|Antonio Tujan Jr., IBON Philippines – The COVID-19 pandemic has become a defining moment for the millennium. It adds to the existential crises that the world faces, along with the threats to human society and nature from climate change and the threat of nuclear conflict. As the COVID19 pandemic rages around the world, developing country governments are scrambling for loans to fund health and economic packages for the poor, including from the Asian Development Bank (ADB).|
The development challenge for the ADB
The ADB was established in 1966 by 31 countries as a multilateral development bank for Asia and the Pacific to aid recovery from the after-effects of the World War II and to foster economic growth and cooperation in the region. Based in Manila, it is controlled mainly by the United States and Japan, the Bank is now made up of 68 member countries, of which 49 are from the region and 40 are developing countries.
As the biggest provider of development aid in Asia Pacific, the ADB is in a unique position to influence the development practices of countries in the region and it prides itself on being considered an institution that “continues to have a positive impact on the lives of the poor in the Asia and Pacific region, as it helps countries meet their development goals”, however it has been regularly criticised by civil society organisations for its pro-big business policies, promotion of the privatisation of social services, the deregulation of economic sectors and funding of socially and environmentally unsustainable projects.
Since its founding in 1966, the ADB’s capital base grew from $4.6B to $147B in 2015 and its overall portfolio grew from $77B in 2016 to $102.6B in 2019. It includes public sector grants and loans amounting to $88.8B and $13.9 private sector portfolios covering some 992 projects. However, in 2019 only 7% of this or $7.4B was allocated to grants.
This is reflected in the increasing direct assistance provided to corporations, whether through private sector portfolios or for guarantees benefiting corporations involved in infrastructure and other projects in the form of Public Private Partnerships. According to its 2019 report, this assistance amounted to an estimated $14B or 13.5% of ADB’s total portfolios covering around one fourth of all the projects. The heavy proportion of loans in the composition of ADB’s portfolio is an indication of the policy of the Bank’s governing body to focus on infrastructure projects rather than to respond to the demands of civil society for a more pro-people development approach.
Critics of the Bank’s focus on loans point out that in view of the debt crisis facing many countries in the global South, the emphasis should be on grants and not on the creation of new debts that will ultimately be shouldered by the people. In that context, civil society organizations such as People Over Profit organized an online rally during the Bank’s Annual Governors Meeting in November 2020 to call for a pro-people framework for ADB’s financing that would focus more on grants for soft projects in sectors such as agriculture, health and education rather than hard infrastructure projects.
In several cases, the imbalance in favour of infrastructure projects in the ADB’s development financing assistance has had negative consequences for communities and the environment. For instance in India, the largest recipient of ADB funding, the bulk of projects supported are in the field of transport, energy, water and urban development. The New Delhi NGO Housing and Land Rights Network reported that infrastructure projects such as the Indian government’s flagship Smart Cities Mission, for which the ADB provides support, have led to the forced eviction of hundreds of thousands of from their homes.
The ADB’s response to the COVID-19 pandemic
In April 2020, ADB President Masatsugu Asakawa announced a $20 billion response package “to help our developing country members counter the severe impacts caused by the COVID-19 pandemic” and introduced a new $9B Asia-Pacific Vaccine Access Facility (APVAX) under which member-countries can borrow $400-$500M for COVID-19 vaccine procurement.
The ADB’s declared objective is “to finance an aggressive set of actions to empower governments and businesses in Asia and the Pacific to tackle the severe health and macroeconomic impacts, address the urgent needs of the poor, sick, and vulnerable and blaze a path to strong recovery.” While the ADB’s response is laudable, a number of questions need to be answered. The development finance facility is essentially just a reprieve, since it is, typically, provided as a loan rather than a grant as humanitarian assistance to those hit by a global catastrophe. Secondly, it is far from sufficient to cover the development finance needed to compensate for the health and economic impacts of the pandemic in the member developing countries and workers jobs lost as a result of the forced lockdowns and other pandemic management measures by governments. In fact, COVID-19 related financing does not even account for one fourth of ADBs portfolio. Thirdly, it does not address the systemic issues behind the pandemic and the need to strengthen health systems and other social services that have been severely weakened due to the dominant neoliberal economic policies that it follows.
Instead of rebalancing development priorities and shifting the focus to social services, infrastructure remains the priority, and neoliberal policies hold sway. The ADB’s COVID-19 response can be summarized as the provision of development financing to provide the global public goods from which corporations earn more profits.
