THE Asian Development Bank (ADB) approved the use of results-based lending (RBL) as a regular financing modality for its operations following a successful 6-year pilot period. This will allow ADB and its developing member countries (DMCs) to have more financing options for improving development outcomes in Asia and the Pacific.
RBL is a results-based form of financing in which fund disbursements are linked to the achievement of agreed program results rather than to expenditures, as is the case with project lending. The modality incentivizes borrowing governments and ADB to focus on results during the design and implementation of government programs, while promoting institutional development, enhancing development effectiveness, and supporting better coordination.
“ADB introduced results-based lending on a pilot basis in 2013 to strengthen both incentives and accountability for delivering and sustaining results, while improving the efficiency and effectiveness of government-owned programs,” says the director general of ADB’s Strategy, Policy, and Partnerships Department Tomoyuki Kimura. “RBL has effectively helped our developing member countries enhance development effectiveness and strengthen their institutions by linking financing directly to the achievement of pre-determined outputs and outcomes targets,” he adds.
The findings from the pilot phase showed that RBL helped strengthen country ownership and accountability by placing the responsibility for achieving results on government institutions rather than on program-specific management units. It also demonstrated good potential for promoting effective development partnerships.
ADB has approved 19 RBLs in 11 DMCs, with a total commitment of US$4.8 billion. RBL projects and programs are spread across a range of sectors, including education, energy, health, agriculture, finance, and urban development. Education is the predominant sector in terms of the number of programs with 10 RBLs and the value of the commitment at US$1.8 billion.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to US$21.6 billion.