ADB, AIIB sign pact to cofinance project in Pakistan

Asian Development Bank and China-sponsored Asian Infrastructure Investment Bank (AIIB) today signed an agreement to co-finance an infrastructure project in Pakistan.
The MoU to cofinance about USD 300-million road project in Pakistan between AIIB and Asian Development Bank (ADB) was signed here on the opening day of the 49th annual meeting here amidst perceived closeness of China and Pakistan.
ADB President Takehiko Nakao, however, downplayed any such consideration while approving the cofinancing of the Pakistan road project.
"We have been working together to identify projects ... by chance Pakistan road project was more mature so it is not related to relationship between China and Pakistan," he said.

The first of these projects would be Pakistan's M4 highway project, a 64-kilometer stretch of motorway in Punjab Province, he said, adding ADB and AIIB would be sharing the same amount.
The Beijing-based USD 100 billion multi-lateral lender AIIB was set up last year to boost lending for infrastructure projects.

China is the largest shareholder with 26.06 per cent voting shares. India is the second largest shareholder with 7.5 per cent followed by Russia 5.93 per cent and Germany with 4.5 per cent.
Asked if similar kind of cofinancing arrangement is being looked at with New Development Bank set up by BRICS countries including India, China, he said that he had talks with its president KV Kamath on the issue.

"We had agreed that if there is opportunity for cofinancing we will look at it," Nakao said, adding that at the moment there was nothing in the pipeline.
On raising of the resources, he said, "We may consider raising capital in the coming years if there is further requirement."
With unanimous support of donors, it has been agreed to substantially strengthen financing capacity with the merger of Asian Development Fund lending operation and Ordinary Capital Resources starting next year, he said.
"As a result, we will be able to expand our annual loan and grant approval by 50 per cent, from USD 13 billion in 2014 to more than USD 20 billion by 2020," he said.

Nakao also said that 32 donors agreed to the 11th
replenishment of the Asian Development Fund (ADF 12) for the four-year period from 2017 to 2020.
This will provide USD3.3 billion of new resources to ADF, the ADB's grant window, and USD 0.5 billion to the Technical Assistance Special Fund, he said.
ADF finances grant operations in its poorest and most debt-distressed member countries.
One important feature of the ADF 12 replenishment is the greater role played by non-traditional donors. The share of donor contributions from Asian emerging economies including India and China increased to 11.7 per cent from 6.9 per cent during the ADF 11 period (2013-2016).