AIIB to lend up to $21b annually for first 5 years

Mr Jin Liqun will be president of China's new global development bank.
Mr Jin Liqun will be president of China's new global development bank.

BEIJING • The president-elect of China's new global development bank yesterday said he expects the institution to lend US$10 billion to US$15 billion (S$14 billion to S$21 billion) a year for the first five or six years, and sought to allay concerns the lender will be a tool of Beijing.

Mr Jin Liqun, who will head the Asian Infrastructure Investment Bank (AIIB) after its expected inauguration this month, said it will start operations in the second quarter of next year.

He said the US dollar would be the operating currency but the bank would consider financing requests in other units, including the yuan.

A successful AIIB that sets itself apart from the World Bank would be a diplomatic triumph for China, which opposes a global financial order it says is dominated by the United States and under-represented by developing nations.

Beijing had been frustrated by delayed reforms at the International Monetary Fund, though on Monday the Washington-based body admitted China's yuan into its benchmark currency basket.

Mr Jin said talks are ongoing with other institutions, including the World Bank and the Asian Development Bank, on co-financing.

"In regular years, given US$100 billion in registered capital, I think every year I expect to do probably US$10-US$15 billion, for the first five or six years," Mr Jin told a European business forum.

He also said about 30 countries are waiting to be members.

The AIIB, first proposed by President Xi Jinping less than two years ago, has become one of China's biggest foreign policy successes. Despite US opposition, almost all its major allies - Australia, Britain, German, Italy, the Philippines and South Korea - have joined.

The US had expressed concern over how much influence China will wield in the new institution.

Mr Jin said China holds the de facto veto power in the bank based on a function of GDP, but that as more countries joined the lender, its relative voting power would drop.

He rejected suggestions the bank would be used to increase the influence of China and its state-run companies, saying other countries would not rush to join if that was the case.

REUTERS

A version of this article appeared in the print edition of The Straits Times on December 02, 2015, with the headline 'AIIB to lend up to $21b annually for first 5 years'. Print Edition | Subscribe