ADB urged to keep extending concessional loans in AsPac

MANILA, Philippines — Manila-based Asian Development Bank (ADB) should continue providing concessional assistance to countries in need in the Asia and the Pacific region to enable them to attain their targets under the Sustainable Development Goals (SDGs), according to a report by its Independent Evaluation Department (IED).

In a report, IED said “there is a strong rationale for continuing concessional support” in the region because of growing inequality and rapidly accelerating climate crisis.

IED also said that unrelenting conflict and insecurity in several countries mean there is a risk that poverty gains may be reversed in the medium term, and that there will not be enough progress on climate change mitigation.

Concessional financing comprises very low interest loans and grants.

“Without accelerated efforts, the region is unlikely to meet any of the 17 SDGs by 2030,” said the report that assessed the relevance and results of the use of concessional loans and grants by ADB from 2013 to 2018

ADB’s concessional financing facility, the Asian Development Fund (ADF), is now up for its 13th replenishment. The bank’s concessional assistance amounted to nearly $21 billion over 2013–2018, of which $5.8 billion was provided as grants.

ADF was established in 1974 as a source of low-interest loans for ADB’s poorest member countries financed largely by ADB’s non-borrowing members.

Access to the ADF is now concentrated in a small group of low income countries that are among the world’s poorest and most vulnerable with exceptional development challenges.

The evaluation found that project performance and results have been stronger in the 11th and 12th ADF replenishment periods so far than in previous ADF periods.

The report underscored the importance of the private sector in achieving SDGs and as such, IED called on the bank to scale up support for private sector development in countries eligible for concessional assistance.

This can also open up opportunities for contractors across ADB member countries who can participate in ADB-financed projects through its procurement system.

“Private sector development through nonsovereign operations is a key objective of ADB, but few nonsovereign operations have been undertaken in ADF countries because of the high risk of doing so,” said ADB principal evaluations specialist and the evaluation’s main author Joanne Asquith.

“ADB can introduce a blended finance window to derisk nonsovereign operations in concessional assistance countries, especially in areas where private sector operations are likely to have a high impact on the SDGs,” she added.

ADF currently does not provide blended concessional finance for nonsovereign operations.