Infrastructure financing in Asia shows no sign of slowing down – ADB



Manila-based Asian Development Bank (ADB) said that strong demand for infrastructure financing in Asia and the Pacific region has no sign of slowing down as economies seek ways to address moderating economic growth, inequality, and significant environmental risks.

In a statement, the multilateral institution said yesterday that the region would require about $800 billion annually for infrastructure investments, equivalent to 6 percent of its gross domestic product (GDP).

ADB’s estimate is way above the current average investment ratio of 2 percent to 3 percent in many Asia and the Pacific countries.

“The funding deficit [of 4 percent to 3 percent] is a key cause of constraints on economic growth and poverty reduction in the region,” ADB said.

Under the Philippine Development Plan, the country needs a total of $120 billion to address its infrastructure bottlenecks in the medium term. Of the total amount, about 12 percent would be filled in by the private sector.

Based on the 2015 annual report, ADB’s total operations surged to $27.17 billion last year, the highest in the bank’s history.

The total included $16.29 billion in approvals for loans and grants, $141 million for technical assistance, and $10.74 billion for co-financing, which increased by a record 16 percent.

Disbursements, a key factor in improving aid effectiveness, also hit a new record of $12.22 billion in 2015, an increase of 22 percent from the previous year.

Private sector operations, a major focus of ADB’s long-term strategy for boosting growth in the region, jumped to $2.63 billion from $1.92 billion in 2014. These figures update the provisional operations numbers released by ADB in January.

“Our record performance in 2015 reflects a growing demand from the Asia and Pacific region for ADB’s development assistance,” Takehiko Nakao, ADB president said. “Poverty persists despite the region’s impressive growth, and infrastructure and other development needs are monumental.”

The 2015 annual report focused on ADB’s response to help the region address these challenges and to implement the ambitious new development agenda adopted by the international community in 2015.

ADB has committed to playing a central role in financing the Sustainable Development Goals, signed in September, 2015, and supporting the new climate deal forged during the 21st Conference of the Parties on climate change in Paris in December.

To deliver on this commitment, ADB in 2015 announced it was significantly scaling up its capacity to provide more financing through a merger of its concessional Asian Development Fund loan portfolio with its ordinary capital resources balance sheet.

Starting from January, 2017, this path-breaking reform will almost triple ADB’s equity base and allow it to increase assistance to developing member countries by up to 50 percent, and to its poorest members by up to 70 percent.

In September, ADB became the first multilateral development bank to commit to a sizeable climate finance target by announcing it would double its annual climate financing to $6 billion by 2020.

Tackling climate change is critical in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods and droughts are increasingly costing jobs and lives.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.

Established in 1966, ADB in December, 2016 will mark 50 years of development partnership in the region. It is owned by 67 members — 48 from the region.


By: Chino Leyco

Manila Bulletin | April 22, 2016