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Green and Blue Finance Will Help Bridge Infrastructure Investment Gap in Southeast Asia

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ADB Director General for Southeast Asia Mr. Ramesh Subramaniam speaking at the ASEAN workshop. Photo: ADB

Countries in Southeast Asia need to promote innovative green and blue finance approaches to address the rising financing gap for sustainable infrastructure in the region, according to an Association of Southeast Asian Nations (ASEAN) workshop in Bangkok.

The event on Innovative Financing Approaches for Sustainable Infrastructure, a preview to the ASEAN Finance Ministers Meeting in April, was jointly hosted on 11 February 2019 by Thailand’s Ministry of Finance with the support of the Asian Development Bank (ADB). Held in conjunction with the ASEAN Finance and Central Bank Deputies’ Working Group Meeting, the workshop gathered together government officials, private sector representatives, and other experts to discuss the way forward for innovative finance in the region.

“The ASEAN region faces significant infrastructure needs,” said ADB Director General for Southeast Asia Mr. Ramesh Subramaniam. “We need innovative financing approaches that mitigate risks in projects and bring more partners to the table; support greener, cleaner development; and help solve critical development challenges.”

Deputy Director-General of Thailand’s Fiscal Policy Office Ms. Ketsuda Supradit said the workshop marks the beginning of a series of activities by the Thai government as chair of ASEAN in 2019, which views enhancing ASEAN’s connectivity as a priority under the finance track. In addition, the workshop findings were reported to the ASEAN Finance and Central Bank Deputies’ Working Group Meeting, as well as the Working Committee on Capital Market Development and the ASEAN Capital Markets Forum.

Infrastructure financing needs for ASEAN members is estimated at around $210 billion per year when taking into account climate change mitigation and adaptation costs, according to ADB. Public budgets alone will not be able to bridge this need, hence, the urgency to catalyze private capital sources.

Using public finance efficiently to mobilize funds from capital markets and attract commercial investors is gaining traction globally and in the region. The Thailand Future Fund, Indonesia’s Sustainable Development Goals One platform, and the new ASEAN Catalytic Green Finance Facility of the ASEAN Infrastructure Fund are examples of how public funds can be leveraged to catalyze private capital for sustainable infrastructure.

The workshop reviewed these efforts and highlighted the needs for a stable and predictable regulatory environment and the strategic use of public funds on project development to mitigate risks and attract investors to scale up private investment in climate change and conservation efforts.

“Green finance” opened the thematic sessions with a context setting presentation on financial initiatives needed to promote environmental improvement, climate change mitigation and adaptation, as well as improving efficiencies in natural capital preservation and resource mobilization. “Blue finance” was discussed as a needed new theme to mobilize finance effectively to address rising pollution caused by plastics and other sources in the region’s rivers and ocean bodies. Both potential green and blue finance mechanisms, examples, and structures were discussed. The ASEAN working group meetings will continue through Friday in Bangkok.

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Mongolia: World Bank Mobilizes $2.2 Million to Strengthen Medical Diagnostic Services

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The World Bank mobilized US$2.2 million to help strengthen Mongolia’s hospital services in the wake of the COVID-19 pandemic. The funding will be used to purchase the most needed medical diagnostic equipment in the country.

This immediate financing is being provided under the ongoing E-health project which seeks to improve integration and utilization of health information and e-health solutions for better health service delivery in selected pilot sites.

This immediate financing will help Mongolia safeguard its people from the potential COVID-19 outbreak in the country and make sure that they have access to early diagnosis and care,” – said the World Bank Country Manager for Mongolia Andrei Mikhnev.

Diagnostic equipment procured under this funding include 15 stationary and 12 mobile digital X-ray equipment and 41 ultrasound machines. Deliveries are expected in the beginning of April.

“We believe that this additional  equipment would strengthen the country preparedness to deal with disease outbreaks like COVID-19,” – said Dinesh Nair, Senior Health Specialist of the World Bank. “We will continue actively engaging with the government to help strengthen health systems, disease surveillance, and diagnosis.

