Kyoto, May 7:

The Asian Development Bank (ADB) failed to win agreement for controversial reforms today, with Asia’s poorest countries and their richer neighbours divided on how - or even whether - the bank should respond to the region’s rapid growth and increasing wealth.

The discord highlighted the divergent priorities of the ADB’s members as the development bank wrapped up a key annual meeting aimed at updating the 40-year-old organisation. Some member countries urged the ADB to keep pace with the region’s rapidly expanding economies, while others warned too much change would leave Asia’s poorest nations behind.

Countries also differed on whether to focus on regional integration, environmental problems, growing disparities between rich and poor or how to tap Asia’s vast pool of foreign reserves and savings. The US even suggested the ADB might wind down its work as Asian nations get richer.

ADB president Haruhiko Kuroda called the discussions ‘lively.’ Many nations reacted to the reform recommendations by pointing out issues that were “missing or merit more careful consideration,” he said. Chartered four decades ago to end poverty through economic development, it has partly beco-me a victim of its own success.

Extreme poverty is now projected to be all but wiped out in Asia within 15 years, and the ADB is suddenly struggling to remain relevant as one of the world’s premier development agencies. Debate on a possible facelift topped the agenda at the four-day long annual meeting in Kyoto, where 3,000 delegates from 67 member nations gathered.

Recommendations for reforming the ADB include focu-sing more on sustainable grow-th, emphasising environmentally friendly development and drawing on Asian capital inste-ad of foreign funds. While Asian economic growth is lifting the region out of poverty, it is also generating increased inequality that “threatens social cohesion and puts at risk process of growth itself,” Kuroda said.

Creating jobs for the 1.9 billion Asians still living on less than $2-a-day will be key to stabilising development, he said. It also requires better education, health care and cleaner governments. The region’s overstrained infrastructure, meanwhile, is forecast to need more than $3 trillion in new investment over the next 10 years just to keep up.

With Asia transformed from a debtor region to a rich club with US$3.1 trillion in foreign currency reserves, it’s time for Asia to mobilise more of its own capital to meet these needs, Kuroda said.

Rapidly growing economies like South Korea and Thailand that were battered by the 1997 Asian financial crisis, largely supported a stronger ADB. They envision a bank that might help manage part of the region’s vast foreign currency reserves and protect against wildly fluctuating exchange rates.

Some even want the ADB to help set up a regional bond market to finance development spending. But the US, one of the ADB’s top shareholders, said the bank should stick to its original task of helping the poor and not seek new mandates that stray from the mission.

“We should celebrate when countries no longer need ADB to finance their development needs, not seek ways to artificially create incentives to lend to them,” US delegate Peel said.

Poor countries, meanwhile, questioned the ADB’s forecast that 90 per cent of the region’s people will be ‘middle income’ by 2020, noting that almost half the world’s poor still live in Asia. The poorer countries are afraid they will be left behind.

“There will still be a significant number of poor,” said Keat Chhon, Cambodia’s governor to the ADB. “The ADB should continue to focus on poverty alleviation in these low-income economies until this mission is accomplished.” Afghan governor Anwar-ul-Haq Ahady said.