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ADB 2017 Operations Reach $28.9 Billion

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Asian Development Bank (ADB) operations—comprising approvals of loans and grants, technical assistance (TA), and cofinancing—reached $28.9 billion in 2017 in its continued efforts to help meet Asia and the Pacific’s development needs, according to preliminary figures released today.

Approvals of loans and grants from ADB’s own resources reached a record $19.1 billion, representing a 9% increase from the $17.5 billion seen in 2016. This puts ADB well on its way to meet its $20 billion target by 2020. Of the total, nonsovereign (primarily private sector) operations accounted for $3.2 billion, a 26% increase from $2.5 billion in 2016. TA, meanwhile, increased by about 22% to $205 million from $169 million in the previous year.

Commitments (the amount of loans and grants signed)—ADB’s new performance measure—reached $20.1 billion. This is a significant increase from $13.3 billion in 2016, reflecting the signing of large projects approved in 2016 and 2017.

“The strong figures for ADB operations in the past year were supported by the successful merger of ADB’s concessional Asian Development Fund lending operations with the Ordinary Capital Resources balance sheet—which took effect at the start of 2017,” ADB President Takehiko Nakao said. “This will allow us to deliver a much higher level of assistance to our developing member countries for years to come without seeking a capital increase.”

A highlight of ADB’s operational figures for 2017 is climate financing, which reached a record $4.5 billion (comprising mitigation $3.6 billion and adaptation $0.9 billion), a 21% increase from 2016. This puts ADB in a good position to achieve its $6 billion climate financing target by 2020.

Cofinancing approvals declined to $9.5 billion in 2017 from the $13.9 billion recorded in 2016, partly due to the delay of large expected cofinanced projects. Disbursements were $11.7 billion in 2017, compared to $12.7 billion in 2016. This is because of lower approvals, and hence disbursements, of policy-based lending and counter-cyclical support facility, among other factors.

“Disbursements are essential to make a difference on the ground. Cofinancing and catalyzation is a much-discussed strategy in the international community to realize the Sustainable Development Goals,” said Mr. Nakao. “ADB will come up with additional concrete measures to increase disbursements and cofinancing, building on the new procurement policy approved in April 2017 and ongoing efforts to leverage resources.”

Among ADB’s other operational highlights were projects that combine finance with innovative approaches to development, including satellite data and remote sensing to improve irrigation in Indonesia and Pakistan, pilot testing of climate-smart agriculture practices in Bangladesh, and supporting social welfare reforms in Mongolia to promote human development.

An innovative $100 million TA loan to the Philippines, approved in October 2017, will help the government prepare and deliver infrastructure projects under its Build Build Build program.

On the funding side, ADB offered new and innovative thematic products such as the health bond and gender bond. This is on top of increased efforts to raise local currency funding to meet the growing demand for nonsovereign local currency loans. ADB’s Indonesian rupiah bond in December was the first bond issued from a multilateral development bank of which Indonesia is a shareholder.

ADB launched three high-impact publications in 2017. Meeting Asia’s Infrastructure Needs estimated Asia and the Pacific’s annual infrastructure needs at $1.7 trillion per year until 2030. A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific put forward scenarios of the devastating effects of climate change. The ADB history book, Banking on the Future of Asia and the Pacific focused on the region’s economic development, the evolution of the international development agenda, and the story of ADB over 50 years.

To scale up the bank’s operations with quality, the ADB Board approved the 2018 budget totaling $672.3 million, an increase of 3.9% over 2017, comprising 2.2% price growth and 1.7% volume growth. This budget supports the ongoing investments in IT reforms and organizational resilience. ADB continues to make its utmost efforts at staff optimization and efficiency measures.

A key priority for ADB in 2018 is to finalize its new corporate strategy, Strategy 2030. ADB’s 51st Annual Meeting of its Board of Governors will be held in Manila again in May after 6 years. Strategy 2030, the impact of technological change and globalization on jobs, aging and longevity dividends, role of women entrepreneurs, and private sector participation in infrastructure development will be among the topics discussed. ADB expects more than 3,000 participants to attend the meeting.

