Connect with us

Newsdesk

ADB Approves CNY130 Million Private Sector Loan to Support Coronavirus Response in China

Newsroom

Published

on

Jointown Vice Chairman Liu Zhaonian (left) and Advisor for ADB's Private Sector Operations Department Hisaka Kimura (right) during the signing on 25 February 2020 in Beijing. Photo: ADB

The Asian Development Bank (ADB) today signed an agreement for a private sector loan of up to CNY130 million ($18.6 million) to Jointown Pharmaceutical Group Co. Ltd. (Jointown) in the People’s Republic of China (PRC).

The local currency loan will support Jointown’s efforts to ensure a continued supply of essential medicines and personal protective equipment such as protective clothing, gloves, goggles, face masks, and respirators. The financing will also support Jointown’s cooperation with the Red Cross in its efforts to respond to the spread of the coronavirus (COVID-19). Jointown is the largest private pharmaceutical distributor in the PRC and is headquartered in Wuhan, the capital of Hubei province and the epicenter of the COVID-19 outbreak.

“We are very grateful to ADB for its timely support for Jointown at the frontline of the fight against the COVID-19 epidemic,” said the Vice Chairman of Jointown Liu Zhaonian. “With ADB’s facility, we will further deliver drugs and urgently needed personal protective equipment to the most severely affected areas.”

“This financing will help Jointown to maintain adequate stock of urgently needed medical supplies, antiviral drugs, and personal protective equipment for distribution to hospitals and retail pharmacy outlets,” said the Director General of ADB’s Private Sector Operations Department Mike Barrow. “By focusing support at the center of the outbreak, the assistance will make a meaningful contribution to Jointown’s crucial role in containing the spread.”

Jointown has been designated by the Hubei provincial government to procure and distribute drugs and medical supplies during the COVID-19 outbreak. Its distribution warehouse in Wuhan is the largest such facility in the PRC. Advanced information technology systems help Jointown to maintain efficiencies and service standards even as the spread of the virus significantly increases the demand for medical supplies. Given its experience in warehouse and inventory management, Jointown has been asked to assist the Wuhan and Hubei provincial branches of the Red Cross Society of China in classifying, storing, and managing inventory of donated products.

The financing is ADB’s first private sector assistance to support health security and was expedited under a streamlined approval process for small nonsovereign transactions. The two-year loan will complement loans already provided to Jointown by PRC financial institutions. It is part of ADB’s broader response to the COVID-19 outbreak, which was initiated on 7 February with $2 million in funding to strengthen response capacity in several countries in Asia and the Pacific.

Continue Reading
Comments

EU Politics

Explainer: SURE, a new temporary instrument to help protect jobs and people in work

Newsroom

Published

on

What is SURE and why is the Commission proposing it?

The new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) is designed to help protect jobs and workers affected by the coronavirus pandemic. It will provide financial assistance, in the form of loans granted on favourable terms from the EU to Member States, of up to €100 billion in total. These loans will assist Member States to address sudden increases in public expenditure to preserve employment. Specifically, these loans will help Member States to cover the costs directly related to the creation or extension of national short-time work schemes, and other similar measures they have put in place for the self-employed as a response to the current coronavirus pandemic.

What are short-time work schemes?

Short-time work schemes are programmes that under certain circumstances allow firms experiencing economic difficulties to temporarily reduce the hours worked by their employees, which are provided with public income support for the hours not worked. Similar schemes apply for income replacement for the self-employed.

SURE would provide additional EU support to finance Member States’ short-time work schemes, and other similar measures, helping to protect jobs.

All Member States already have some form of national short-time work schemes in place.

Why is the Commission focusing on supporting short-time work schemes?

The SURE instrument is just one element of the Commission’s comprehensive strategy to protect citizens and mitigate the pandemic’s severely negative socio-economic consequences.

Many businesses experiencing difficulties are being forced to temporarily suspend or substantially reduce their activities and the working hours of their employees. By avoiding wasteful redundancies, short-time work schemes can prevent a temporary shock from having more severe and long-lasting negative consequences on the economy and the labour market in Member States. This helps to sustain families’ incomes and preserve the productive capacity and human capital of enterprises and the economy as a whole.

