ADB faces funding crunch, warns India

The Asian Development Bank is facing a funding crunch as the multilateral lending agency seeks to reduce widespread poverty in emerging market nations and boost infrastructure, India warned Saturday. The Asia-Pacific region, despite boasting the world's fastest-growing economies, is still home to around two-thirds of the world's poor, with some 1.5 billion people living on less than $2 a day. Member countries of the Manila-based development bank need to consider ways to increase its resources to meet Asia's massive needs for infrastructure, economic growth and to combat poverty, India's Finance Minister P. Chidambaram said. "The support that the ADB can deliver for economic development and poverty reduction in the region will be seriously constrained by the lack of adequate capital," he told the annual two-day meeting of the ADB's board of governors. "We may hit the wall (in funding) in about three years," Chidambaram added, noting the amount of lending by Asia's main development bank is expected to decline to $8 billion annually from $10.1 billion. Some 5,000 delegates are at the two-day annual meeting, being held on the outskirts of New Delhi, of the board of governors of the lending agency that offers low-interest loans, grants and other support to fight poverty in Asia. The ADB's support is also critically important to improve the quality of the region's infrastructure, Chidambaram said, noting Asia needs a "humongous sum" of $8 trillion to $10 trillion over the next decade to upgrade its ports, roads and other infrastructure in order to fuel growth. "The ADB has its work cut out," said Chidambaram, who was speaking as the chair of the ADB board of governors. The 67 members from the ADB are made up of 48 from the Asian region and 19 from elsewhere, mainly North America and Europe. If the ADB is to keep up its important regional role, "its resource base has to expand considerably", Chidambaram said. India has a strong interest in seeing the ADB's financial resource base strengthened as it is one of its biggest borrowers.