What are Policy-Based Lending and Sector Development Program?
Channel: Asian Development Bank
Date: 2021-11-13

ADB offers its developing member countries different types of financing modalities to support governments in boosting economic growth and solving development challenges. Responding to the evolving needs of countries and the Asia and Pacific region as a whole, ADB's range of public sector loans and grants differ in purpose, focus, financing and disbursements, and implementation arrangements. This video explains ADB’s policy-based lending (PBL) modality and the sector development program (SDP). PBL provides general budget support to public sector borrowers, helping countries that are facing a financing gap in their annual budget. PBL is disbursed only when the borrower completes policy reforms or actions that have been agreed with ADB. The sector development program (SDP) combines PBL with an investment loan, responding to occasions when a country has both an investment requirement and a need for policy reform in a given sector. SDP finances a country’s reform program along with a specific investment project linked to the program, providing an integrated solution to a country’s sector needs.