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ADB reworking capital adequacy norms to boost lending resources

THE Asian Development Bank (ADB) said it is reviewing its capital adequacy standards in order to expand lending to vulnerable countries, while also letting private-sector financing shoulder more of the burden in development projects.

“The ongoing review of our Capital Adequacy Framework will prepare us to optimize our balance sheet and, potentially, boost our lending capacity,” ADB President Masatsugu Asakawa said at the bank’s annual meeting in Incheon.

“Under ADB’s new operating model, our ‘private sector development shift’ will promote market-based development. We will catalyze even more private capital through deeper coordination between our sovereign and non-sovereign operations,” he added.

The focus of support for developing member countries (DMCs) facing challenges in the current economy will center on social safety nets, including protection for women and girls, Mr. Asakawa said.

“The ADB will continue to prioritize our developing members and populations most in need. Social protection measures for poor and vulnerable groups, and a focus on the needs of women and girls, are essential… To better support our DMCs, ADB is actively evolving our mission, increasing our resources, and undertaking organizational reforms. We are especially committed to investing in global and regional public goods, to help mitigate the increasing global threats,” he added.

Mr. Asakawa said that low-income and small-island developing members were most vulnerable to external headwinds such as the pandemic, geopolitical tensions, and high inflation.

“The midterm review of Strategy 2030 will address the multilateral development bank evolution agenda. This will enable ADB to invest in global public goods,” he said.

The ADB will also provide countercyclical support and emergency assistance, to “help DMCs manage crises and undertake reforms that build resilience — for example, through improved domestic resource mobilization.”

On Thursday, the ADB said its Board of Governors approved a $1.1-billion net income allocation from its ordinary capital resources.

This consists of $716.5 million to ADB’s ordinary reserve to support the bank’s capital growth and provide an earnings base to generate income; $292.4 million to the Asian Development Fund; and $90 million to the Technical Assistance Special Fund.

In 2022, the ADB committed $20.5 billion in loans, grants, equity investments, guarantees, and technical assistance.

Last year, the ADB extended $3 billion in financial assistance to the Philippines, the fifth-highest in the region. It is earmarking $4 billion worth of loan financing to support development projects this year. — Luisa Maria Jacinta C. Jocson

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