Special Message to the Congress Proposing a Contribution to the Asian Development Bank's Special Funds

To the Congress of the United States:

In 1966, the United States--with strong bipartisan approval of the Congress--joined with other nations in the establishment of the Asian Development Bank. Since then this Bank has shown its ability to marshal funds from Asia, Europe and this continent for the purpose of economic development. In the short span of three years, it has effectively put these resources to work. It has demonstrated an ability to make a major contribution to Asian economic development. It gives evidence of a unique capability for acting as a catalyst for regional cooperation. And it can assist individual Asian countries find solutions to their problems on a multilateral basis.

Now it is time for the United States to reaffirm its support of the Asian Development Bank.

Experience has shown that effective Bank support of certain projects and programs essential to economic growth and development in Asia must involve some financing on easier repayment terms. The economic capabilities of some of the countries of Asia have not yet reached a level of development adequate to service needed loans on conventional terms. The Bank cannot furnish this needed financing out of its ordinary resources and the limited amount of special funds now available to it.

To measure up to its potential for assisting in the economic growth of Asia, the Bank must have adequate facilities and resources to provide concessional as well as conventional financing. I believe that the United States should now join with other donors in providing the Special Funds that will enable the Bank to meet a wider range of Asia's development needs.

The proposal I am submitting to the Congress would authorize the United States to pledge a contribution of $100 million to the Bank's Special Funds over a three-year period. It would authorize the appropriation of $25 million in the present fiscal year, and $35 million and $40 million, respectively, in the next two fiscal years.

This proposal is designed to assure that the United States contribution will have maximum impact on Asian development problems, that the Bank's Special Funds will constitute a truly multilateral financing facility, and that the United States contribution will take account of our own balance of payments position. To assure that other advanced countries provide their fair share of these funds, the United States contribution would not exceed that contributed by other donors as a group, nor would it constitute the largest single contribution to the Bank's Special Funds. The terms governing the use of the United States contribution are clearly set forth in the bill I am transmitting to the Congress.

This support by our country will enable the Asian Development Bank to more effectively perform its critical role in promoting Asian economic progress. The Bank is in a unique position to do this because:

--It is first and foremost a bank, applying sound economic and financial principles to the job of development.

--It is Asia's own creation, largely conceived, established, financed and operated by Asians to meet Asian problems.

--It embodies equitable arrangements for sharing the burden of providing development finance.

--It brings to bear on Asia's challenging development problems the cooperative efforts of 33 nations, with balanced representation among Asian and non-Asian members, and among developed and developing countries.

--Its progress to date gives promise that it will become the important focal point for Asian development efforts envisaged by its founders.

Other developed country members already have responded to the Bank's need for Special Funds resources.

Japan has earmarked $100 million of which $40 million has already been paid. Canada is contributing $25 million in five equal annual installments, while Denmark and The Netherlands have also contributed a total of $3. 1 million.

The Governors of the Bank have supplemented these contributions by setting aside for Special Funds purposes $14.5 million of the Bank's own paid-in convertible currency capital resources, as permitted by the Bank's charter.

A United States contribution at this time will give additional needed strength to this essential supplement to the Bank's Ordinary Capital resources, and will encourage other developed countries to contribute to the Special Funds facility.

This proposal has been developed after careful study of the pressing development needs of Asia, of the ability of the Asian Development Bank to use Special Funds resources to help meet those needs, and of our own fiscal and balance of payments problems. I believe that it represents a sound and realistic balancing of those factors, and that it will serve the national interests of the United States in a number of ways.

--It will further demonstrate the strong United States interest in the economic development of Asia.

--It is responsive to the developmental needs of Asia and to Asian initiatives already taken to meet them.

--It will strengthen the Bank as a multilateral regional institution capable of dealing with current and future development problems in Asia.

--It will encourage other advanced nations to provide their fair share of concessional aid to Asia--a region heretofore predominantly dependent on United States aid.

--It takes account of our fiscal and financial problems and contains the necessary balance of payments safeguards.

--It constitutes another example of effective utilization of the multilateral approach to economic development.

I urge the Congress to give this proposal its wholehearted and prompt approval.

RICHARD NIXON

The White House

February 25, 1970