[back to previous text]

Mr. Bone: I asked the Minister earlier about the exchange rate fluctuations, and he was right to say that the order contains a £116 million limit on what can be spent. Does he agree that that might result in a smaller commitment to the bank in percentage terms? When the £116 million is turned into dollars, its value will obviously be a lot less than it would have been four years ago, so we are actually shrinking our commitment to the bank.
4.54 pm
Mr. Lewis: I thank members of the Committee for their constructive contributions to the debate and for their questions. I will deal first with the comments regarding the bank’s response to the current economic climate and how that fits with some of the conclusions made at the G20.
The G20 shareholders of the bank agreed to a request by the bank to increase their capital by 200 per cent., which needs to be formally agreed by all the shareholders at the annual meeting in early May. The increased capital base will enable the bank to provide an additional $15 billion to help countries to cope with the immediate crisis. G20 leaders also recognised that the bank has an important role in increasing investment in the private sector in the poorest countries, as part of the extra $50 billion agreed by the G20 specifically to safeguard development. There is also a commitment to select the presidents of the international financial institutions, including the Asian Development Bank, by open competition in future.
Some examples of how the fund is responding to the current crisis include: the front-loading of $688 million of grants to Afghanistan, Nepal, Cambodia, Kyrgyzstan, Laos, Tajikistan and Mongolia; the front-loading of $1.2 million of concessional loans and grants to Bangladesh, Vietnam, Pakistan, Uzbekistan and Sri Lanka; the release of $400 million from special reserves; and the encouragement of donors to give additional contributions. It is important to make the point that the bank is responding in real time, supported by the decisions made at the G20; the commitment not only to stabilise the financial system but to intervene specifically to support the poorest countries received a warm welcome.
Mr. Moore: That is all very helpful. May I press the Minister on the British commitment to that additional pledge? Presumably, when we signed up to this public statement we had a sum in mind that would flow through as our commitment.
Mr. Lewis: Can I come back to the hon. Gentleman later in my contribution to try to respond to the point? If we do not have the details, I will write to him.
The hon. Member for North-East Milton Keynes raised the question of the nature of our replenishment and how it compares historically. It is fair to say that the reason that our contribution remains relatively stable is because of some of the historical concerns about the pace of reform. We do not feel that we have had the kind of reforms that were promised in 2001, although there has been undoubted progress in the past couple of years. We do not think that, in the light of those performance improvements, it would be appropriate to spend a significant amount of additional UK taxpayer’s money through this vehicle at this time. In relation to the range of countries that the fund is trying to support, we had to find a lever to incentivise the fund to take the question of gender equality at the bank far more seriously.
There is always a balance to be struck between core funding and the element of funding that is an incentive, but we believe, despite what the hon. Member for North-East Milton Keynes rightly said about the bank’s overall strategic objectives, that it is important that we encourage, support and reward work on gender equality. We know the consequences—I tried to describe them in my opening speech—both economically and socially of making no real progress on gender equality. We believe that this measure will, albeit in a small way, raise the profile of gender equality in relation to how the fund is administered and more generally in regard to how the bank sees its responsibilities.
Mr. Lancaster: That is a perfectly reasonable explanation. Given the history that the Minister has outlined, however, why are we continuing to set only a small percentage as conditional funding? Because of past problems and our earlier decisions not to pay the supplementary funds, about 96 per cent. remains as core funding, which is unconditional. Surely that should have changed as we learned our lesson from the last replenishment?
Mr. Lewis: I can only say that this is a question of making a judgment, on a case-by-case basis. Between 2001 and 2005, there was nowhere near the kind of progress that we had expected. To be fair to the bank, however, in the past 12 to 18 months, the commitments made on reform have largely been honoured. We therefore decided to retain the largest share of our investment as mainstream core funding and to have a smaller amount to incentivise performance on the question of gender. There was an appropriate judgment to be made at this time. There is always a case for considering the relative balance of our contribution to incentivise for the outcomes and reforms that we want. However, if we chart the history of our engagement with the bank over a long period of demanding that reforms be delivered, we can see that, in the circumstances, this is an appropriate response to the progress that has been made.
The hon. Member for North-East Milton Keynes wanted a specific breakdown of core and supplementary contributions. The core was 6 per cent. or £114.1 million and, historically, the supplementary contribution was to be based on institutional reform. At that stage, we did not identify the amount of supplementary contribution that we would make available. We did not say, “If you perform, it will be a particular amount.” We simply committed to a supplementary investment if reform occurred. Because that reform did not happen, we did not feel that it was appropriate to pay a supplementary amount. I assume that Parliament made provision for that to happen as an enabling provision; the Government were not compelled to make those resources available. We did not make the supplementary payment because we were not satisfied with the pace of reform.