How much funding will be available for the EU as a whole and for individual Member States?

Up to €100 billion in total financial assistance will be available to all Member States.

There are no pre-allocated envelopes for Member States.

How will the Commission secure and provide funding for the SURE instrument?

Financial assistance under the SURE instrument will take the form of a loan from the EU to the Member States that request support.

To finance the loans to Member States, the Commission will borrow on financial markets. The Commission would then provide the loans to Member States on favourable conditions. Member States would, therefore, benefit from the EU’s strong credit rating and low borrowing costs.

The loans will be underpinned by a system of voluntary guarantees from Member States committed to the EU. The instrument will start to function once all Member States have committed to those guarantees.

How will the conditions of each loan be decided?

These loans should be used by Member States to finance short-time work schemes for employees or similar measures for the self-employed.

Following a request by a Member State for financial assistance, the Commission would consult the Member State concerned to verify the extent of the increase in public expenditure that is directly related to the creation or extension of short-time work schemes and similar measures for self-employed. This consultation will help the Commission to properly evaluate the terms of the loan, including the amount, the maximum average maturity, pricing, and the technical modalities for implementation.

On the basis of the consultation, the Commission would present a proposal for a decision to the Council to provide financial assistance.

Once approved, the financial assistance will take the form of a loan from the European Union to the Member State requesting support.

How will the guarantee system work?

Loans provided to Member State under the SURE instrument would be underpinned by a system of voluntary guarantees from Member States. This will allow the Commission to expand the volume of loans that can be provided to Member States.

This guarantee system is necessary to achieve the necessary capacity while at the same time ensuring a prudent financing of the SURE instrument.

To this end, a minimum amount of committed guarantees (i.e. 25% of the maximum amount of loans of €100 billion) is needed.

How does this instrument relate to the previously announced European Unemployment Reinsurance Scheme?

In the Communication setting out its coordinated economic response to the coronavirus pandemic, the Commission committed to accelerating the preparation of its legislative proposal for a European Unemployment Reinsurance Scheme.

The SURE instrument is the emergency operationalisation of the European Unemployment Reinsurance Scheme and is designed specifically to respond immediately to the challenges presented by coronavirus pandemic.

It in no way precludes the establishment of a future permanent unemployment reinsurance scheme.

What are the next steps?

The Commission’s proposal for a SURE instrument will need to be swiftly approved by the Council.

The new instrument will be of a temporary nature. Its duration and scope are limited to tackling the consequences of the coronavirus pandemic.

African Development Bank launches record breaking $3 billion “Fight COVID-19” Social Bond

The African Development Bank (AAA) has raised an exceptional $3 billion in a three-year bond to help alleviate the economic and social impact the Covid-19 pandemic will have on livelihoods and Africa’s economies.  

The Fight Covid-19 Social bond, with a three-year maturity, garnered interest from central banks and official institutions, bank treasuries, and asset managers including Socially Responsible Investors, with bids exceeding $4.6 billion. This is the largest dollar denominated Social Bond ever launched in international capital markets to date, and the largest US Dollar benchmark ever issued by the Bank. It will pay an interest rate of 0.75%.

The African Development Bank Group is moving to provide flexible responses aimed at lessening the severe economic and social impact of this pandemic on its regional member countries and Africa’s private sector.

“These are critical times for Africa as it addresses the challenges resulting from the Coronavirus. The African Development Bank is taking bold measures to support African countries. This $3 billion Covid-19 bond issuance is the first part of our comprehensive response that will soon be announced. This is indeed the largest dollar social bond transaction to date in capital markets. We are here for Africa, and we will provide significant rapid support for countries,” said Dr. Akinwumi Adesina, President of the African Development Bank Group.

The order book for this record-breaking bond highlights the scale of investor support, which the African Development Bank enjoys, said the arrangers.

“As the Covid-19 outbreak is dangerously threatening Africa, the African Development Bank lives up to its huge responsibilities and deploys funds to assist and prepare the African population, through the financing of access to health and to all other essential goods, services and infrastructure,” said Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB.

Coronavirus cases were slow to arrive in Africa, but the virus is spreading quickly and has infected nearly 3,000 people across 45 countries, placing strain on already fragile health systems. 

