ADB, Japan ink $16 billion development partnership

Will span over five years, includes creation of investment fund

MANILA: The Asian Development Bank (ADB) and the Government of Japan today announced a $16 billion partnership over the next five years, including the establishment of an investment fund, to boost support for private infrastructure projects and promote public infrastructure development.

Developing quality, reliable, sustainable, and resilient infrastructure is one of the Sustainable Development Goals (SDGs) agreed at the UN summit in September.

“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,” said ADB President Takehiko Nakao.

“Through its assistance for urban transport, renewable energy, and other infrastructure, the partnership will also contribute to the expansion of climate financing to developing countries, in line with the expected outcome of the COP21 meeting in December.”

Programmes

First, in order to stimulate investment in quality and sustainable private infrastructure in Asia and the Pacific, including through public-private partnerships, ADB will establish a trust fund under the partnership with Japan by March 2016.

The fund will be managed by ADB’s Private Sector Operations Department and capitalised with $1.5 billion in equity from the Japan International Cooperation Agency (JICA). Combined with ADB’s own capital and that of commercial cofinancing partners, the fund is expected to provide financing of at least $6 billion and will enable ADB to expand large-scale private infrastructure operations by leveraging JICA’s official development assistance resources and risk-bearing capacity.

Second, in order to promote quality and sustainable public infrastructure development in the region, ADB and JICA will provide a total of $10 billion ($5 billion each) in co-financing to sovereign borrowers over the 5 years.

The two parties will collaborate to support long-term investment plans using ADB’s Multi Tranche Financing Facility. They will also provide necessary technical assistance for preparing and implementing projects, leveraging the comparative advantages of each institution.

ADB and JICA will soon sign a Memorandum of Understanding on the partnership. ADB and the Government of Japan have agreed to hold regular high-level policy dialogues to effectively implement infrastructure investments under the partnership. 

Published in The Express Tribune, November 22^nd, 2015.

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