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Environment

No pathway to reach the Paris Agreement’s 1.5˚C goal without the G20

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“The world urgently needs a clear and unambiguous commitment to the 1.5 degree goal of the Paris Agreement from all G20 nations”, António Guterres said on Sunday after the Group failed to agree on the wording of key climate change commitments during their recent Ministerial Meeting on Environment, Climate and Energy.

“There is no pathway to this goal without the leadership of the G20. This signal is desperately needed by the billions of people already on the frontlines of the climate crisis and by markets, investors and industry who require certainty that a net zero climate resilient future is inevitable”, the Secretary General urged in a statement.

The UN chief reminded that science indicates that to meet that ‘ambitious, yet achievable goal’, the world must achieve carbon neutrality before 2050 and cut dangerous greenhouse gas emissions by 45 % by 2030 from 2010 levels. “But we are way off track”, he warned.

The world needs the G20 to deliver

With less than 100 days left before the 2021 United Nations Climate Conference COP 26, a pivotal meeting that will be held in Glasgow at the end of October, António Guterres urged all G20 and other leaders to commit to net zero by mid-century, present more ambitious 2030 national climate plans and deliver on concrete policies and actions aligned with a net zero future.

These include no new coal after 2021, phasing out fossil fuel subsidies and agreeing to a minimum international carbon pricing floor as proposed by the International Monetary Fund (IMF).

“The G7 and other developed countries must also deliver on a credible solidarity package of support for developing countries including meeting the US$100 billion goal, increasing adaptation and resilience support to at least 50% of total climate finance and getting public and multilateral development banks to significantly align their climate portfolios to meet the needs of developing countries”, he highlighted.

The UN Chief informed that he intends to use the opportunity of the upcoming UN General Assembly high-level session to bring leaders together to reach a political understanding on these critical elements of the ‘package’ needed for Glasgow.

A setback for Glasgow

The G20 ministers, which met in Naples, Italy on July 23-25, couldn’t agree to a common language on two disputed issues related to phasing out coal and the 1.5-degree goal, which now will have to be discussed at the G20 summit in Rome in October, just one day before the COP 26 starts.

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Development

Economic Recovery Plans Essential to Delivering Inclusive and Green Growth

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EU member states must ensure careful and efficient implementation of economic recovery plans that support inclusion and growth to bounce back from the worst impacts of the COVID-19 pandemic, says a new World Bank report.  

The World Bank’s latest EU Regular Economic Report – entitledInclusive Growth at a Crossroads – finds that the unprecedented and exceptional policy response of governments and EU institutions has cushioned the worst impacts on employment and income. However, the pandemic has exposed and exacerbated deep-seated inequalities, halting progress in multiple areas including gender equality and income convergence across the EU member states. A further three to five million people in the EU today are estimated to be ‘at risk of poverty,’ based on national thresholds benchmarked before the crisis.

The report highlights that effective recovery programs can reinforce progress on the green and digital transitions underway across the region. With the crisis continuing to unfold, government support schemes and the rollout of vaccines in a timely manner will remain essential to bolstering the resilience of firms, workers, and households. Given the longevity of the crisis and the impact on the most vulnerable, many governments have opted to extend the duration of support throughout 2021.

“A green, digital and inclusive transition is possible if economic policy is increasingly geared towards reforms and investment in education, health and sustainable infrastructure,” said Gallina A. Vincelette, Director for the European Union Countries at the World Bank.

With an output contraction of 6.1 percent in 2020, the COVID-19 pandemic has triggered the sharpest peacetime recession in the EU. Governments will need to ensure targeted and active labor market policies are in place to support an inclusive recovery. The report highlights that special attention should be given to already vulnerable workers such as youth, the self-employed, and those in informal employment. These groups are more likely to face employment adjustments during the crisis and may face longer spells of unemployment or periods outside the labor force.

