COVID-19 Response

The Value of Partnerships in the Face of Global Adversity

The COVID-19 pandemic was the main challenge facing the Asia and Pacific region and the world over in 2020. As the pandemic unfolded, its enormous economic and social impact became clear.

The COVID-19 pandemic derailed lives, governments, and economies across the globe. As the pandemic unfolded, its enormous economic and social impact became clear. Strict social distancing measures, extended lockdowns, and border closures have decimated both domestic and international demand in consumer-driven sectors, especially leisure and hospitality. ADB’s Asia Economic Outlook estimated that the region experienced its first economic contraction in 6 decades. Moreover, the World Bank estimated that an additional 88 million to 115 million people globally were pushed into extreme poverty in 2020, and this number may climb further to 150 million by 2021.

No country or institution could hope to address the unprecedented challenges alone. The collaboration across the international community has been unparalleled in speed and scale. ADB President Masatsugu Asakawa stated that the pandemic has reinforced the need for stronger and more strategic partnerships in Asia and the Pacific, which served as a central plank of ADB’s strategic response.

ADB’s COVID-19 Response: Sovereign Cofinancing

ADB’s response to the pandemic was agile, bold, and innovative. Through the regional initiative Greater Mekong Subregion Health Security Project, ADB was able to help Cambodia, the Lao People’s Democratic Republic, Myanmar, and Viet Nam address COVID-19 as early as January 2020. The project, which bolsters Greater Mekong Subregion (GMS) countries’ capacity to respond to health emergencies, enabled governments across the subregion to quickly reallocate funds to buy personal protective equipment (PPE), ventilators, bedside monitors, and other equipment. In February 2020, ADB provided additional funding to another ongoing GMS initiative, the Strengthening Regional Health Cooperation in the Greater Mekong Subregion. This helped improve outbreak investigation and surveillance, including in rural areas, as well as support the supply of diagnostic and laboratory equipment for rapid testing. In March 2020, ADB began reprioritizing existing projects and designing new delivery tools, enabling the institution to move with unprecedented pace to meet the needs of its developing members in these challenging times.

In April 2020, ADB introduced a $20 billion COVID-19 response package, which supports developing members combat the economic and health impacts of the pandemic through streamlined business processes, wider eligibility and scope of various support facilities, disaster financing for health-related emergencies, and faster procurement of critical medical and other equipment and supplies for COVID-19 responses, among others. The package also includes the COVID-19 pandemic response option (CPRO), an instrument designed to help developing members finance programs that mitigate the impact of the pandemic. The CPRO provides quick-disbursing budget support to help governments finance economic stimulus. It also served as a useful platform to mobilize cofinancing to support the developing members' response to COVID-19.

As of 31 December 2020, cofinancing for COVID-19 response had reached $8.2 billion. Of this amount, $8.1 billion were in the form of loans, $28.4 million of grants, and $17.4 million of technical assistance.

A wide range of partners cofinanced COVID-19 related projects, including the Asian Infrastructure and Investment Bank ($4 billion), Japan International Cooperation Agency ($1.6 billion), and the Government of Australia ($1.1 billion). The CPRO also provided a structured platform for collaboration with the World Bank and the International Monetary Fund. Partners also contributed to ADB COVID-19 initiatives using other modalities such as the Emergency Assistance Lending, Contingent Disaster Financing under the Policy-Based Lending, and technical assistance.

ADB also established closer ties with institutions such as the World Health Organization (WHO) and UNICEF to quickly deliver much-needed supplies to its developing members. It contracted $21 million to the United Nations agencies to procure and deliver PPE, and other medical goods to 13 member countries and added $26 million more to cover COVID-19 testing kits and essential medical equipment and supplies. These partnerships and the expertise that the partners brought enabled ADB to provide frontline health workers urgent lifesaving medical supplies.1

Recovery from the COVID-19 pandemic can best be achieved by all of us—governments from across the region, the private sector, development partners, and other stakeholders—working together and closely collaborating to address the immense challenges before us.

ADB President Masatsugu Asakawa
17 March 2021
Innovation through Collaboration: Planning for Inclusive Post-COVID-19 Recovery

ADB’s COVID-19 Response: Nonsovereign cofinancing

ADB private sector operations played an active and crucial role from the start of the crisis. For example, on 25 February 2020, even before WHO declared COVID-19 a global pandemic on 11 March, ADB had already approved a loan for the Wuhan-based Jointown Pharmaceutical Group Co. Ltd to ensure a continuous supply of essential medicines and PPE at the disease’s initial epicenter.

Five COVID-19 projects benefited from total long-term cofinancing of $157 million. Cofinancing for three of these five projects came from risk transfers with a total gross amount of $120 million. One was an ADB project in India that enhances microfinance loans and guarantee support to provide liquidity to small and medium-sized enterprises (SMEs), including those owned and run by women. This initiative provided a $40 million loan to private company Northern Arc Capital Limited, which will then on-lend the loan proceeds to microfinance borrowers and SMEs in India affected by the pandemic. In another project, the Olam COVID-19 Smallholder Farmer Livelihood Support Project will help sustain the livelihood of smallholder farmers impacted by COVID-19 in Indonesia, Papua New Guinea, and Viet Nam by providing working capital financing for raw material procurement from these farmers.

For ADB’s short-term cofinancing products, $2.3 billion or 74% of the $3.1 billion total for trade finance, supply chain finance, and microfinance programs supported ADB’s COVID-19 response. These included the production and distribution of test kits, PPE, medicines, and more. Toward the end of 2020, ADB’s private sector support also covered financing for the construction of cold chain warehouses for vaccine distribution.

