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.
I will have
to get back to the hon. Member for North-East Milton Keynes on the
question of the overall share of DFID’s budget that the
replenishment represents,
but I can say that it will be paid annually. The hon. Gentleman raised
the question of representation and our governance role. My predecessor,
my hon. Friend the Member for Dewsbury (Mr. Malik), attended
the annual meetings of the governors last year, and the Under-Secretary
of State for International Development, my hon. Friend the Member for
Worcester (Mr. Foster), will be going to the meetings this
year, which, I believe, will take place next month. There is therefore
significant ministerial, as well as senior official,
engagement. 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?
Mr.
Lewis: I do not have that information at my disposal.
There is always a debate about wanting to change behaviour and how that
can be done most appropriately. My hon. Friend the Member for Vauxhall
has an impressive track record of presenting arguments
about the disgraceful situation in Zimbabwe, for example. There is now a
new Government in Zimbabwe, and a new Prime Minister. Our inclination
is very much to want that Prime Minister to succeed. Equally, we know
that if we jump in too quickly and make significant resources available
to the new Government at an early stage, there will be no pressure on
that Government in regard to economic reform or human rights. That is
an example of the kind of judgment that we have to
make. 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. Resolved, That
the Committee has considered the draft Asian Development Bank (Ninth
Replenishment of the Asian Development Fund) Order
2009. 5.11
pm Committee
rose.
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