The Philippines example
The Philippines has suffered the second highest number of cases in the sub region and was subjected to extended and harsh lockdowns resulting in a severe recession and placing a tremendous strain on the economy, government services and ultimately the people. In a developing country such as the Philippines, where the majority of the population is underemployed or unemployed, the poor have a hand-to-mouth existence with no system of social benefits to fall back on, and a protracted hard lockdown spells disaster for the majority of the people. Hunger has become a defining social problem where community kitchens and welfare food bags are the only lifeline for the destitute.
As a response, the ADB extended a record $4.2 billion for 11 loan projects in the Philippines in 2020, the bulk of which was supposedly geared towards immediate Covid-19 response. The Duterte government enacted a “Heal as-One” Act to address Covid-19 that included a support program providing grants of US $ 100 – 150 to 18 million urban poor families for a period of 2 months. The program was funded through a $100 million loan from the World Bank in May 2020 and with a loan of $200 million from the ADB. However, in the end, the program only supported 3.5 million households for two months, due to bureaucratic red tape, lack of government coordination and corruption.
For 2021, the ADB plans to lend the Philippines a total of $3.57 billion across seven programs and projects intended to support infrastructure development, health care and jobs recovery. Talks are also underway between the Government of the Philippines and the ADB on access to the new $9-billion Asia-Pacific Vaccine Access Facility (APVAX).
As Covid-19 ran its course, the government developed a successor program that it sought to fund by integrating Covid-19 response measures into existing programs. However, this has resulted in some cases in government programs that were already detrimental to the people being further boosted.
For example, an ADB loan of USD 400 million was approved in 2020 to support government reforms aimed at “improving productivity in the agriculture sector”. These reforms include the government’s Rice Tarrification Act, that was enacted in 2019 despite years of protest from farmers, including ASTM’s partner organisation, the national farmers’ movement KMP. This law has further weakened market supports for farmers, removed government control of stocks and deregulated rice importation, driving down the price of locally farmed grains, while there are no production subsidies available to cover the losses to farmers, which are estimated at about USD 1.4 billion as of February 2020.
According to Rafael Mariano, former chairperson of KMP, poor landless and small farmers and agricultural workers lack sufficient funds for production inputs and cannot dictate prices. Their precarious livelihood collapse under neoliberal reforms that bring in cheap imported products like rice.
Likewise there is a decreasing trend in ADB loans and grants for agriculture, while loans and grants for 2016-2030 are mainly aligned to power, water and sanitation infrastructure. For example, the ADB-funded Angat Water Transmission Project in Bulacan will improve the capacity of the dam but for the purpose of providing better water distribution water for households and not for the irrigation of cropland.
The COVID-19 pandemic should redefine the priorities for human society and for development financing
As the ADB’s 68 country members grapple with the Corona virus pandemic, its development strategy needs to be reviewed deeply. While Agenda 2030 continues to provide a framework for a balanced, comprehensive and transformative approach to sustainable development, the pandemic has clearly shown that the so-called new normal must not be more of the same with minor adaptations. We need to transform the concept of development and the imperatives and role of development financing in order to address the existential threats posed to human health, food etc. by biological vectors, by climate change and man-made weapons of mass destruction.
If development is about people, it should be balanced with the environment. If the starting point is to provide for the material needs of the people, development should start with people’s rights to achieve a balanced and comprehensive development framework where economic rights are not determined by corporate business.
But ADB’s vision of development is to deliver hard infrastructure development projects as dictated by government economic programs rather than assuring peoples rights and welfare. As many infrastructure projects are premised on PPPs, they include a package of neoliberal reforms to ensure a return on investments for corporate partners, as well as risk guarantees and other financial support mechanisms. These reforms lead to layoffs for workers and higher user-fees for consumers.
Economic planning should be based on consultation and social consensus that takes account of the need for and feasibility of infrastructure projects, as well as their impact on the affected communities and their environment. ADB financing provides countries with public goods, whether in terms of social services or infrastructure, or, in the current emergency, vaccines and hospital equipment and supplies needed for the pandemic. But resourcing, means of provision, prioritization and allocation need a reboot of the development architecture, a development reboot.
 ADB 2019 Annual Portfolio Performance Report
 People Over Profit was established in Manila in 2017 as a global network of grassroots organizations and institutes to campaign on issues such as people’s development, development finance and transnational companies.
 India’s Smart Cities Mission: Smart for Whom? Cities for Whom? HLRN India, June 2017
 Simeon, L. (2020, February 22). Farmers lose P68 billion from rice tariffication law. Retrieved from Philstar Global: https://www.philstar.com/business/2020/02/22/1995025/farmers-lose-p68-billion-rice-tariffication-law