Bayan Bayanihan, a food program for Filipino families affected by COVID-19, is a partnership among the Asian Development Bank, the Government of the Philippines, and the private sector. In coordination with the Philippine Army, the program served 162,000 households in 44 barangays (villages) across the country’s capital and nearby provinces.

Green, resilient, and inclusive recovery

As emphasized by President Masa,2 the first step to recovery is addressing the pandemic through vaccination. ADB plays a key role in the region’s vaccination effort through the $9 billion Asia Pacific Vaccine Access Facility, or APVAX. This facility is assisting developing members in procuring safe and effective vaccines and distributing them to communities in a fair and equitable manner. APVAX is being implemented in close coordination with other development partners, including the World Bank Group, WHO, Gavi, and bilateral and multilateral partners. More than ever, partnership remains vital to an effective response.

Achieving better health for all entails making quality healthcare accessible and affordable to all.

Achieving better health for all entails making quality healthcare accessible and affordable to all.

Nature, climate, and sustainability are at the center of recovery planning and implementation. The impact of climate change deepens and magnifies the effects of any health crisis. As such, resilient recovery must be prioritized. To do this, initiatives and investments should be green—focusing on approaches that lower carbon emissions, create green jobs, promote resource conservation, and foster cleaner air, water, and oceans. As articulated in Strategy 2030, ADB is committed to delivering $80 billion in climate finance cumulatively between 2019 and 2030. This ambitious goal will only be realized through partnerships, especially with developing members.

This will involve supporting country plans, realizing low-carbon development policies, stepping up our efforts to build climate and natural disaster resiliency especially in vulnerable Pacific countries, and addressing income inequality, including the disproportionately negative impact of the crisis on women and girls.

Stories

Bangladesh: COVID-19 Active Response and Expenditure Support Program
  • Approval: 7 May 2020
  • Signing Date: 11 May 2020
  • Completion: 31 December 2021
  • Project amount: $750 million

Partner

  • Asian Infrastructure Investment Bank $250 million

The pandemic had devastating effects on Bangladesh’s economic and social life. It pushed more people into poverty. Many informal workers, which make up about 85.1% of the country’s workforce, lost their jobs during the lockdown.

To cushion the impact of the pandemic, the Government of Bangladesh acted swiftly to expand social safety nets and stimulate jobs. ADB, together with the Asian Infrastructure Investment Bank, supported the government’s pro-poor initiatives through the COVID-19 Active Response and Expenditure Support Program (CARES). Aside from strengthening social safety nets, CARES also aims to protect employment in key industries, such as the labor-intensive ready-made garment sector where the majority of the workers are vulnerable, low-skilled female workers.

Pakistan: Emergency Assistance for Fighting the COVID-19 Pandemic
  • Approval: 19 May 2020
  • Signing Date: 5 June 2020
  • Completion: 30 November 2022
  • Project amount: $526.4 million

Partners

  • World Bank $200 million
  • Agence Française de Développement (AFD) $21.2 million
  • Government of Norway $5.3 million

Pakistan is vulnerable to the social and economic shocks caused by the pandemic. It sits at the southwest border of the People’s Republic of China, has large numbers of returning migrant workers, a weak health system, and densely populated urban areas. Without mitigation measures to contain and manage the spread of the virus, Pakistan’s economy will be severely affected. Even without the pandemic, it is already suffering from falling tax revenues and a reduction in exports and remittances.

This project, a collaboration among ADB, AFD, Norway, and the World Bank, aims to help the government deal with the crisis quickly and flexibly through the provision of immediate financing. This support will help make the country better prepared to respond to the pandemic and provide social protection for the vulnerable and poor segments of society.

Regional: Regional Support to Build Disease Resilient and Energy-Efficient Centralized Air-conditioning Systems
  • Approval: 12 September 2020
  • Completion: 31 December 2021
  • Project amount: $1 million

Partners

  • Clean Energy Fund under the Clean Energy Financing Partnership Facility $500,000
  • High-Level Technology Fund $500,000

In many Asian countries, the transmission risk of COVID-19 and other diseases in public buildings with centralized air-conditioning (CAC) is higher, mainly because of inadequate hygiene standards, poorly maintained and inefficient air-conditioning equipment, and large crowds in enclosed spaces. To reduce this risk, ADB embarked on this project in September 2020. Financed through the Clean Energy Fund under the Clean Energy Financing Partnership Facility and the High-Level Technology Fund, this technical assistance will study the energy efficiency and virus transmission risks of CAC systems and pilot the operations of smart, energy-efficient, and disease-resilient CAC system in selected developing members. This will cut the risk of COVID-19 transmission, reduce energy consumption in public buildings, and meet hygiene standards for indoor air quality.

Tonga: Strengthening Macroeconomic Resilience Program
  • Approval: 25 June 2020
  • Completion: 31 July 2021
  • Project amount: $28.9 million

Partners

  • Australia $7.2 million
  • New Zealand $4 million
  • World Bank $5.5 million

Even before the pandemic, Tonga has been facing economic difficulties due to its remote and vulnerable location. Jobs have been limited and business costs have been high owing to their geographic disadvantages and exposure to extreme weather events. About 20% of the island’s household incomes depend on the remittance of its overseas workers. The advent of the COVID-19 pandemic further aggravated these difficulties: it had exposed the country’s reliance on remittances, disrupted its tourism industry, and slowed down construction activities

To strengthen Tonga’s macroeconomic resilience and to help mitigate the impact of COVID-19, ADB, in partnership with Australia, New Zealand, and the World Bank, supported the Strengthening Macroeconomic Resilience Program. This initiative sought to address the country’s fiscal and public financial management risks and improve public sector and national human resource management to mitigate the labor market impact of COVID-19 and to encourage long-term growth.

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