ADB’s new climate programme to offer up to $20b in loans
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Mr Masatsugu Asakawa took the helm of ADB after serving as Japan’s top currency official.
PHOTO: ADB
SEOUL – The Asian Development Bank (ADB) announced a new programme for financing efforts to counter climate change, stepping up its attempt to back one of its main focuses in the region.
The Innovative Finance Facility for Climate Change in Asia and the Pacific (IF-CAP) could create up to US$15 billion (S$20 billion) in new loans through a goal of US$3 billion in guarantees, according to ADB president Masatsugu Asakawa.
“The region needs trillions in investment to combat climate change,” the ADB chief said. “To help reach that level, we need to maximise our capital in new ways. The IF-CAP will multiply ADB’s lending capacity through leverage.” This would make it possible to take climate action across sectors and regions, he added.
Mr Asakawa was speaking at a press conference in South Korea, where the annual ADB conference is being held from May 2 to May 5.
The new programme will make use of a leverage mechanism to fund a greater amount of loans than was previously possible. In the past, US$1 of guarantees generated US$1 of loans, but the ADB’s lending capacity could be increased by fivefold, according to the development bank.
Under the programme, Denmark, Japan, South Korea, Sweden, Britain and the United States will guarantee some of the lender’s loans and shoulder losses in case its borrowers default on their debt.
Mr Asakawa, who took the helm of ADB after serving as Japan’s top currency official, was considered by some economists to be a contender for Bank of Japan governor a few months ago.
In a February interview, the ADB chief saw China’s emergence and recovery from its Covid Zero programme as a factor that could lift inflation again globally, while the war in Ukraine would probably have a relatively limited impact in Asia.
IF-CAP will contribute to meeting the ADB’s goal to use US$100 billion from its own resources to combat climate change for 2019-2030, the lender said.
Asia is among the regions most vulnerable to the impact of climate change. More than 40 per cent of climate-related disasters occurred in Asia and the Pacific since the start of the century, the ADB said. BLOOMBERG, REUTERS
