Banks in development deal

Banks in development deal

Baku, Azerbaijan: The Asian Development Bank (ADB) has agreed to become a partner with the China-led Asian Infrastructure Investment Bank (AIIB) to support infrastructure development across Asia.

The two multilateral lenders have discussed the scope of their collaboration, including co-financing arrangements, and confirmed their commitment to working together for Asia, ADB president Takehiko Nakao said.

“ADB and AIIB will cooperate on infrastructure financing across Asia using our considerable experience and expertise in the region,” he said.

Mr Nakao met with Liqun Jin, the secretary-general of the AIIB’s multilateral interim secretariat, on the sidelines of the ADB’s 48th annual meeting, which started yesterday in Azerbaijan.

The two agreed to continue sharing information and discussing options for further cooperation. Mr Nakao recently admitted the Manila-based lender alone cannot finance Asia’s hefty investment requirements for infrastructure projects — estimated at US$8 trillion (about 265 trillion baht) through to 2020.

The AIIB was launched in October last year and its operations are expected to start late this year, with 21 Asian members, including Thailand, signing up as founding members.

The AIIB is considered by many economists to be a rival of the ADB, the International Monetary Fund and the World Bank, in which Japan, the eurozone and the US play key roles in decision-making.

Japan and the US, the ADB’s two biggest shareholders, have yet to decide whether they will join the AIIB as members.

Mr Nakao said the AIIB will complement the ADB’s funding of infrastructure projects in Asia. He urged ADB shareholders to consider increasing the bank’s capital to boost its lending capacity and increase member countries.

China has frequently complained about an imbalance within the ADB.
Meanwhile, the ADB’s board of governors approved the integration of the bank’s two lending programmes: the Asian Development Fund (ADF) and Ordinary Capital Resources (OCR).

The merger will be completed in January 2017. The ADF provides concessional loans and grants to poor countries, while the OCR offers loans to middle-income countries.

The merger will boost the ADB’s total annual lending and grant approvals to as much as $US20 billion, 50% more than the current level. Upon completion of the merger, the ADF will become a grant-only donor fund for eligible countries.

Do you like the content of this article?