It is estimated that the continent will require many billions of dollars to cushion the impact of the disease as many countries scrambled contingency measures, including commercial lockdowns in desperate efforts to contain it. Globally, factories have been closed and workers sent home, disrupting supply chains, trade, travel, and driving many economies toward recession. 

Commenting on the landmark transaction, George Sager, Executive Director, SSA Syndicate, Goldman Sachs said: “In a time of unprecedented market volatility, the African Development Bank has been able to brave the capital markets in order to secure invaluable funding to help the efforts of the African continent’s fight against Covid-19. Not only that, but in the process, delivering their largest ever USD benchmark. A truly remarkable outcome both in terms of its purpose but also in terms of a USD financing”.

The Bank established its Social Bond framework in 2017 and raised the equivalent of  $2 billion through issuances denominated in Euro and Norwegian krone. In 2018 the Bank was designated by financial markets, ‘Second most impressive social or sustainability bond issuer” at the Global Capital SRI Awards.

“We are thankful for the exceptional level of interest the Fight Covid-19 Social Bond has raised across the world, as the African Development Bank moves towards lessening the social and economic impact of the pandemic on a continent already severely constrained. Our Social bond program enables us to highlight our strong development mandate to the investor community, allowing them to play a part in improving the lives of the people of Africa. This was an exceptional outcome for an exceptional cause,” said Hassatou Diop N’Sele, Treasurer, African Development Bank.

Fight Covid-19 was allocated to central banks and official institutions (53%), bank treasuries (27%) and asset managers (20%). Final bond distribution statistics were as follows: Europe (37%), Americas (36%), Asia (17%) Africa (8%,) and Middle-East (1%).

Continue Reading

EU Politics

Explainer: EU Emergency Support Instrument for the healthcare sector

Newsroom

Published

on

What does the Commission propose to support the healthcare sector?

The Commission wants to directly support the healthcare systems of EU Member States in their fights against the coronavirus pandemic through measures that can best be taken at EU level. For this purpose and based on the solidarity principle, the Commission will complement in a fast, flexible and direct way the ongoing efforts at national level.

More concretely and as a first stage, the Commission has drawn up an initial needs assessment and will be working with Member States to further detail and prioritise their necessities.

To finance this action, the Commission is mobilising €3 billion from the EU budget, of which €2.7 billion will be channelled through the Emergency Support Instrument and €300 million though the rescEU medical equipment capacity. Additional contributions will be possible from Member States and also individuals, foundations and even crowd funding.

In this way, the Commission will be able to:

-directly purchase or procure emergency support on behalf of Member States and distributing medical supplies such as masks and respirators;

-financially support and co-ordinate pressing needs such as the transportation of medical equipment and of patients in cross-border regions;

-support the construction of mobile field hospitals.

To make use of efficiency gains and generate economies of scale, wherever possible, the Commission will directly procure on behalf of Member States and focus the help where the needs are.

In the medium- to long-term and thanks to these tools, the EU will be able to support testing capacities of its Member States and to support any relevant medical research. In this way, the Commission will be providing an EU response throughout the health crisis, until its exit.

To implement the initiative, the Commission will work with Member States national health authorities, international organisations and with the non-governmental sector.

What action can be undertaken via the Emergency Support Instrument?

The Emergency Support Instrument will allow the EU to provide a coordinated EU response throughout the different stages of the crisis.

The concrete action will depend on the needs of the EU countries. For example, the Commission will work to:

-support the imports, transport and distribution of protective gear, focusing on worst hit regions;

-assist the transportation of patients in need to cross-border hospitals which can offer free capacity;

-boost the swift development of medication and testing methods.

Other actions will also be possible, according to the evolving needs of Member States, hospitals, doctors and patients.

How will this action be financed?

To secure the necessary financing, the Commission is relying entirely on the EU budget for 2014-2020 and mobilising all available resources within the spending limits for 2020.

This is why today the Commission has also put forward a Draft Amending Budget – a proposal to reorganise part of the EU spending for the year in line with the latest priorities – to secure:

€300 million for the rescEU-medical equipment capacity.This will help to procure and distribute further medical supplies across the EU. The funding comes on top of the €80 million already allocated last month.

