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Water Financing Program 2006-2010
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Under its new Water Financing Program (WFP), the Asian Development Bank (ADB) is offering to double spending on water projects as a means for ramping up investments in infrastructure that is critical to capturing and sustaining the huge new opportunities emerging in Asia’s booming economies. WFP will initially focus on six countries that believe in water to either support or juice up their growth rates. |
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In countries throughout Asia, particularly those with booming economies, governments need to ramp up investment in the infrastructure upon which growth depends.
ADB’s WFP is designed precisely to help countries meet the infrastructure challenge in the water sector, which represents perhaps the most critical gap in financing. Safe and reliable water sources, and the resources upon which they depend, are integral to sustained economic growth, and to meeting the targets of the Millennium Development Goals.
The WFP will initially focus on six countries: India, Indonesia, Pakistan, the People’s Republic of China (PRC), the Philippines, and Viet Nam. However, the program is open to all ADB’s developing member countries (DMCs).The WFP countries together represent a large part of the region in need of better water service delivery and resource management. They are also among ADB’s biggest clients.
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India: Now Open for Water Finwancing India is making good progress in increasing infrastructure for water supply and sanitation in urban and rural areas. However, it is still lagging behind in expanding services that are reliable and sustainable. Read more. |
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Indonesia: Increasing River Basin Investments Indonesia has made excellent progress in developing water resources policy, but implementing changes is proving more difficult. The country is drumming up investments for better management of its river basins. Read more. |
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Pakistan: More Investments for Increased Capacity Pakistan has a long history of developing its water infrastructures, but the expansion of water sector investments is hindered by the lack of capacity for sector planning and strong management to take on new projects. Read more. |
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People’s Republic of China (PRC): Private Sector Investment is Key The PRC is facing water sector challenges that can only be addressed through a coherent and integrated national water policy, a greater understanding of the challenges the country faces, and the recognition that the private sector can play an integral role in financing. Read more. |
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Philippines: Getting Better at Water Projects Opportunities to expand water sector lending in the Philippines are hindered by weak capacity at the local level for developing new projects, but recent government efforts to boost the country’s economy have improved the situation markedly. Read more. |
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Viet Nam: Full Speed Ahead towards Water Financing Viet Nam needs $5 billion for water projects, but the country’s self-imposed borrowing cap stunts increased investments. The country also gives the energy sector a higher priority, and is reluctant to borrow for the water sector. Read more. |
ADB’s investment in the water sector over the last 15 years has been modest and unpredictable, averaging US$790 million a year from 1990-2005, and ranging from $330 million in 2004 to $1.4 billion in 2005. WFP is an offer to increase ADB's overall investments in water operations to an average that is well over $2 billion annually in the next 5 years.
Actual demand for new projects in the water sector is huge. The question is how to transform that demand into bankable projects. In most of the countries, the capacity for project design and implementation is complicated by a lack of skill, compounded by the decentralization of government services and borrowing or lending caps in some countries. To deal with these issues, the WFP will be backed by a grant facility—the Water Financing Partnership Facility—through which more than $100 million in grants may be distributed to top off current projects and fund programs that will develop human resources in public utilities and groups that manage water resources.
The WFP also features more flexible financing services by introducing several new products that will help governments with limited expertise and funds to create projects to improve rural, urban, and basin water resources. Measures such as the multitranche financing facility (MFF), for example, offer a line of credit (a sort of up-front, umbrella financing) that can be drawn down by a government as needs emerge or the capacity to carry through a project develops. It can combine public-sector lending with sub-sovereign lending and private sector operations.Just as water has moved up ADB’s development agenda, it is gaining more recognition within government ministries. ADB’s WFP is a part of the solution to Asia’s water woes. As Asia’s economies boom, they are creating a huge need for enabling infrastructure to continue attracting eager investors and to ensure capital flows into areas outside the economic centers where poverty is often highest.
The WFP will seek creative solutions to ensure that the development of water sector infrastructure keeps pace with the increasing demands placed upon it. It will also mobilize co-financing and investments from government clients, the private sector, and multilateral and bilateral partners. Wouter Lincklaen Arriens
Lead Water Resources Specialist, ADB
E-Mail: water@adb.org
K. E. Seetharam
Principal Water Supply and Sanitation Specialist
Email: water@adb.org
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