ADB pledges to continue supporting Pakistan's efforts for economic reform
SEOUL (APP) – Acknowledging quick stabilization measures taken by Pakistan to put the national economy back on track, Asian Development Bank (ADB) President Masatsugu Asakawa on Tuesday assured the bank’s continued support for the incumbent government’s critical and structural reforms at a time when the country recently witnessed devastating floods caused by climate change.
Addressing a press conference at the ADB Board of Governors’ 56th annual meeting here at Incheon, a bordering city of South Korea’s Capital Seoul, Asakawa said Pakistan was taking ‘quick’ required stabilization measures by containing spending, enhancing tax revenues and improving the financial sustainability of energy sector.
He said the ADB was supporting these policy measures that would definitely improve the economic condition of the country and help improve fiscal space for enhancing social protection transfers.
He said the bank would continue supporting Pakistan in these reforms through Policy-based lending operations to help improve the economy and financial position.
Answering a question of APP correspondent about predicted heavy rains and floods this year in Pakistan and ADB’s response in this regard, he said “… the government [of Pakistan] is taking swift economic stabilization and rehabilitation measures… These structural reforms will definitely bring [economic] stability of Pakistan and create fiscal space for enhanced social protection transfers.”
Asakawa renewed pledge of the international financing lender to continue extending all possible support to Pakistan, saying “The ADB will maintain supporting Pakistan on its economic structural reforms.”
The ADB will maintain to continue its support to improve Pakistan’s economic condition.”
The ADB President also announced new programme IF-CAP: the Innovative Finance Facility – for Climate in Asia and the Pacific, terming the plan “a global first in its scale and scope.”
Elaborating the IF-CAP facility, Masatsugu Asakawa said it would change the way ‘we do business.’
He was of the view that the region needed trillions (of dollars) in investment to combat climate change and help reach that level, there was need to maximize our capital in new ways.
He said the IF-CAP would multiply ADB’s lending capacity through leverage and would allow crowding in substantially more resources from the private sector, and other investors who share bank’s commitment to climate action.
He explained that the programme was based on the use of financial guarantees from ADB partners, adding by guaranteeing a portfolio of the bank’s sovereign loans, they would help shoulder some of the loss in case of a credit event in one of our borrowers.
“This is a groundbreaking arrangement because it will reduce the capital ADB needs to hold for credit risk, freeing up capital for a substantial increase in lending to climate projects. Every dollar of guarantee into IF-CAP will result in the capacity to make new loans,” he added.
He said, it was a fundamental shift from the traditional “one dollar in, one dollar out” facilities at MDBs, because of its multiplier effect.
“We aim to bring in approximately $3 billion for IF-CAP, which can unlock up to $15 billion of new ADB climate projects. This will allow ADB to significantly accelerate climate action and achieve more ambitious results,” the ADB President said.
Second, he added, IF-CAP would change the way of addressing the climate change by providing innovative and all-encompassing solutions.
“It will be the first ADB financing vehicle to serve as a one-stop shop for climate finance. This will make climate action across sectors and regions possible. And it will support both infrastructure and reforms that address climate changes issues,” The ADP President said.
“This gives us the power to address climate change everywhere and anywhere, that it is needed,” he said adding the IF-CAP financing would support both mitigation projects, to reduce greenhouse gas emissions, and adaptation projects, to build resilience to the impacts of climate change.
He said the IF-CAP was another clear example of ADB’s strong and innovative work as the Climate Bank for Asia and the Pacific “And I believe it will transform the way we do development.”
In recent years, he said war, disease, and economic hardship have taken a terrible toll on human welfare. The most alarming challenge facing our region was the worsening impact of climate change. This threatens the existence of countless species, including our own.
He said the global battle against climate change would be won or lost in Asia and the Pacific. Since 2000, more than 40% of climate-related disasters occurred in Asia and the Pacific. “Over 3.5 billion people have been affected, with close to one million deaths. By 2050, another 1 billion people living in urban areas in our region will suffer from harmful air pollution and heat stress.”
In addition, Masatsugu Asakawa said the developing member countries of the Asian Development Bank have experienced physical losses worth billions of dollars due to climate-related events.
In 2020 alone, the region faced a disaster loss of $67 billion and “If we don’t act, the increase in annual losses will outpace the region’s GDP growth.”
He said the ADB was aimed at delivering $100 billion in climate finance to our developing member countries between 2019 and 2030, expand its investments in renewable energy options, and “we will not invest in coal.”
It is pertinent to mention here that the ADB meeting began here Tuesday themed “Rebounding Asia: Recover Reconnect, and Reform,” wherein relevant issues are being discussed with members and development partners in working toward an inclusive, resilient, and prosperous Asia and the Pacific.
The forum would be taking up a wide range of issues including food security, climate change, and dealing with external shocks such as the Russian invasion of Ukraine, paving the way for sustainability and progress of the region with robust economic policies.