On March 17, the World Bank Group also    pledged  $14 billion in immediate support to assist countries coping with the health and economic impacts of COVID-19. This financing is designed to help member countries, among them Mongolia, take effective action to respond to, and, where possible, lessen the tragic impacts posed by the global pandemic.

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Peru Will Receive US$ 50M from the World Bank to Strengthen Key Social Protection

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The World Bank Board of Directors today approved a US$ 50 million loan to strengthen key policies and strategies to increase human capital accumulation in Peru, particularly in the most vulnerable social sectors.

The Human Capital Development Program will focus on improving the delivery of social protection and early childhood development services, especially at the local level, and in strengthening professional development and management systems in education. Guaranteeing access to quality social protection, health and education services throughout the lifecycle is crucial for ensuring that individuals can develop the basic knowledge and skills they need to become productive members of society.

Over the past two decades, Peru has sharply reduced its poverty and inequality rates. It has also made significant strides in education and learning, as well as in decreasing chronic malnutrition and in implementing early childhood development policies. Notwithstanding, the country needs to reinforce its investments in human capital to further narrow inequality gaps and to guarantee that prosperity reaches all social sectors.

“The Peruvian government has undertaken the challenge of making multisector efforts to guarantee that all children reach their enormous potential and that they can become key players in the country’s development,” saidMarianne Fay, the World Bank Director forBolivia, Chile, Ecuador and Peru. The World Bank is accompanying Peru in this effort. “We provide technical and financial assistance for development policies that invest in people and that help to unlock and accelerate the generation of human capital, as well as to create synergies in the investments made in early childhood development to maximize results,” she added.

To this end, the program seeks to improve the comprehensive delivery of social protection and early childhood development services, as well as education quality and management. It will also support priority political and institutional reforms in the social sector and the linkage of policies implemented by the Ministry of Development and Social Inclusion and the Ministry of Education.

The Ministry of the Economy and Finance will implement the program using a multisectoral and territorial approach, in close coordination with the Ministry of Development and Social Inclusion and the Ministry of Education.

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AIIB To Scale Up Public Health Infrastructure in Wake of COVID-19

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Recognizing that countries with fragile infrastructure have less capacity to handle health crises, the Asian Infrastructure Investment Bank (AIIB) is working to scale up infrastructure investment—including in public health, healthcare and information and communications technology (ICT)—to better serve members impacted by COVID-19.

AIIB President and Chair of the Board, Jin Liqun, said: “There has never been a greater need for a multilateral and truly global coordinated effort to ease the economic burden experienced by all.”

He continued, “We have a responsibility to our members who face tremendous pressure to maintain the health and safety of their citizens while managing the impact of an economic downturn. It is our duty to be flexible and responsive in a time of crisis so our members can continue investing in sanitation, healthcare and technology-enabled infrastructure.”

Recent analysis by AIIB1 highlights a direct correlation between quality of overall infrastructure and health security, indicating that infrastructure development is a key part of health security and epidemic preparedness. The COVID-19 virus has exposed the critical need for countries to also ensure preparedness for the needs of an aging population.

Lower income countries are particularly vulnerable as they are already struggling to keep up with their infrastructure needs. Layering an economic downturn and additional fiscal stresses from COVID-19 on top, many of them will fall short of the 6 percent to 10 percent GDP investment needed to maintain economic growth.

Continues President Jin, “We will work with our Board of Directors, members and partners to adjust to this new reality, providing scaled up and targeted investment in critical sustainable infrastructure to protect the people we serve and the generations that follow.”

AIIB will announce a number of public health infrastructure financing options for its members in the coming days and weeks, to help build up economic resilience and mitigate the impact of future health crises.

Comments Dr. Ngozi Okonjo-Iweala, Chairperson of the Board of GAVI: “Multilateral banks like AIIB will play a critical role in supporting countries, helping them address challenges presented by COVID-19 as they build towards sustainable long-term infrastructure development.”

“The support that a bank such as AIIB can provide its members is invaluable, reducing risks, absorbing longer-term exposures and cushioning the impact from increases in borrowing costs.”

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