Cofinancing Mechanisms in Action

In 2020, the $11.1 billion sovereign resources mobilized from partners cofinanced 180 projects and technical assistance. Of these, 71 projects received grant and loan commitments especially earmarked for them and 117 projects received support from ADB-administered trust funds.*

ADB’s financing partners have two modalities for cofinancing with ADB. They can cofinance individual projects, programs, or technical assistance; and create a trust fund or contribute to ADB’s existing trust funds.

Project-Specific Cofinancing

Project-specific cofinancing (PSC) are grants and loans from partners earmarked for individual projects. When the PSCs are to be administered by ADB, ADB and its financing partners sign a cofinancing agreement. When the PSCs are not to be administered by ADB, a memorandum of agreement may be signed instead. ADB also accesses the resources of global funds for the PSCs.

In 2020, ADB mobilized $10.8 billion for PSCs. Of these, $10.3 billion were for loans and $500 million were for grants, which allowed technical assistance or other components to be added to ADB’s sovereign projects for the benefit of its developing members.

There were 71 PSCs in 2020, and 19 were in response to the COVID-19 pandemic.

Trust Funds

A trust fund is a financing arrangement established by ADB for accepting contributions from financing partners, with such contributions used to finance projects and activities that meet certain eligibility criteria. It may be financed by a single partner or supported by multiple partners.

Trust funds can either stand on their own or be a part of an umbrella facility, called Financing Partnership Facility (FPF), that supports specific ADB corporate initiatives, such as clean energy or increasing health impacts and health security across the region.

The FPFs have one or more trust funds that finance projects and programs contributing to the achievement of its objectives. ADB administered 45 trust funds in 2020, of which 15 trust funds are under 6 FPFs.

Financing partners keen on strategic, long-term collaborations may agree with ADB on an indicative amount of development finance for a specific period. This financing can be divided into specific projects or trust funds. In such cases, ADB and the financing partner sign a partnership framework arrangement (PFA) to formalize and define the partnership in broad terms.

The PFAs—also expressed as framework cofinancing arrangements, memoranda of understanding, and similar terms—facilitate better strategic collaboration, cooperation, and complementarity. The PFAs involve a funding envelope to cover a broad range of planned and coordinated cofinancing activities. They also serve as a tool for surfacing and resolving concerns that may arise during project negotiations.

ADB has active PFAs with 11 financing partners, with a total funding envelope of at least $24 billion.

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