€2.7 billion directly to the European Union’s Emergency Support Instrument – whose general purpose is to complement the other EU instruments, where they cannot act alone, by directly respond to crisis situations across the EU – and to amend it so that it can be used in the context of the coronavirus pandemic.

The Commission will activate the remaining flexibility of the current long-term budget – reserves which go beyond the annual ceilings – to finance this operation.

The needs are obviously bigger than the budget you have. How are you going to bridge the gap?

Given the medium- to long-term perspective of the proposed action, the Commission will explore further avenues to attract financing. These include donations by individuals, foundations and even crowd funding. The Commission is looking into putting in place all necessary modalities to allow speedy collection of contributions and donations. The budget could be further reinforced through these means as well as fresh budget appropriation in 2021 once a budget for 2021 is in place (based on an agreement on the MFF 2021-2027).

How will this money be distributed among Member States?

The objective of the initiative will be to provide targeted support to the Member States and regions most concerned.

Given the rapid evolution of the health crisis across the Union, there cannot be a pre-determined allocation per Member State. The team running the initiative will monitor the ongoing developments and respond based on the relative severity of the crisis in the different Member States as well as already existing measures and instruments.

To map EU countries’ most pressing necessities and be able to direct money where the needs are, the Commission has already started working with Member States’ national health authorities. This preliminary assessment will serve to identify the first steps to make and the decisions to take. Additional consultations with Member States and specific requests from their part will also be taken into account.

Who will be implementing the initiative?

The Commission will have a central role in implementing the initiative. For this purpose, the Commission is setting up a Task Force from across its departments, which will work, on a full time basis, to turn the ideas into action. The team in charge will include experts in crisis management, health policy, transport, EU public procurement and financial management.

Of course, the Commission will work closely with Member States’ national authorities as well as international organisations and the non-governmental sector.

Which will be the next steps?

Today, the Commission has put forward a comprehensive legislative proposal to finance and implement its action to directly support Member States’ healthcare sectors. The Commission is inviting the European Parliament and the Council to endorse this initiative as soon as possible.

In the meantime, the Commission will be working to identify and prepare the first actions that need to be undertaken so that implementation can start as soon as the legislative proposals have been adopted.

What other actions have been supported by the EU budget?

The EU has already taken a series of action to address the coronavirus pandemic across the EU, in the Western Balkans and in the Eastern Partnership countries.

Measures taken so far notably include unlocking €37 billion of investments from the EU cohesion funds to enable Member States buy medical supplies, pay doctors and help small and medium-sized enterprises keep paying their staff; creating the first-ever RescEU medical capacity and financing the repatriation of EU nationals stranded around the world. So far, the Union Civil Protection Mechanism has facilitated the repatriation of 10,017 EU citizens to Europe on 47 flights.

However, the scale and scope of the challenge requires an even more robust co-ordinated response, targeted directly at the health care systems, which builds on the solidarity and enhances cooperation between EU Member States.

Today’s initiative will be complementary to and consistent with the action taken so far. It will seek to add to what national healthcare authorities are already doing by creating synergies and making best use of economies of scale.

How the rescEU medical capacity works?

The medical capacity will be hosted by one or several Member States. The hosting State will be responsible for procuring the equipment. The Commission will finance 100% of the medical capacity. The Emergency Response Coordination Centre will manage the distribution of the equipment to ensure it goes where it is needed most.

The initial EU budget of the capacity is €80 million, of which €70 million is subject to the approval of the budgetary authorities.

Who can use strategic capacity of critical medical assets under rescEU?

rescEU capacities are primarily available to complement national capacities of all countries that are part of the Union Civil Protection Mechanism (UCPM): all EU Member States, the UK during the transition period and six Participating States (Iceland, Norway, Serbia, North Macedonia, Montenegro and Turkey).

If national capacities and including those pre-committed to the European Civil Protection Pool under the Mechanism are not sufficient to ensure an effective response to an emergency, rescEU capacities can be activated as a last resort and strategic reserve at European level.

