Manila, Philippines – The volume of ADB’s operations in 2005 increased by 30% from the previous year to US$7.4 billion, according to the ADB Annual Report 2005 released ahead of the 39th Annual Meeting to be held on 3-6 May in Hyderabad, India.

With $5.8 billion approved for 64 projects, lending made up 78% of total operations. Grants approved sharply increased from $104.4 million in 2004 to $1.2 billion in 2005, with almost half the amount from the Asian Tsunami Fund and another $80 million from the Pakistan Earthquake Fund.

Loans

The $5.8 billion was used for 72 loans for 64 projects in the public and private sectors in 2005, the Report says. The average loan size in 2005 was $81 million, compared with $66 million in 2004.

The largest borrower in 2005 was the People’s Republic of China (PRC), which received $1.5 billion or 26% of the total. Other top borrowers were Indonesia ($1.1 billion or 19%) and Pakistan ($776 million or 13%).

The transport and communications sector continued to receive the largest share of lending at $1.7 billion (30%), followed by energy with 18.5% of the lending pie. By theme, sustainable economic growth was most prevalent and was associated with 53 projects.

Of the total lending, loans with government guarantees amounted to $5.3 billion for 58 projects. Of this amount, $3.9 billion for 25 loans came from ADB’s ordinary capital resources and $1.4 billion for 40 loans from the concessional Asian Development Fund (ADF).

Lending to the private sector without government guarantee amounted to $536 million for seven projects. In financial terms, this is an increase of 83.2% over the $292.5 million for five loans in 2004.

In addition, under a new financing modality, two multi-tranche financing facilities were approved, totaling $1.52 billion. These were $770 million to Pakistan for the National Highway Development Sector Investment Program, and $750 million to India for the Rural Roads Sector II Investment Program. It is expected that loans from these facilities will be approved starting in 2006.

Grants

Grants saw the biggest increase from the previous years with $1.2 billion approved for 51 projects. Of this amount, $246.6 million was funded from the ADF, $570 million from the Asian Tsunami Fund, and $80.0 million from the Pakistan Earthquake Fund.

The remaining $254.7 million was from cofinancing sources, including $28.4 million from the Japan Fund for Poverty Reduction, $12.1 million from the Global Environment Facility, $2.4 million from the Japan Fund for Information and Communication Technology, and $211.8 million other from bilateral and multilateral sources.

In addition, parallel grants of $128.6 million were provided from multilateral and bilateral institutions without ADB administration services for seven ADB financed projects.

Technical Assistance

Complementing the loans during 2005, 299 technical assistance grants amounting to about $198.7 million were approved. Regional technical assistance projects received $69.8 million or 35% of the total. The largest recipient of country-specific technical assistance (excluding regional technical assistance) was the PRC at $18 million (9%), followed by Pakistan, Viet Nam, and Indonesia.

Of the 299 technical assistance activities, 68 were for project preparation, 152 were advisory, and 79 were for regional assistance. Of the total amount approved, $89.5 million will be financed from the Technical Assistance Special Fund, $28.4 million from the Japan Special Fund, $2 million from the Asian Tsunami Fund, and the remaining $79 million from other multilateral and bilateral sources.

Equity Operations

Ten equity investments totaling $217.1 million were approved in 2005, compared with 11 for $164 million in 2004.

Cofinancing and Guarantee Operations

ADB’s cofinancing operations in 2005 amounted to $7.4 billion, a large increase from the $2.4 billion in 2004. This includes $5.2 billion of commercial cofinancing from international and domestic banks and export credit agencies, $1.8 billion of official loan cofinancing, and $352.6 million of grant cofinancing from bilateral and multilateral development partners.

ADB also established two new trust funds – PRC Poverty Reduction and Regional Cooperation Fund ($20 million) and Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific ($12.8 million) – with financing commitments of $32.8 million, and replenished two funds with commitments of $57.2 million.

Private Sector Operations

A total of 17 financial markets and infrastructure projects providing $821.5 million in assistance in the private sector were approved by ADB in 2005, comprising 10 equity investments of $217.1 million, 7 loans of $536 million, a partial credit guarantee of $18.4 million, and a political risk guarantee of $50 million. The first and largest private sector project in the Lao People’s Democratic Republic was approved for the Nam Theun 2 Power Company Limited in 2005.

ADB’s loan and equity investments mobilized funding from other sources, leveraging ADB’s own funds by almost 10 times. In 2005, ADB’s private sector operations also embarked on technical assistance for capacity building in areas such as water, trade, finance, small business and microfinance banks, development of the asset-backed securities market, and worker remittances.

As of end-2005, ADB’s overall private sector exposure amounted to about $1.7 billion, consisting of $598.2 million in equity investments, loans of $732.2 million, and guarantees of $361.7 million. ADB’s private sector exposure is largest in the infrastructure sector with a total of $820.9 million in exposure, followed by investment funds and financial institutions at $742.3 million.

The total private sector exposures are largely in India (17.1%), PRC (15.6%), Sri Lanka (11.5%), and Bangladesh (11.2%). Regional projects account for roughly 8.9% of the total.

Read the full report here. To order a copy of the Annual Report 2005, send an e-mail to adbpub@adb.org.