ADB’s guidelines for economic analysis of projects require that a national affordability assessment be carried out for large projects. A project is considered large if it may have a substantial impact on the country’s foreign exchange revenues, expenditure, or budget resources. During the implementation of the second project, the IMF introduced a PIP ceiling in 2001 because it was concerned about the government’s fiscal sustainability. It set a rigid ceiling and thereby contributed to a significant delay in project implementation. As assessment of the projects’ national affordability could have helped set a realistic timeline based on the national economy’s resource mobilization capacity. It would be prudent for ADB to finance large infrastructure projects in smaller countries based on the national affordability analysis in a medium-term fiscal perspective, as mandated in its own guidelines for the economic analysis of projects.
Road Rehabilitation Project, Second Road Rehabilitation Project, and Third Road Rehabilitation Project [Loans