The Asian Development Bank runs the risk of becoming obsolete if it persists with policies such as lending heavily to countries with huge currency reserves like India and China, a US official said on Tuesday.

This practice is one of the reasons the United States, standing alone, voted against the development bank’s new long-term strategy when the Manila-based bank approved it last month, Assistant US Treasury Secretary Clay Lowery told a news briefing at the institution’s annual meeting in Madrid, dominated by discussions of the global food crisis.

The bank was founded four decades ago to fight poverty in Asia, but now finds itself lending billions to emerging powerhouses such as China and India, with booming economies and gigantic foreign currency reserves; in the case of China, nearly US$2 trillion. Last year, China and India were among the bank’s top four recipients of loans, at US$1.3 billion and US$1.4 billion, respectively, while destitute nations such as Afghanistan got a fraction of that.

To consider new ways

Mr Lowery said poverty certainly remains in much of China and India and the Asian Development Bank still has role to play in those countries.

But the bank needs to consider new ways of dealing with them, for example serving as fee-based consultants offering expertise, rather than strictly as a moneylender. The bank, he added, is an “institution that needs to be almost continuously evolving, because if it fails to evolve it will become irrelevant.”