as that occurs along with improvements in tax revenue efforts,” Crouch says.

Crouch admitted that many analysts regard the twin threats of a US recession and high commodity prices and the commitment of a balanced budget as litmus tests for the Arroyo administration.

“Managing the economy is a balancing act, and the key element here is that it needs a calibrated response on who you want to protect,” said Crouch.

Subsidies must be well-targeted

“My view is that you need very sharp instruments, not blunt ones. The important thing is to ensure that any subsidies given are well-targeted and well-focused on those people that are impacted most by rising rice and fuel prices,” he said.

“There is nothing intrinsically wrong with providing safety nets to those who are already in poverty or those in danger of falling into poverty. But the important thing is to maintain the integrity of the fiscal reform program,” Crouch said.

The Philippines is at the tail-end of its fiscal consolidation program that aims to balance the budget by 2008.