The FINANCIAL — from Frankfurt, Germany. Creating quality jobs, developing the private sector, and combating climate change are critical for a vibrant and sustainable region, Asian Development Bank (ADB) President Takehiko Nakao said at the 49th Annual Meeting of ADB’s Board of Governors held in Frankfurt, Germany. Key development priorities of ADB in Georgia are to foster inclusive and sustainable economic growth, accelerate poverty reduction, and enhance regional connectivity. According to ADB’s President, Asia-Pacific’s long-term outlook is “strong”, despite a slowdown in some economies this year.
ADB was established in December 1966; the Bank turns 50 this year. The Bank has 67 members, including Georgia. The ADB programme in Georgia has provided loans, grants and technical assistance to grow the country’s economy and improve the lives of people, particularly the poor, women, children and other vulnerable groups.
ADB is one of Georgia’s largest multilateral partners with over USD 1.9 billion approved for development assistance since 2007.
In the aftermath of the global financial crisis of 2008, ADB intensified its assistance to Georgia, extending budget support to the Government through five programme loans totalling USD 400 million from 2008 to 2015.
Key development priorities of ADB in Georgia are to foster inclusive and sustainable economic growth, accelerate poverty reduction, and enhance regional connectivity. Guided by the country partnership strategy, priority sectors include transport, water supply and sanitation, energy, public sector management, and finance.
“When ADB was established 50 years ago, Asia was poor, and one of the most important challenges was how to feed the large and growing population. Asia has achieved a lot since then. Yet, many challenges remain in Asia. 450 million people still live in extreme poverty. We need to create jobs for the increasing number of young people. Gender equity should be enhanced. The private sector should be further developed. Climate actions are urgent. In addressing these challenges, ADB will continue to play a critical role in building an Asia and Pacific region that is vibrant and sustainable,” said Takehiko Nakao, ADB President.
With unanimous support from donors and shareholders, ADB has agreed to substantially strengthen its financing capacity with the merger of the ADF lending operations and Ordinary Capital Resources (OCR) starting in 2016. As a result, the Bank will be able to expand its annual loan and grant approvals by over 50%, from USD 13 billion in 2014 to more than USD 20 billion by 2020.
Approvals of ADB’s loans and grants were a record USD 16.3 billion in 2015, 21% over 2014 levels. With an additional USD 10.7 billion in co-financing, total support to developing member countries reached USD 27 billion in 2015.
Disbursements of ADB’s own loans and grants in 2015 reached a record USD 12.3 billion, 21% more than in 2014.
In 2015, ADB delivered many proactive and innovative operations. These included: 1. Quick responses to natural disasters, especially the Nepal earthquake and cyclones in the Pacific; 2. Prompt support to countries suffering from low commodity prices and volatility in financial markets; 3. The first policy-based loan to the People’s Republic of China (PRC) by any multilateral development bank; and, 4. Issuance of our first green bond to finance ADB’s climate operations.
In Frankfurt, ADB has successfully concluded the negotiations for the replenishment of ADF 12. This replenishment will allow the Bank to increase its grant operations for the poorest countries by 70% while reducing contributions from donors by almost half, thanks to the merger of the ADF lending operations with OCR. In using ADF, ADB will place a special emphasis on fragile and conflict-affected countries and disaster risk reduction.
ADB’s Role and Partnerships in Creating Quality Jobs
ADB supports education and skills development to increase the employability of youth, particularly women. The Bank promotes core labour standards and safe working conditions in cooperation with Germany and other partners. In Bangladesh, the Bank extended a loan to a private sector bank to finance the improvement of health and safety conditions in textile factories.
The most important role for ADB in promoting growth and employment is to support infrastructure investment. ADB finances infrastructure such as energy, roads, railways, ports, and water.
ADB is strengthening its support for infrastructure in fragile and conflict-affected countries. In Afghanistan, for example, the Bank has approved a USD 1.2 billion grant programme to strengthen energy infrastructure.
Promoting Private Sector Development
ADB’s direct financing of private sector companies and projects amounted to USD 2.6 billion last year, 37% higher than 2014. It ranged from supporting financial sector development, to delivering infrastructure, to providing critical social services through the private sector—all with a strong focus on poorer countries. And, in addition to direct financing of the private sector, ADB is promoting the use of public-private partnerships (PPP) and improving the investment climate.
In 2015, ADB approved loans and equity investments to private financial institutions in seven countries totalling over USD 750 million. In doing so, the Bank paid special attention to underserved customers, such as farmers, women entrepreneurs, and micro, small and medium sized enterprises.
ADB provides loans, equity investments, and guarantees to private companies that build and operate important infrastructure. For every dollar ADB provides, the Bank mobilizes at least USD 4 more in commercial co-financing.
The Bank helps strengthen social service provision through the private sector. In Myanmar, the Bank is financing the expansion of a private sector, third-generation telecommunications network. This includes the skills development of women in ICT, and mobile applications for health, banking, and agriculture.
More than 40% of the private sector transactions the Bank approved in 2015 were to companies, banks, and projects in poorer countries. To undertake small but innovative transactions in these countries, ADB introduced a faster and streamlined approval process in 2015.
ADB helps to improve the overall investment climate through technical assistance and policy-based loans.
Combating Climate Change
ADB is doubling its annual climate financing to USD 6 billion by 2020. Of this, USD 4 billion will support mitigation through investments in sustainable transport, clean energy, and energy efficiency. The other USD 2 billion will be for adaptation through more resilient urban infrastructure, climate-smart agriculture, and better preparation for climate-related disasters.
The Bank is seeking more co-financing from bilateral and multilateral partners for climate actions.
In 2014, ADB signed a USD 2 billion co-financing partnership with KfW with a focus on clean energy and urban infrastructure.
In its new partnership with the Asian Infrastructure Investment Bank, ADB will make climate change a priority.
ADB is working with leading re-insurance companies, including some in Europe, to develop disaster risk insurance in Asia and the Pacific. The Bank recently helped guarantee the first climate bond in Asia for a private sector geothermal project in the Philippines.
The Bank is adjusting its project design and procurement procedures to promote the use of cleaner and more advanced technologies.
ADB is enhancing its support to governments’ policy frameworks for implementing their Intended Nationally Determined Contributions based on the COP21 agreement. For this purpose, the Bank is using a mix of technical assistance, loans and grants, and high-level policy dialogue.
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