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Anytime this year, the Asian Development Bank (ADB) will bankroll the first in a series of infrastructure projects across the region that is expected to boost trade, foster economic growth, and create more jobs.
The Manila-based multilateral lender announced on Thursday it has set aside an initial $485 million as part of its Asean Infrastructure Fund (AIF), which will be used to "provide additional co-financing" to construct projects including farm-to-market roads, trains, power plants, among others.
Each country in the ten-member Association of Southeast Asian Nations (Asean) can seek funding for its infrastructure projects as long as these meet ADB's standards, Rajat Nag, the ADB's Managing Director General said in a briefing on Thursday afternoon.
"Criteria for investments include the [projects'] potential to cut poverty, increase trade, and bolster investment," the bank said in a statement distributed during the briefing.
The bank will "diversify funds to try to give to as many countries as possible," Nag said during the second day of the ADB's Annual Meeting of the Board of Governors in Manila.
However, Myanmar will be disallowed from using the facility since it has yet to settle debts it owes to the bank, Nag said.
The fund, to which the Philippines contributed $15 million, will "finance approximately six projects a year, with a $75 million lending cap per project," the statement said.
Only projects with sovereign guarantees will be allowed for the first five years, Nag said.
After this period, it plans "to issue bonds and have these rated by credit rating agencies,"Arjun Goswami, the ADB's Southeast Asia Dept. Director said during the same briefing.
These bonds are "designed to target the use of the region's foreign exchange reserves in the future," the ADB said. "With Asean countries holding over $700 billion in reserves, the fund could over an avenue for recycling the region's resources for its growing infrastructure requirements."
The fund's total lending commitment until 2020 is expected to reach $4 billion, the ADB said, adding that these could be "leveraged to more than $13 billion." InterAksyon
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