Regions and Countries

	Table of Contents
p. 20 of 23 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Thailand

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VI. Cofinancing and Catalyzing External Resources

126. Since 1987, the ADB has provided direct loan funds totaling $1.9 billion for 17 cofinanced projects in Thailand. Total official and commercial cofinancing mobilized for these projects amounts to $3.2 billion from the Government of Japan (Overseas Economic Cooperation Fund (OECF)/Export-Import Bank of Japan (JEXIM/JBIC), World Bank, European Investment Bank, and KfW, as well as other export credit and commercial sources. During 1999, $300 million in “Miyazawa Initiative” cofinancing was pledged by JBIC in support of the ASPL. In order to maximize the impact of the ADB’s assistance with financial constraints, cofinancing will continue to play an important role in the ADB’s Thailand operations during 2001-2003. Special efforts will be made to maintain the momentum of cofinancing, both official and commercial. Concessionary cofinancing possibilities will be pursued with JBIC in areas including poverty reduction, education, agriculture/rural development, SME development, and area development (including support for border towns and economic corridors, which have subregional cooperation elements). With respect to commercial cofinancing, a major focus will be to mobilize long-term debt in support of the Government’s SFI restructuring and SME development efforts. In this context, the ADB is prepared to explore the use of its partial credit guarantee to facilitate resource mobilization efforts. A combined cofinancing leveraging ratio (including both official and commercial cofinancing) of 71 percent is aimed at during the 2001-2003 program period.

127. In the wake of the financial crisis, increasing emphasis is being placed on mobilizing local currency resources to finance priority projects. In this regard, representatives from MOF, BOT, Securities and Exchange Commission and other concerned parties have been consulted to discuss alternative approaches under which ADB might catalyze local currency resource mobilization. Staff have indicated to these agencies that an integrated and phased approach to local currency financing was considered to be the preferred course of action. In this regard, it was proposed that Phase 1 consist of an ADB bond issue in Thailand denominated in Baht. Such an issue would provide an appropriate domestic pricing “benchmark” for ADB risk and contribute to development of Thailand’s domestic capital market. The ADB benchmark issue would be followed, in Phase 2, by ADB credit enhancement support (e.g., partial credit guarantee support) for specific private sector projects that meet the ADB’s criteria for participation. It is expected that such projects would be primarily in the infrastructure and financial sectors. Staff have also met with project sponsors and commercial cofinanciers to discuss potential Phase 2 projects. The projects discussed tended to generate local currency revenue streams, for which local currency financing would provide a natural hedge against currency risk. These meetings reinforced the conclusion that there is significant unmet demand in Thailand for ADB support to mobilize local currency cofinancing and extend the maturities of such cofinancing.