The hon. Member for North-East Milton Keynes mentioned the relationship between the Asian Development Bank and World Bank and the need to ensure that they function complimentarily. Country by country, there is significant co-operation between the World Bank and the ADB. For example, they are co-operating on implementing the new climate investment funds, which the United Kingdom leads on. They also co-operate with recipient countries on the development of poverty reduction strategies. The hon. Gentleman also mentioned plans for the reform of the governance of the bank, and the relationship between donors and country involvement in that governance. During negotiations and at other meetings, we have constantly raised the question of governance reform, and it has to be said that other shareholders share the concerns of the United Kingdom. Asian members are taking a greater role in the direction of the bank, which we welcome as an important step forward while acknowledging that there is still considerable progress to be made towards more acceptable governance arrangements.
The hon. Gentleman asked about the impact assessment. We have undertaken an ongoing assessment of the bank’s progress on its internal reform agenda and, equally important, its performance on the ground. We have considered indicators such as the bank’s reporting, including its annual effectiveness report and its annual report. During the ninth replenishment, we undertook a regular review, with our country offices, of action on the ground, and worked with other donors—Australia, Norway and the US—to share assessments of the bank’s effectiveness. There may not have been a formal impact assessment, but a series of processes has ensured that judgments have been made. The fact that we withheld the supplementary replenishment suggests that we took our commitment to reform very seriously. We sent a message to the governors and the director of the bank that we expected more rapid progress, and in recent years we have seen such progress, so that decision bore fruit.
The hon. Gentleman also raised the question of our core contribution. The replenishment will be judged against a detailed bank-wide results framework. The reporting on that will be done on an annual basis. The framework examines the bank’s impact and effectiveness at regional, sub-regional and country level, and also considers the whole question of internal reforms. There will be a major mid-term review of the entire replenishment.
My hon. Friend the Member for Vauxhall asked about the range of countries that the fund supports. I do not know whether she wishes me to read out the 29 countries that it covers, but I would be happy to give her a full and detailed list at the end of the proceedings if that is acceptable.
Mr. Bone: I would be grateful if the Minister could provide that list to all members of the Committee, if possible.
Mr. Lewis: Certainly. There is no problem with that. I have dealt with all the issues except the one raised by the hon. Member for Berwickshire, Roxburgh and Selkirk. It would probably be best if I wrote to him with those details.
Kate Hoey: I am sorry to interrupt my hon. Friend. I am grateful for that information and I look forward to having it as my bedtime reading tonight. Could he say something about the human rights aspect? I am concerned that we are funding countries such as China.
Mr. Lewis: The fund does not fund China. Clearly the bank has a very important relationship with China. We have a role as a governor of the bank and there are constant deliberations about the nature of some of the decisions that are made. There have been some controversial decisions recently about Sri Lanka, for example. While we have had to judge decisions about investment in particular projects on their merits, we have also used the opportunity to make clear and strong political statements about any anxiety that we may have about human rights. All Members of the House are conscious right now of the strength of feeling of the demonstrators outside Parliament. We want to see an immediate ceasefire in Sri Lanka, and we want to see humanitarian assistance made available as soon as possible to those who have been victims of violence. We are also concerned about the Tamil population, which makes an incredibly important contribution to the United Kingdom. The former Secretary of State for Defence has been appointed by the Prime Minister as a special envoy to Sri Lanka. We want people to understand that we are engaging at the highest levels to try to achieve a ceasefire and an immediate end to the violence that plagues significant parts of that country.
Mr. Lancaster: The Minister moved swiftly off China on to Sri Lanka. He said that the fund does not directly fund China, but can he confirm how much the Department currently gives to China in bilateral aid?
We have major concerns about the behaviour of some of the Governments in the countries with which we have a diplomatic relationship and which DFID supports. Of that there is no doubt, but the challenge for development agencies and for responsible Governments is to decide how best to exercise influence to change behaviour in the interests of ordinary people in those countries. I point out to the Committee that if the judgments we made about many of the poorest countries in the world were based on the quality, accountability and democratic transparency of their Governments, we would not make a penny available to them. However, we all know that we have a responsibility to the citizens of those countries to alleviate poverty and, in many cases, to support moving from war, conflict and violence to the rebuilding of nation states and the building of the institutions that give those countries and, more importantly, their populations the chance of a decent quality of life where their human rights are respected.
We can have a debate about some of the sensitive and difficult judgments that have to be made. In this case, however, taking into account the important role that the bank and the fund fulfil, the other vehicles available to us to support development in Asia, and the progress that has been made on reform over a reasonably long period, I believe that the replenishment we are recommending to the House today is appropriate and I ask the Committee to support it.
Question put and agreed to.
That the Committee has considered the draft Asian Development Bank (Ninth Replenishment of the Asian Development Fund) Order 2009.
5.11 pm
Committee rose.
Previous Contents
House of Commons 
home page Parliament home page House of 
Lords home page search page enquiries ordering index

©Parliamentary copyright 2009
Prepared 22 April 2009