Project-Specific Cofinancing

Project-specific cofinancing, whether for a loan or a grant, is undertaken by ADB and a financing partner through a signed cofinancing agreement, if the cofinancing is to be administered by ADB, or a memorandum of understanding, if the cofinancing will not be ADB-administered. ADB also accesses the resources of Global Funds for project-specific cofinancing. In 2019, ADB mobilized $4.71 billion in loans and grants from partners.

Global Funds

ADB participates in and accesses funds from Global Funds where the International Bank for Reconstruction and Development acts as Trustee. These funds are designed for particular development projects or technical assistance. In 2019, ADB accessed $206.5 million from Global Funds for its DMCs.

Project-specific cofinancing (PSC)—that is, partnerships around individual ADB projects—make up the bulk of total ADB sovereign cofinancing. PSC comes in the forms of loan, grant for investment, and grant for technical assistance cofinancing. For PSCs, partners provide DMCs with funding that support the intended outcomes from ADB operations. The total volume of project-specific cofinancing in 2019 was $4.71 billion, divided into loan cofinancing at $4.52 billion and grant cofinancing at $191 million. Bilateral partners provided the bulk of PSCs at $3.59 billion, while $1.12 billion came from multilateral partners, including $206.5 million from Global Funds.

For loan cofinancing, the year saw ADB’s second largest-ever, single cofinancing operation, namely the collaboration with the Japan International Cooperation Agency (JICA) on the Malolos-Clark Railway Project. The project is among ADB’s largest infrastructure projects to date, cofinanced by JICA in the amount just slightly over $2 billion.

ADB’s work with partners further expanded through grant-based project-specific cofinancing, in which partners provide dedicated funding to specific ADB projects. In 2019, there were 39 projects with grant-based project specific cofinancing, totaling $191 million, for both investment project and technical assistance. Of this, $127 million was for investment projects, while $63 million was for technical assistance operations. Australia was the largest bilateral provider of grant-based cofinancing in 2019, supporting a total of 18 projects worth $83 million, including, for example, its $2.5 million contribution for the Renewable Energy Project in Tonga and its $4.5 million contribution for the Northern Mountain Provinces Transport Connectivity in Viet Nam. Among multilateral partners, the largest amounts were from the Green Climate Fund and the European Union. The year also saw gradual but consistent progress in terms of engaging with partners not so familiar with ADB. For instance, steady dialogue with JPMorgan Chase Foundation culminated in the first-ever partnership focusing on advancing women and trade, with JPMorgan committing a grant of $1.3 million.

By product type and source, the PSCs are distributed as follows:

Following the course set by Strategy 2030, ADB will explore innovative funding solutions to increase the availability of resources for project and strengthen its collaboration with new multilateral partners such as the Asian Infrastructure Investment Bank and the New Development Bank.

These are some examples of PSCs in 2019.

Malolos-Clark Railway Project

ADB’s biggest cofinanced project in 2019 is the Philippines: Malolos-Clark Railway Project, with $2.01 billion coming from Japan.

An important flagship project of ADB’s host country, the Malolos-Clark Railway is also ADB’s second largest cofinanced infrastructure project ever. The Japan International Cooperation Agency (JICA) is cofinancing the project, which is expected to improve local, national, and international connectivity with the direct link to the international airport at Clark, making it a gateway for Asian destinations. With this single loan, the Philippines received 41% of ADB sovereign cofinancing this year.

Project

Philippines: Malolos-Clark Railway Project

Project Cost

$6.14 billion

Financing Partner

  • Japan International Cooperation Agency- $2.01 billion
Approval Date:

May 2019

Completion Date:

May 2019

Improved Fiscal and Infrastructure Management Program

The Tuvalu: Improved Fiscal and Infrastructure Management Program has the most number of financing partners in 2019.

Four partners—Australia, the European Union, New Zealand, and the World Bank—collaborated with ADB in this policy-based program that supported reforms to improve the management of public finance and national infrastructure. The program strengthened Tuvalu’s fiscal sustainability by supporting priority policy actions under the government’s rolling multiyear policy reform matrix. The ADB assistance was policy-based, meaning the funds are released as budget support once policy actions outlined in the program are successfully completed.

Project

Tuvalu: Improved Fiscal and Infrastructure Management Program

Project Cost

$14.6 million

Financing Partners

  • Australia - $1.0 million
  • New Zealand - $600,000.00
  • European Union - $1.5 million
  • World Bank - $7.5 million
Approval Date:

October 2019

Completion Date:

December 2019

Mumbai Metro Rail Systems Project

ADB and new partner New Development Bank (NDB) embarked on the India: Mumbai Metro Rail Systems Project their first cofinanced project. The metro rail project will ease travel for millions of commuters across Mumbai, help decongest heavily crowded suburban rail systems, and contribute to providing a modern, clean, and livable urban environment (See related story).

The Shanghai-based NDB is a new multilateral development bank set up in 2015 by five BRICS (Brazil, Russia, India, China and South Africa) countries to mobilize resources for development projects in BRICS, emerging economies, and developing countries. ADB and NDB signed a memorandum of understanding in July 2016.

Project

India: Mumbai Metro Rail Systems Project

Project Cost

$1.68 billion

Financing Partner

  • New Development Bank – $260 million
Approval Date:

February 2019

Completion Date:

June 2023

Shandong Green Development Fund Project

The financing partnership among ADB, France, and Germany on the People’s Republic of China: Shandong Green Development Fund Project is expected to create new partnerships on climate financing with the private sector.

The project will help establish the Shandong Green Development Fund (SGDF) and attract private, institutional, and commercial financing for climate mitigation and adaptation projects. In fact, the Green Climate Fund (GCF) approved $100 million for the project in November 2019, the first GCF funding for the People’s Republic of China. By catalyzing climate finance, the SGDF is expected to help reduce carbon emissions by 2.5 million tons per year and directly build resilience for at least 2 million people in Shandong Province.

Project

People's Republic of China: Shandong Green Development Fund Project

Project Cost

$477.86 million

Financing Partners

  • KfW Bankengruppe – $113.69 million
  • Agence Francaise de Developpement - $84.53 million
Approval Date:

September 2019

Completion Date:

June 2027

Pacific Private Sector Development Initiative

The Regional: Pacific Private Sector Development Initiative, Phase IV (PSDI IV) is the PSC with the broadest DMC coverage, providing advisory and capacity-building assistance to all 14 Pacific Island Countries (PICs) to improve the PICs' business enabling environments. The multi-phased initiative is expected to support inclusive, private sector-led economic growth in the Pacific subregion. The fourth phase is financed by Australia.

PSDI IV will build on past achievements across six core areas: access to finance, business law reform, state-owned enterprise reform, public-private partnerships, competition and consumer protection, and the economic empowerment of women. The 14 PICs are Cook Islands, Fiji, Federated States of Micronesia, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

Project

Regional: Pacific Private Sector Development Initiative, Phase IV

Project Cost

$16 million

Financing Partner

  • Australia - $14 million
Approval Date:

November 2019

Completion Date:

October 2024