The Asian Development Bank approved May 23 the creation of the Japan Fund for Poverty Reduction, a ¥10 billion ($90.9 million at ¥110=$1.00) resource intended to help alleviate poverty in Asia. Finance Minister Kiichi Miyazawa had proposed the idea at the ADB's annual meeting, held in Chiang Mai, Thailand in early May. The facility will finance grants for poverty reduction and social development activities. In contrast, the Asian Development Fund, the multilateral development bank's main financing vehicle, extends loans on concessional terms to poor nations.
Last November, the ADB declared poverty reduction to be its main mission, and at the Chiang Mai meeting, ADB President Tadao Chino called on the organization's 58 member nations to contribute additional resources to support the effort. According to the Manila-based bank, some 900 million Asians two-thirds of the developing world's poor remain destitute despite the spectacular economic growth achieved in the 1980s and in early 1990s. In fact, due in large part to the 1997-99 East Asian financial and economic crisis, more people in the region today endure abject poverty, defined as living on less than $1 a day, than five years ago.
The United States and Japan are the ADB's two largest shareholders; each has a 15.9 percent interest. Tokyo has been a top contributor to the bank since its founding in 1966 and, in contrast to Washington's stance, favors expanding the ADB's capital base. At the May annual meeting, Assistant Secretary of the Treasury for International Affairs Edwin M. Truman indicated that increasing American contributions to the bank is not an option. The White House position is that the ADB should use existing funds more efficiently and make loans more selectively. Even without Washington's support, Tokyo's new fund will add value to ADB-financed projects and bolster the bank's mission. Moreover, it will highlight Tokyo's ongoing commitment to assist development in Asia.