MANILA, Philippines — The Asian Development Bank (ADB) and the Government of Japan on Saturday, November 21 announced a $16-billion partnership over the next 5 years to help fund public and private infrastructure deals in Asia and the Pacific.
"Support for quality and sustainable infrastructure has been a central feature of our operations since ADB’s foundation in 1966 to achieve poverty reduction and sustainable development in Asia and the Pacific," ADB President Takehiko Nakao said in a statement.
Nakao added that the partnership will contribute to the expansion of climate financing for developing countries, in line with the expected outcome of the Conference of Parties 21 (COP21) meeting in Paris in December this year.
Trust fund
ADB said it will establish a trust fund under the partnerhip with Japan by March 2016 to stimulate investments in private infrastructure in Asia and the Pacific.
The fund will be managed by ADB's Private Sector Operations Department and capitalized with $1.5 billion in equity from the Japan International Cooperation Agency (JICA).
Combined with ADB’s own capital and other commercial co-financing partners, the fund is expected to provide financing of at least $6 billion.
This will expand ADB's large-scale private infrastructure operations by leveraging JICA’s official development assistance resources and risk-bearing capacity.
Multi-tranche financing
For public infrastructure development in the region, ADB and JICA will provide a total of $10 billion in cofinancing to sovereign borrowers over the next 5 years.
ADB said it, along with JICA, will collaborate to support long-term investment plans using ADB’s Multi Tranche Financing Facility.
They will provide necessary technical assistance for preparing and implementing projects, according to ADB.
ADB and JICA said they will soon sign a memorandum of understanding on the partnership, but did not disclose the exact date.
ADB and the government of Japan have agreed to hold regular high-level policy dialogues to implement infrastructure investments under the partnership.
ADB said it will seek similar arrangements with other development partners to increase climate financing, support quality and sustainable infrastructure development, promote private sector development and operations, and address other development issues.
ADB aims to reduce poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion. — Rappler.com