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Annual Report 2002 : Operations

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Cofinancing and guarantee operations

Cofinancing from both official and commercial sources enhances the benefits and impact of ADB projects. ADB’s intensified efforts in 2002 to mobilize additional resources led to a significant increase in cofinancing, both in the number of cofinanced loan projects and in the volume of commercial cofinancing and guarantee operations. Cofinancing mobilized from all sources amounted to $2,851 million for 38 public and private sector loan projects. Total cofinancing mobilized in 2002 was more than double the amount mobilized in 2001, and equivalent to half of ADB’s total lending of $5,676 million during the year. This was the sixth consecutive year in which cofinancing was arranged for more than 40% of ADB loan projects. For details, see Table 7 in the Statistical Annex.

Fifteen DMCs received cofinancing in 2002. The PRC received the largest amount of about $767 million, primarily from its domestic financial institutions, followed by Viet Nam with $609.5 million and the Philippines with $545.5 million.

Since 1970, cofinancing and guarantee operations have mobilized a cumulative total of $38.3 billion, providing additional resources for 609 ADB-assisted loan projects and programs. The cumulative total comprises $22.3 billion from official sources, and $16 billion from commercial sources and export credit agencies. The energy sector accounted for $16.8 billion or 44%, followed by transport and communications ($8.2 billion or 21%), agriculture and natural resources ($4.2 billion or 11%), social infrastructure ($3.3 billion or 9%), and other sectors ($5.8 billion or 15%).

Official cofinancing: ADB maintained proactive and close interaction with its development partners through regular consultations and discussions. In 2002, a total of $754.5 million in official cofinancing was provided by ADB’s development partners in grant funds ($221.4 million) and loans ($533.1 million) for 29 loan projects. Japan provided cofinancing of $275.5 million for six loan projects, followed by France with $80.3 million for four loan projects, and the Netherlands with $71.8 million for four loan projects. The European Bank for Reconstruction and Development provided $49 million for the Regional Power Transmission Modernization Project in the Central Asian republics. Other major multilateral cofinanciers include the OPEC Fund for International Development ($30.9 million), International Development Association ($27.0 million), International Finance Corporation ($20.0 million), and Nordic Development Fund ($14.1 million).

In 2002, 64 technical assistance projects were cofinanced by 71 grants for a total of $30.3 million from the governments of Australia, Canada, Denmark, Finland, France, Italy, Japan, New Zealand, the Netherlands, Norway, Spain, Sweden, and United Kingdom; the ADB-administered multidonor cooperation funds; the World Bank; and the Global Environment Facility. Fifteen loan projects received grant cofinancing amounting to $221.4 million from bilateral and multilateral sources in 2002.

During the year, the United Kingdom made an initial contribution of $60 million toward the establishment of the Poverty Reduction Cooperation Fund, a multidonor fund administered by ADB (see http://www.adb.org/Documents/Policies/PRF/). Norway committed $2 million for the existing Governance Cooperation Fund. The Netherlands made an additional contribution of $4 million to its existing Cooperation Fund for the Water Sector (see http://www.adb.org/Documents/Others/Cofinancing/IN30_03.pdf). The Swiss Cooperation Fund for Consulting Services was also replenished in the amount of $600,000 (see http://www.adb.org/Documents/Others/Cofinancing/IN70_02.pdf).

Commercial cofinancing and guarantee operations: Commercial cofinancing in 2002 amounted to $2,097 million for 12 projects, compared with $933 million for 8 projects in 2001. Of the 2002 total, $885 million was raised using ADB guarantees, $249 million was export credit, and $963 million was parallel cofinancing, mainly from domestic financial institutions in the PRC.

Of the 12 projects funded by commercial cofinancing in 2002, four projects were supported by ADB guarantees. Guarantee operations comprised a partial credit guarantee (PCG) of $500 million in support of a bond issue for the Power Sector Restructuring Program (see box above) in the Philippines, and four political risk guarantees (PRGs) in three projects with an aggregate total of $385 million.1 From 1988 to end-2002, ADB issued a total of 12 PCGs and 6 PRGs to mobilize about $2.4 billion in commercial cofinancing through syndicated loans and capital market instruments. For more on ADB’s cofinancing and guarantee operations, see http://www.adb.org/cofinancing.

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