Operational Policies and Practices

Abstract

The ADB’s operational policies and lending practices are formulated within the context of the Bank’s political debate on development policy and the organisational constraints discussed in the preceding chapter. Underlying operational policies and practices are two conflicts. The first is between the Bank’s developmental objectives and the interests of the borrowing countries, on the one hand, and the political and economic interests of the donors, on the other. While changes in the Bank’s rural development policy have called for changes in operational policies such as increased lending to low-income countries, more financing of local costs, greater procurement from developing countries, greater use of domestic consultants, more emphasis on appropriate technologies, and more flexible loan terms, many of these go counter to questions of commercial or political interest to the Bank’s donors. The second conflict is between the Bank’s development objectives and considerations of operational and organisational efficiency. Several of the above changes in operational policies, while facilitating the achievement of development objectives, may also complicate or slow down project planning and implementation, thus conflicting with concerns related to fund-channelling.