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OM Section G2/BP
Issued on 12 March 2014
Page 1 of 4
OPERATIONS MANUAL
BANK POLICIES (BP)
These policies were prepared for use by ADB staff and are not necessarily a complete
treatment of the subject.
FINANCIAL MANAGEMENT, COST ESTIMATES, FINANCIAL ANALYSIS, AND FINANCIAL
PERFORMANCE INDICATORS
A. Introduction
1. Article 14(xi) of the Agreement Establishing the Asian Development Bank (the Charter)
requires the Asian Development Bank (ADB) to take necessary measures to ensure that the
proceeds of any loan made, guaranteed, or participated in by ADB are used only for the
purposes for which the loan was granted, and with due attention to considerations of economy
and efficiency. In addition, Article 14(xiv) of the Charter requires ADB to be guided by sound
banking principles in its operations.
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B. Definitions
1. Executing and Implementing Agencies
2. Executing and implementing agencies for ADB projects may be classified broadly as
follows:
(i) public corporations, which are legal entities that are owned or controlled by
central or local governments and created for the purpose of producing goods or
services for the market (these entities include development banks, public utilities,
and port and other authorities);
(ii) private sector and other nongovernmental entities (i.e., entities that are owned or
controlled by private interests, whether for-profit or not-for-profit, including
nongovernmental organizations); or
(iii) general government sector units, which include central and local units that are
primarily engaged in nonmarket operations (these units include ministries and
departments).
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2. Financial Management
3. Financial management comprises multiple processes, including financial accounting,
management (and cost) accounting, asset management, cash and treasury management,
financial reporting, internal controls, and internal and external audit. Each of these processes
should incorporate subprocesses and techniques including management, forecasting, strategic
planning, planning and budgeting, procurement, disbursement, control, and communications
and reporting.
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The requirements also apply to grant financing for ADB projects.
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Classifications (i) and (iii) are consistent with International Monetary Fund. 2001. Government Finance Statistics
Manual. Washington, DC.