Innovation and Efficiency Initiative: Cost Sharing and Eligibility of Expenditures for Asian Development Bank Financing: A New Approach

Abstract

This paper proposes the modification of a number of Asian Development Bank (ADB) policies and rules on cost sharing and eligibility of expenditures. Its aim is to establish a new policy framework to determine how much, and what, ADB can finance under its public sector development programs.1 A new policy framework is essential for ADB to remain an effective, responsive, results-oriented, and hence relevant partner to its developing member countries (DMC). The proposed changes will give ADB a project financing framework that is (i) more closely aligned with the actual expenditure requirements of borrowers, (ii) harmonized with that of other development partners, and (iii) consistent across lending instruments. Simpler and more uniform cost sharing and expenditure eligibility will help reduce transaction costs for borrowers and ADB.