ADB: Asia-Pacific region annually requires about $800 billion of infrastructure investments

ADB: Asia-Pacific region annually requires about $800 billion of infrastructure investments

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The demand for finance for major infrastructure and development projects in Asia and the Pacific shows no sign of slowing as regional economies seek ways to address moderating economic growth, inequality, and significant environmental risks, says the Asian Development Bank (ADB)’s 2015 Annual Report (2015 AR).

As ADB marks its 50th year of operations in 2016, the latest annual report, released recently, shows that total operations surged to $27.17 billion in 2015—the highest in ADB’s history. The total included $16.29 billion in approvals for loans and grants, $141 million for technical assistance, and $10.74 billion for cofinancing, which increased by a record 16%. Disbursements, a key factor in improving aid effectiveness, also hit a new record of $12.22 billion in 2015, an increase of 22% over the previous year.

Private sector operations, a major focus of ADB’s long-term strategy for boosting growth in the region, jumped to $2.63 billion from $1.92 billion in 2014. These figures update the provisional operations numbers released by ADB in January.

“Our record performance in 2015 reflects a growing demand from the Asia and Pacific region for ADB’s development assistance,” said ADB President Takehiko Nakao in his 2015 AR message. “Poverty persists despite the region’s impressive growth, and infrastructure and other development needs are monumental.”

ADB estimates that the region needs about $800 billion for infrastructure investments annually, amounting to about 6% of gross domestic product, compared with current investments of about 2%-3% in many countries in Asia and the Pacific. The funding deficit is a key cause of constraints on economic growth and poverty reduction in the region.

2015 AR focuses on ADB’s response to help the region address these challenges and to implement the ambitious new development agenda adopted by the international community in 2015. ADB has committed to playing a central role in financing the Sustainable Development Goals, signed in September 2015, and supporting the new climate deal forged during the 21st Conference of the Parties on climate change in Paris in December, the 2015 AR says.

To deliver on this commitment, ADB in 2015 announced it was significantly scaling up its capacity to provide more financing through a merger of its concessional Asian Development Fund loan portfolio with its ordinary capital resources balance sheet. Starting from January 2017, this path-breaking reform will almost triple ADB’s equity base and allow it to increase assistance to developing member countries by up to 50%, and to its poorest members by up to 70%.

In September, ADB became the first multilateral development bank to commit to a sizeable climate finance target by announcing it would double its annual climate financing to $6 billion by 2020. Tackling climate change is critical in Asia and the Pacific, where rising sea levels, melting glaciers, and weather extremes like floods and droughts are increasingly costing jobs and lives.

ADB, based in Manila, was established in 1966. ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members—48 from the region. 

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