ADB, donors pledge $5 billion in grants

On By Vaseline

KARACHI:

The Asian Development Bank (ADB) and donors have committed $5 billion in grants to member states to combat vulnerabilities such as climate change, natural disasters, poverty and gender gaps over the next four years, allowing countries including Pakistan to focus on growth, development, and regional connectivity.

In a statement on Friday, the ADB said: “Donors and ADB have agreed to match $5 billion for ADB’s Asian Development Fund (ADF) 14 and Technical Assistance Special Fund (TASF) 8. The commitment was made at the 57th annual meeting of ADB.”

According to the bank, ADB President Masatsugu Asakawa said at a press conference: “This remarkable addition marks the largest-ever commitment to ADF’s grant operations. It demonstrates ADF donors’ continued partnership with ADB to address the pressing development challenges of those most in need.”

The ADF is ADB’s largest source of funding for operations in the poorest and most vulnerable developing countries and is replenished every four years. ADF 14, the thirteenth addition since the fund’s inception, will support grant operations in the period 2025-2028.

The ADF 14 replenishment is approximately 22% higher than the $4.1 billion available in ADF 13 and will provide eligible ADB members with the largest volume of ADF grants ever. TASF 8 will provide grants that help prepare projects, build capacity and provide technical or policy advice.

Pakistan remains one of the most vulnerable countries to climate change globally, despite contributing less than 1% to global greenhouse gas emissions. The country faced its worst situation in three decades during the summer 2022 floods, which affected 33 million people and caused the country more than $30 billion in damage and economic losses.

Pakistan would receive eligible grants through transformative projects, among others. Moreover, Islamabad could also obtain concessional loans as the regional bank plans to provide $16.7 billion at very low interest rates over long repayment periods.

ADB President Masatsugu Asakawa further said: “Grants are more important than ever as our poorest and most vulnerable members seek to reverse recent development setbacks and take urgent action to combat the climate crisis.”

ADF 14 prioritizes targeted assistance to small island developing States that are particularly vulnerable, especially to climate change, and to countries in fragile and conflict-affected situations.

ADF 14 will continue to play a critical role in supporting climate change adaptation and disaster risk reduction. It will enable comprehensive assistance for regional cooperation and regional public goods, and for transformative gender action. It will also provide flexible assistance in case of emergencies through its crisis response window.

More than $2.5 billion, or 51%, of the supplement will be funded by contributions from donors, including two new countries: Armenia and Georgia. ADB will significantly increase its net current transfers to ADF, from just under $1.2 billion in ADF 13 to almost $1.6 billion in ADF 14, an increase of 35%. The remaining $0.9 billion will consist of carryovers from previous ADF cycles and income from liquidity investments.

At the same time, ADB plans to provide $16.7 billion in concessional loans during the ADF 14 period, with very low interest rates over long repayment periods. In total, for every $1 in donor contributions, ADB will be able to provide more than $8 in grants and concessional loans.

ADB strives for a prosperous, inclusive, resilient and sustainable Asia and the Pacific, while continuing its efforts to eradicate extreme poverty. It was founded in 1966 and is owned by 68 members, 49 of which are from the region.

The following donors have announced contributions to ADF 14: Armenia; Australia; Austria; Canada; Denmark; Finland; France; Georgia; Germany; Hong Kong, China; India; Indonesia; Ireland; Italy; Japan; Luxembourg; Malaysia; The Netherlands; New Zealand; Norway; People’s Republic of China; Philippines; Portugal; Republic of Korea; Spain; Sweden; Switzerland; Taipei, China; Turkey; United Kingdom; and United States.

The following developing countries are the major recipients of ADF 14 grants: Federated States of Micronesia; Kiribati; Kyrgyz Republic; Maldives; Marshall Islands; Nauru; Samoa; Solomon Islands; Tajikistan; Tonga; Tuvalu; and Vanuatu. Grants will also be available to support the people of Afghanistan and Myanmar, and for transformative projects in Bangladesh; Bhutan; Cambodia; Cook Islands; Fiji; Lao People’s Democratic Republic; Mongolia; Nepal; Niue; Pakistan; Palau; Papua New Guinea; Sri Lanka; East Timor; and Uzbekistan.

Speaking at a press conference, ADB President Masatsugu Asakawa said: “We meet in the midst of multiple challenges impacting human and economic development, with progress for many at a standstill. It is our duty to intensify efforts to tackle the climate crisis, eradicate poverty and promote inclusive socio-economic development. The Asian Development Bank, together with other multilateral development banks, plays a central role in these efforts.”

“With this in mind, I am pleased to announce that yesterday we concluded the pledging session for the Asian Development Fund 14, or ADF 14. I am deeply grateful for the generous commitments from donors, which have contributed to a $5 billion replenishment. ”

ADF 14 focuses on climate change adaptation, disaster risk reduction, promoting gender equality and promoting regional cooperation and integration, including regional public goods, he said.

ADF 14 remains ready to respond flexibly to disasters, health emergencies and major cross-border displacements.

“Our efforts will pave the way for a resilient, inclusive and sustainable region, and ensure that the Asian Development Fund remains a powerful instrument for change.”

Published in The Express Tribune, May 4e2024.

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