Other countries can in principle also request support to the EU Civil Protection Mechanism. If no assistance is offered on spontaneous basis or through the European Civil Protection Mechanism, rescEU capacities such as the newly created stockpile can be deployed in third countries but only for an emergency with a major impact on Member States or EU citizens.

However, in view of current high demand for medical capacities under the Union Civil Protection Mechanism from countries participating in the Mechanism, it is at this stage unlikely that the rescEU capacity can be used for response operations in countries not participating in the Mechanism.

How are you going to report on how the project is being implemented and on how the money has been spent?

In full transparency, the Commission is going to set up a dedicated section on its website where it will report on the progress made and on the steps ahead

Continue Reading

Energy News

World Bank Supports Clean and Green Power in Pakistan

Newsroom

Published

on

The World Bank Board of Directors today approved a $700 million additional financing to help Pakistan generate low-cost, renewable energy to provide affordable electricity supply to millions of users. This support for one of country’s longer-term development priorities comes as the World Bank is also working with the federal and provincial governments to prepare and respond to the immediate challenge of the COVID-19 outbreak.

The Additional Financing for Dasu Hydropower Stage I Project willfinance the transmission line to complete the first phase of the Dasu hydropower plant that will install 2,160 MW capacity along the main Indus River. Plans for Stage II expansion will double the installed capacity to 4,320MW, making Dasu the largest hydropower plant in the country.

“Pakistan’s energy sector is aiming to move away from high-cost and inefficient fossil fuels towards low-cost, renewable energy to power the national grid,” said Illango Patchamuthu, World Bank Country Director for Pakistan. “Along with reforms in the tariff structure, the Dasu Hydropower Project will result in fewer imports of fossil fuels, alleviating the stress on the country’s current account balance.”

The project will help to lower the overall cost of energy generation in Pakistan, benefiting millions of energy users by making electricity more affordable for households and productive sectors, such as manufacturing and agriculture. The Dasu hydropower plant will provide most of its electricity during the summer months to reduce blackouts when demand is the highest. The project also contributes to the socioeconomic development of the communities in Dasu and surrounding areas of the Upper Kohistan District of Khyber Pakhtunkhwa Province.

“The Dasu hydropower plant has a low environmental footprint and is considered to be one of the best hydropower projects in the world,” said Rikard Liden, Task Team Leader for the project.“It will contribute to reducing Pakistan’s reliance on fossil-fuels and producing clean renewable energy.”

Dasu hydropower station will produce electricity at  $0.03/kWh compared to Pakistan’s current average cost of electricity generation of $0.08/kWh. This investment in the energy sector is an important step in Pakistan’s path towards becoming an upper middle-income country by 2047, as articulated in Pakistan@100: Shaping the Future.

Project Terms

The project will be financed from the International Bank for Reconstruction and Development (IBRD), with a variable spread and 25 years maturity including a 5-year grace period.

Continue Reading

Publications

Latest

EU Politics11 mins ago

Explainer: SURE, a new temporary instrument to help protect jobs and people in work

What is SURE and why is the Commission proposing it? The new instrument for temporary Support to mitigate Unemployment Risks...

African Renaissance2 hours ago

In the big night

“What are you running away from? I’m sad too, you know. Leaving behind the only world that I’ve ever known....

Central Asia4 hours ago

Russia-China relations: Engagement abilities in managing their differences in Central Asia

Ever since the collapse of the Soviet Union, Moscow and Beijing have converted their relationship from being Cold War rivals...

Tourism6 hours ago

UNWTO Launches a Call for Action for Tourism’s COVID-19 Mitigation and Recovery

The World Tourism Organization (UNWTO) has released a set of recommendations calling for urgent and strong support to help the...

South Asia8 hours ago

COVID-19 in India: The bright and the dark sides

Many fortresses have collapsed and the invisible enemy has entered everywhere. Indians are at the doorsteps of one of the...

Americas10 hours ago

American law firm’s frivolous lawsuit against China targets the wrong defendant

When I first heard the recent news that Florida’s Berman Law Group had the chutzpah to sue China for trillions...

EU Politics13 hours ago

Explainer: EU Emergency Support Instrument for the healthcare sector

What does the Commission propose to support the healthcare sector? The Commission wants to directly support the healthcare systems of...

Trending