The Asian Development Bank announced a new program for financing efforts to counter climate change, stepping up its attempt to back one of its main focuses in the region.
(Bloomberg) — The Asian Development Bank announced a new program for financing efforts to counter climate change, stepping up its attempt to back one of its main focuses in the region.
The Innovative Finance Facility for Climate Change in Asia and the Pacific (IF-CAP) could create up to $15 billion in new loans, through a goal of $3 billion in guarantees, according to Asian Development Bank President Masatsugu Asakawa.
“The region needs trillions in investment to combat climate change,” the ADB chief said. “To help reach that level, we need to maximize our capital in new ways — the IF-CAP will multiply ADB’s lending capacity through leverage,” making it possible to take climate action across sectors and regions, he added.
Asakawa was speaking at a press conference in South Korea, where the annual ADB conference is being held through May 2 to May 5.
The new program will make use of a leverage mechanism to fund a greater amount of loans than was previously possible. In the past, $1 of guarantees generated $1 of loans, but the ADB’s lending capacity could be increased by fivefold, according to the development bank.
Partner countries including the US and Japan will guarantee a portfolio of ADB’s sovereign loans, helping shoulder some of the losses in case of a credit event in one of its borrowers, the development bank said.
Asakawa, who took the helm of the ADB after serving as Japan’s top currency official, was considered by some economists to be a contender for Bank of Japan governor a few months ago.
In a February interview, the ADB chief saw China’s emergence and recovery from its Covid Zero program as a factor that could lift inflation again globally, while the war in Ukraine would probably have a relatively limited impact in Asia.
Asakawa has also emphasized ADB’s focus on climate change. In 2021 the regional development bank set a goal of raising $100 billion of climate financing by 2030.
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