The Asian Development Bank's lending will continue to be dominated by disbursements to India and China, despite donor objections that the two fast-growing economies are not in need of concessional funds.
Rajat Nag, managing director general of the Manila-based multilateral lender, said in an interview on the sidelines of the ADB's annual meeting that loans to China and India held more significance than the dollar amounts given out.
"It enables these two countries and also us to be able to bring in best international practices in project implementation, policy issues and safeguards," he told Reuters late on Saturday. "I think for these countries it helps to have an external agency providing that."
Last year, India accounted for $2.88 billion of the ADB's total ordinary loans of $10.45 billion, while China came in at second spot with $1.75 billion. Other major recipients included Pakistan, Indonesia, the Philippines and Vietnam.
Nag acknowledged that many of the ADB's donors had expressed reservations about the amount of lending to the two Asian powerhouses.
But he added: "If we are going to seriously attack the issue of poverty in Asia and the Pacific, you are really talking about China and India."
"We believe that our involvement with the two countries is important because of the fight against poverty, because that's where the numbers are."
INVESTMENT GRADE
Nag also said it was important for the ADB to have a good part of its loans lent out securely.
"We are also a bank," he said. "These are the two countries which are investment grade."
The ADB's formal meetings with its board of governors -- finance ministers from its donors and other member-nations -- begin on Monday.
Donors have already agreed to a 200 percent increase in the ADB's capital base, which will enable the bank to ramp up lending by about 50 percent over 2009 and 2010 to around $33 billion in the two-year period.
On Saturday, ADB President Haruhiko Kuroda announced a new $3 billion fund to provide quick loans for increased spending to counter the global economic downturn. The ADB has also set up a $1 billion fund to provide trade financing.
Besides these facilities, Nag said most of the new funding would concentrate on infrastructure.
"Bulk of it will be in infrastructure because that is where the huge needs of Asia still are and because that is where you will get the most immediate impact of employment and income generation," he said.
Education and the environment would be other priorities.
The ADB will also seek to ensure that governments maintain social expenditure to counter the effects of the economic crisis on the poor, he said.
Soft loans under the Asian Development Fund (ADF) window, reserved for poorer nations, will be front-loaded over the next two years, Nag said.
Last year, donors agreed on a $11.3 billion contribution to the ADF window over the 2009-2012 period.