The Asian Development Bank (ADB) is a multilateral development finance institution
founded in 1966 to promote social and economic progress in its developing member
countries in Asia and the Pacific (see ADB’s website: http://www.adb.org/about/main).
2.2 ADB’s principal functions are
- lending funds,
- providing grants,
- providing technical assistance and advisory services,
- promoting investments for development purposes, and
- assisting in coordinating the development policies and plans of developing
member countries.
Inquiries
2.3 Loan disbursement is handled by the Loan Administration Division of the Controller’s
Department.
2.4 For loan service payments and billing matters, inquiries are addressed to the
Accounting Division of the Controller’s Department.
Loan or Grant Regulations
3.4 The regulations4
further set out conditions for the use of loan or grant proceeds
financed by ADB, or proceeds administered by ADB.
5
These documents are expressly
incorporated in the associated loan agreement, guarantee agreement, or grant
agreement. If any provision of a loan agreement, guarantee agreement, or grant
agreement is inconsistent with a provision of these regulations, the provision of the
loan agreement, guarantee agreement, or grant agreement governs.
Loan Documents
3.5 Loan documents
6
include the following documents and agreements:
ȕ Thereport and recommendation of the President to the Board of Directors
(RRP) presents the project proposal for consideration by the ADB Board.
ȕ Theproject administration manual (PAM)
7
includes all the information and
schedules describing project implementation and project readiness filters
covering major preproject implementation actions (e.g., government approvals,
procurement, and resettlement) to ensure a rapid start-up and enable early
disbursement. It is mandatory
8
that the PAM be referenced in the RRP and in
the loan (or facility) agreements, is presented as a stand-alone linked document
to the RRP, and serves as the main document describing implementation details.
The PAM is prepared in the course of loan processing and initially agreed with
the government at the loan fact-finding stage. At loan negotiations, the borrower
and ADB shall review and confirm the PAM agreed during loan fact-finding to
ensure consistency with the loan agreement, and such confirmation shall be
reflected in the minutes of the loan negotiations. The detailed cost estimate by
financier (one schedule included in the PAM) is prepared based on Section J6 of
the ADB Operations Manual (Appendix 3A).
9
Related illustrative tables are also
provided in this handbook (Appendix 3B).

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Basic Principles
3.1  The Agreement Establishing the Asian Development Bank (the ADB Charter)1
states
three main principles of disbursement for development projects:
ȕ The proceeds of any loan, investment, or other financing provided by the Asian
Development Bank (ADB) shall be used only for procurement in member
countries of goods and services produced in member countries unless specifically
permitted by its Board of Directors (Article 14[ix]).
ȕ The borrower shall be permitted by ADB to draw its funds only to meet
expenditures in connection with the project as they are actually incurred
(Article 14[x]).
ȕ Proceeds of any loan made, guaranteed, or participated by ADB are used only
for the purposes for which the loan was granted and with due attention to
considerations of economy and efficiency (Article 14[xi]).
3.2  The borrower2
can withdraw loan funds only for eligible expenditures incurred after
the loan agreement becomes effective, unless retroactive financing is provided in the
loan agreement.
Definitions
3.3  The following terms are defined for the purpose of this handbook:
ȕ closing date    The date ADB may terminate the right of the borrower
to make withdrawals from the loan
3
account.
ȕ disbursement  The withdrawal of proceeds from an ADB-financed
loan account.
ȕ eligible expenditures  Project expenditures that can be financed under an
ADB loan.
ȕ expenditures incurred  The borrower’s obligation to pay either as a result of
contractual terms or after goods and services have
been provided.
ȕ loan account    The account opened or to be opened by ADB on its
books in the name of the borrower, and to which the
amount of the loan has been or will be credited.
1
ADB. 1965. Agreement Establishing the Asian Development Bank.Manila.
2
“Borrower(s)” in this handbook refers to borrowers, recipients (of grants), and/or their executing agencies
unless the context requires otherwise.
3
The term “loan(s)” as used in this handbook refers to loan(s) and grant(s) for investment projects which are
managed by executing agencies unless the context requires otherwise.