Annual Report on the 2006 Country Performance Assessment Exercise

Abstract

In order to strengthen the development impact of its concessional lending, the Asian Development Bank (ADB) has adopted a system to link the allocation of Asian Development Fund (ADF) resources to country performance. Performance-based allocation (PBA) of ADF resources was introduced in 2001, during the ADF VIII period. The underlying premise of the system is that aid is most effective in accelerating poverty reduction in countries where policy and institutional performance are strong. During the negotiations that culminated in the ADF IX replenishment, the system was revised to place greater weight on performance—especially in relation to governance—in allocating ADF resources. ADB uses the annual country performance assessment (CPA) to gauge the relative performance of all eligible borrowers with access to ADF.