Women have been disproportionately impacted by work disruptions during the pandemic, particularly in the sectors facing the worst effects of the crisis. This was also highlighted in the 2020 Regular Economic Report produced by the World Bank, which found that at least one in five women will face difficulty returning to work compared to one in ten men. It has been harder for women to resume work due to the sectors and occupations that they are working in and because of the additional care burdens that have fallen disproportionately on their shoulders – a manifestation of increasing inequities in home environments.

“As recovery takes hold, it will be important for carefully targeted and coordinated policy support to continue to mitigate the impact of the crisis, with measures increasingly targeted towards vulnerable households and viable firms. Policy makers will also need to strike a balance between helping those that need it most, while enhancing the productivity of the economy and keeping debt at manageable levels,” added Vincelette.

World Bank’s Regional Action in Europe and Central Asia

To date, the World Bank has committed more than $1.7 billion to help emerging economies in Europe and Central Asia mitigate the impacts of COVID-19. Since April 2020, around $866 million has been approved through new emergency response (MPA/Vaccines) projects. In addition, up to $904 million is being reallocated, used, or made available from existing projects and lending, including additional financing, to help countries with their COVID-19 response.

The World Bank’s Global Economic Prospects suggests that growth will be strong but uneven in 2021. The global economy is set to expand 5.6 percent—its strongest post-recession pace in 80 years. The recovery largely reflects sharp rebounds in some major economies.

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Health & Wellness

COVAX and World Bank to Accelerate Vaccine Access for Developing Countries

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COVAX and the World Bank will accelerate COVID-19 vaccine supply for developing countries through a new financing mechanism that builds on Gavi’s newly designed AMC cost-sharing arrangement. This allows AMC countries to purchase doses beyond the fully donor-subsidized doses they are already receiving from COVAX.

COVAX will now be able to make advance purchases from vaccine manufacturers based on aggregated demand across countries, using financing from the World Bank and other multilateral development banks. Participating developing countries will have greater visibility of available vaccines, quantities available, and future delivery schedules, enabling them to secure doses earlier, and prepare and implement vaccination plans more effectively.

This important and timely financing mechanism, made possible now by the World Bank and Gavi teaming up on the AMC cost-sharing arrangement, will allow COVAX to unlock additional doses for low- and middle-income countries,” said Dr. Seth Berkley, CEO, Gavi, the Vaccine Alliance. “As we move beyond initial targets and work to support countries’ efforts to protect increasingly large portions of their populations, World Bank financing will help us advance further towards our goal of bringing COVID-19 under control.”

The scalable mechanism brings together COVAX’s ability to negotiate advance purchase agreements with vaccine manufacturers with the World Bank’s ability to provide predictable financing to countries for vaccine purchase, deployment and broader health systems investments. The new mechanism will mitigate risks and uncertainties in country demand and financing ability.

Accessing vaccines remains the single greatest challenge that developing countries face in protecting their people from the health, social, and economic impacts of the COVID-19 pandemic,” said World Bank Group President David Malpass. “This mechanism will enable new supplies and allow countries to speed up the purchase of vaccines. It will also provide transparency about vaccine availability, prices, and delivery schedules. This is crucial information as governments implement their vaccination plans.”

Countries with approved World Bank vaccine projects that confirm the purchase of additional doses through COVAX will agree with COVAX on the number of doses of a specific vaccine as well as related windows of delivery. On receiving a request from the country, the World Bank will provide COVAX a payment confirmation, allowing COVAX to make advance purchases of large amounts of vaccine doses with manufacturers at competitive prices.

Under the cost-sharing arrangement for AMC countries (92 low- and middle-income countries), COVAX plans to make available up to 430 million additional doses, or enough to fully vaccinate 250 million people, for delivery between late 2021 and mid-2022. There will be several supply offerings where countries will have the opportunity to select and commit to procuring specific vaccines that align with their preferences.

COVAX is co-led by the Coalition for Epidemic Preparedness Innovations (CEPI), Gavi, the Vaccine Alliance and the World Health Organization (WHO). The World Bank and COVAX will work in partnership with UNICEF and the PAHO Revolving Fund as key implementing partners to ensure safe vaccine delivery and supply of materials such as syringes, safety boxes and other items essential for vaccination campaigns.

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