44th Annual Meeting of ADB's Board of Governors: Toward Sustainable Development

Nearly 4,000 delegates - comprising top policymakers, business leaders, media, academics, and civil society and development institution representatives - attended the Asian Development Bank’s (ADB) 44th Annual Meeting of Board of Governors in Hanoi from May 3 - 6, 2011.

 

High level officials from Asia and the Pacific joined other delegates to discuss means of addressing rising concerns over food and energy prices, climate change, overcoming middle-income trap, development model, infrastructure development, sustainable development and environment as well as best strategies for ADB to work with the public and private sectors to reduce poverty and ensure long-term economic growth in Asia and the Pacific.

 

Governor of the State Bank of Vietnam, Nguyen Van Giau, said at a press briefing prior to the meeting that high inflation is a global issue, not only emerging countries. “This content will be discussed in many satellite conferences on the sidelines of the 44^th Annual Meeting, said Governor Giau, who is also Standing Vice Chairman of the Steering Committee for the 44^th Annual Meeting.

 

Governor Giau said world economies have not completely stepped out the century crisis but face new uncertainties, specially rising prices in countries in the progress of recovery.

 

ADB forecast that Vietnam’s inflation in 2010 will not stop at a single-digit rate but may climb 13.5 percent over 2010. ADB warned global food prices registered a new high in February 2011, rising by more than 30 percent year on year, and fuelling up pressures on inflation and economic growth throughout the region. If a 30 percent increase in global food prices persists throughout 2011, gross domestic product (GDP) growth for some food-importing countries in the region could be choked off by up to 0.6 percentage points. If this is combined with a 30 percent increase in world oil prices, GDP growth could be reduced by up to 1.5 percentage points compared with the baseline scenario where food and oil price hikes do not occur. With this pessimistic scenario, a 10 percent rise in domestic food prices in developing Asia could push an additional 64.4 million into poverty, based on the US$1.25-a-day poverty line.

 

In Vietnam, Giau said, the Government actively adopted strong measures, particularly the Resolution 11, to stabilise macro economy. Since the start of the year, the State Bank of Vietnam has worked with ministries and other agencies to work out response scenarios where the devaluation of Vietnamese dong was chosen to control trade gap and hosts of policies were adopted to reduce the demand and aggregate demand, including tightened monetary and fiscal policies.

He said this annual meeting took place at a relatively special time when Vietnam, as the host, officially became a middle-income country after 25 years of doi moi (reform). Vietnam has attained important social and economic achievements, particularly poverty reduction - a field that ADB specially concerns and considers a major mission of its operations.

 

ADB President Haruhiko Kuroda said: “Vietnam has made great progress in poverty reduction after a decade of rapid growth. Vietnam is a typical example of a development success story for other developing countries in the world.”

 

He noted inflation should be curbed with a package of major measures, especially as it has had a strong impact on hundreds of millions of poor people throughout Asia. Chronic poverty must be tackled if Asia wants to become wealthy and progress in this century. This is specially correct to underdeveloped economies. However, middle-income countries are also struggling with poverty and rising inequality.

 

Nearly 20 conferences and national presentations took place in the framework of the annual meeting. Notably, the conference titled “Asia 2050” discussed what to be done in the next 40 years to sustain its present growth momentum Asia obtained in the past decades.

 

The seminar titled “Climate Risk and Resilience: Securing the Region’s Future” examined the threats posed by climate change to water and food security in the region and explored strategies to manage those threats. Key solutions include scaling up efforts to “climate proof” infrastructure, manage disaster risks such as floods and droughts, and adopt regional food security strategies.

 

Another centre of attention of delegates is the seminar “Bridging the Gap: Catalyzing Private Capital for Investment in Infrastructure.” This meeting discussed the challenges that developing nations face to mobilize the world’s enormous pools of private savings and what development financing institutions must do to facilitate the flow of this capital.

 

ADB estimates Asia and the Pacific alone need US$750 billion per year through 2020 to finance necessary infrastructure. Greater use of risk mitigation instruments, including guarantees, are key to drawing the private sector into supporting projects in emerging economies. Without them, private companies and financial institutions may not be prepared to invest their capital. But limited resources even at development finance institutions mean they will need to work more closely with other guarantors, including export credit agencies, private insurers, and other donors to draw in even more private capital.

 

The joint ADB/Asian Development Bank Institute (ADBI) seminar, “Working Together Towards Better Financial Regulation and Stability in Asia,” looked at weaknesses exposed during the recent global financial crisis. These included insufficient macro-prudential supervision, still underdeveloped regional financial markets, and high vulnerability to volatile capital flows.

 

Remarkably, at the Joint ADB-IMF-Japanese ASEAN +3 Co-chair-French G20 Presidency High-Level Panel on Reforming the International Monetary System” held at the framework of the 44^th ADB Annual Meeting, ADB President Haruhiko Kuroda said “Asia must accept greater responsibility in global economic and financial affairs by playing a more proactive role in designing an effective multilateral framework that promotes global monetary and financial stability.”

 

Mr Kuroda cited the Chiang Mai Initiative Multilateralisation and the creation of the ASEAN+3 Macroeconomic and Research Office as signs that the region is taking concrete steps to build a stronger regional financial architecture supporting regional and global financial stability. But he warned that deeply rooted problems in the international monetary system - such as persistent global imbalances, large and volatile capital flows, undue exchange rate pressures, and disruptions in providing sufficient global liquidity in times of market distress - must still be addressed with collective efforts if Asia is to achieve strong, sustainable and inclusive growth.

 

A prime objective of the current French G20 Presidency is to establish a collective global response to continued deficiencies in the IMS and panellists at the seminar discussed opportunities for the G20 to collaborate in strengthening existing global and regional financing arrangements. French Finance Minister Christine Lagarde said: “We need to have a more comprehensive and better organized system; a system that is more in sync with the real economy.” She said the basket of currencies behind the IMF’s Special Drawing Rights must be enlarged to be more representative of the world’s multi-polar economy.

 

Meanwhile, Mr Shinohara, an IMF representative, said the IMF has intensified its current study of the various experiences in emerging markets, especially on how they have dealt with capital flows. He said the comprehensive study is taking into account the situation of capital recipients and capital originators. “The work is still in progress in formulating a framework to help countries manage volatile capital flows,” he added. While developing Asia had made significant strides in tackling income poverty, non-income poverty still remained pervasive. Half of all Asians live without basic sanitation while 900 million people in the region have no access to electricity.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members - 48 from the region. In 2010, ADB approvals, including co-financing, totalled US$17.51 billion. In addition, ADB's ongoing Trade Finance Program supported US$2.8 billion in trade.