The ADB: Asia’s ‘Debt Bank’

This article reviews how the Asian Development Bank has resulted in the indebtedness and underdevelopment of countries in the Asia-Pacific region.

Posted by Bulatlat

In a two-day people’s opinion tribunal held in Bali, Indonesia on May 2 and 3, the Asian Development Bank (ADB) was charged by civil society groups and grassroots sectors from the Asia Pacific region of human rights violations.

Organized by non-government organizations led by the Asia Pacific Research Network (APRN), Indonesian NGO Forum on International Development (INFID), and Institute for National and Democratic Studies (INDIES) together with peoples’ organizations in the region, the Asia Pacific Peoples’ Tribunal on ADB raised the voices of grassroots and marginalized sectors and exposed how ADB has played a significant role in worsening poverty through debt entrapment, unsound governance policies and environmental degradation.

Testimonies and evidence from experts and victims from affected communities on the negative impact of ADB policies and projects were presented.

According to the groups, the ADB since its establishment in 1966 has largely focused on creating business opportunities on the flawed premise that market forces will lead to development. This has contributed to turning vital health, education, power and water services into luxury goods inaccessible to poor majorities. The underdeveloped countries of the region have also been made to suffer high and mounting debt burdens.

Increased commerce, widened disparities

ADB is the region’s main international development finance institution and its third largest source of such funding after Japan and the World Bank. It has 67 member countries, 44 of whom it categorizes as “developing countries” and including 19 developed country members from outside the region in North America and Europe.

While development of poor countries is the supposed goal of the ADB, there are however still 3.5 billion people living in the region, of which 550 million are reported hungry and 1.7 billion poor. Also, two-thirds of the world’s poor and half its undernourished people are said to be in Asia and the Pacific. The region also accounts for 40 percent of children who die before age five, 60 percent of those without safe water and 70 percent of those without access to improved sanitation.

The region has supposedly seen rapid growth and great structural transformation in the last three to four decades. Yet the rapid economic growth recorded merely reflects greatly increased commerce and other economic activity whose benefits have accrued to a few. The last decades in fact have seen widening disparities within and between countries in the region. These are not accidental and are the necessary result of the distorted economic model pushed by the ADB, among others, through its loans. In this model, the economy, labor and natural resources exist to be exploited for profit rather than to improve the welfare of people.

Harmful to people and environment

Over four decades of ADB lending has resulted in vast amounts of debt used for projects hurtful to people and communities as well as harmful to the environment. Loans have been used to leverage policy conditionalities which have made public utilities prohibitively expensive, undermined social services of health and education, and destroyed local agriculture and industry.

The ADB’s lending has been criticized as not going towards development. The people of the underdeveloped countries of Asia and Pacific region remain deeply indebted, endure intensifying poverty, and suffer economic backwardness. The underdeveloped ADB member countries combined foreign debt stock of US$344.2 billion in 1988 (39 countries) has even increased five-fold to US$1,635.2 billion in 2006 (44 countries).

Overall, the ADB has used its lending as leverage to compel retrogressive “free market” economic policies on the underdeveloped countries of the region. These policies sustain and deepen domestic conditions of underdevelopment: trade and investment liberalization has undermined domestic agriculture and industry; privatization has turned social and public services into opportunities for profit; and deregulation has unleashed unbridled profit-seeking.

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