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ADB to prioritize poverty eradication, rising inequality
The Asian Development Bank (ADB), while sustaining efforts to eradicate absolute poverty, will step up efforts to address rising inequality, growing environmental pressures and rapid urbanization, ADB president Takehiko Nakao asserted in Manila on Saturday
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he Asian Development Bank (ADB), while sustaining efforts to eradicate absolute poverty, will step up efforts to address rising inequality, growing environmental pressures and rapid urbanization, ADB president Takehiko Nakao asserted in Manila on Saturday.
The programs, Nakao told the 51st annual meeting of the ADB board of governors, were among several components of the ADB Strategy 2030, a road map that would guide the bank’s objectives in the next decade.
The other priorities of the strategy, which is being finalized and will be adopted later this year, include scaling-up support to fight climate change, promoting rural development and food security, strengthening governance, fostering regional cooperation and integrating and mobilizing private sector resources to meet the region’s huge development financing needs, Nakao added.
ADB’s country director, Winfried Wicklein, said earlier in Jakarta that the bank had cumulatively committed US$35 billion to Indonesia in sovereign and non-sovereign loans, equity investments and guarantees, and another $252 million in technical assistance. Of the total, $27 billion has been disbursed, mostly for energy, agriculture, education, health and water development.
The Indonesian government is the sixth-largest shareholder in ADB, which as of this year has more than $50 billion in capital resources, enabling it to book outstanding loans of up to $150 billion.
The bank’s work plan for Indonesia from 2018 to 2020 focuses on infrastructure, economic governance and human development, supported by $7.50 billion in indicative sovereign lending allocations, Wicklein said.
In a related development, the finance ministers and central bank governors of the 10 ASEAN countries, China, Japan and South Korea (ASEAN+3) , who met in Manila on the sidelines of the ADB meeting, agreed on Friday to strengthen the regional financial safety net, called the Chiang Mai Initiative Multilateralization (CMIM) scheme.
“We discussed the risks of rising trade protectionism and faster-than-expected tightening in global financial condition [United States Federal Reserve rate normalization], which could induce capital outflow and financial volatility in our region,” noted Singaporean Finance Minister Heng Swee Keat, the chairman of the meeting, during a press conference on Friday.
Therefore, he added, the ASEAN+3 finance ministers and governors, have reaffirmed their commitment to enhancing the operational readiness of the $250 billion CMIM liquidity support to assist member countries facing sudden reverse capital flows.
The CMIM itself is a network of bilateral swap arrangements (BSAs) among the ASEAN+3 countries established in May 2000, three years after the Asian financial crisis, to serve as a regional safety net (liquidity support) mechanism to complement the International Monetary Fund (IMF).
At a seminar on the ASEAN-3 macroeconomic outlook in Manila earlier on Thursday, some pinpointed a shortcoming of the current CMIM mechanism, whereby members are obliged only to exchange letters of commitment to provide a swap line but the exchange of letters of commitment itself does not involve any lending or borrowing of US dollars between members.
They suggested that central pooling of a certain portion of the dollar holding could enhance assurances of financial support under the CMIM and contribute to the quicker provision of dollar liquidity.
Heng added that the finance ministers and central bank governors also agreed to strengthen regional surveillance to detect early risks and to remain vigilant against the risks of contagion and spillovers from excessive capital flow volatility.
In this context, Heng said, the ASEAN+3 Macroeconomic Research Office (Amro) would strengthen its cooperation with the IMF to improve the quality and effectiveness of its surveillance of the financial soundness of member countries.
