ADB approves new products and modalities for financing PPPs, other activites

ADB’s new products and modalities will support the implementation of the forthcoming Strategy 2030, by expanding ADB’s product offering to meet the diverse and evolving needs of our developing member countries, says Nakao.

The Asian Development Bank’s (ADB) Board of Directors approved a set of new products and modalities—including quick release project readiness financing, policy-based guarantees, and financing facilities to support public-private partnership (PPP) and small expenditure financing.

“ADB’s new products and modalities will support the implementation of the forthcoming Strategy 2030, by expanding ADB’s product offering to meet the diverse and evolving needs of our developing member countries,” said ADB President Mr. Takehiko Nakao. “These new products will contribute to our efforts to build a stronger, better, and faster ADB.”

ADB has implemented various business process reforms to speed up loan processing, introducing a project design facility in 2011 on a pilot basis and improvements to grant-funded technical assistance in 2016. But to accelerate infrastructure investment, many developing member countries have stressed the need for faster project preparation and implementation.

The new project readiness financing facility (PRF) will support project preparation and design activities in a faster and more responsive manner. The PRF will feature simplified documentation, and approvals for the facility will be delegated to the ADB Management for an amount not exceeding $15 million.

The small expenditure financing facility will finance activities such as consulting services, pilot testing, and rehabilitation. On approval of a proposed facility, the borrower can propose eligible activities for funding through the facility using simplified business processes.

ADB provides various credit enhancements and guarantee products and will now be able to offer policy-based guarantees (PBG). The PBG will cover the credit risk of sovereign borrowing for the general budget support from commercial lenders. As with the existing policy-based lending modality, the PBG will be anchored on a set of policy conditions.

ADB is also strengthening its credit enhancement operations to mobilize more private capital. New modalities will increase access to certain types of guarantees, making increases in B loans easier.

The PPP Standby Financing Facility will support government payments to private PPP concessionaires. The facility is intended to help private concessionaries secure timely payments from the government.

ADB will launch outreach activities in its developing member countries to raise awareness of the new products and modalities and jointly explore opportunities to apply these in ADB’s country programs.