Statement by Ingrid van Wees, ADB Vice-President for Finance and Risk Management, at the Small States Forum: World Bank Spring Meetings on 19 April 2018.
Thank you Chair.
I am delighted to have the opportunity to say a few words on behalf of the Asian Development Bank.
ADB is committed to addressing challenges and meeting the specific needs of our developing small state members. Our Charter specifically notes that we will have a “special regard” for our smaller developing member countries [Article 2(ii)].
At the Small States Forum in Washington DC last October, I mentioned six ways that ADB is further strengthening support for small states. Since then, we have made further progress:
First, ADB continues to increase the volume of financing we provide. Today, we can provide over $280 million per year of our own resources for our small state developing member countries1. This is more than treble the level of ADB financing for our small state members only 5 years ago.
Beyond this, ADB Management will be proposing to shareholders at our Annual Meetings in May 2018 to further increase the base concessional allocations for all eligible countries from $6 million per year to $13 million per year starting in January 2019. If approved, this will mean we can provide an additional $80 million a year on concessional resources to small states over and above what we can currently provide. While ADB’s base concessional allocations are still a little less than the World Bank, we will consider options for further increases as part of Strategy 2030, to be discussed in 2018, and in the lead up to the Annual Meetings in Fiji in 2019.
Second, ADB is providing increasingly concessional funds to many small states, reflecting your vulnerability.
About $200 million of the more than $280 million annually we can make available for small state developing member countries (DMCs) is concessional, even though many small states have per capita incomes above usual eligibility thresholds. As of January 2019, Samoa and Tonga became eligible for 100% grants from ADB. ADB now provides 100% grants to 8 small state members, and 50% grants to a further two countries. While some of the small states receiving grants have limited debts, we want to make sure that our increasing assistance does not push you into debt distress.
Third, we are helping small states access global climate financing.
As I mentioned last October, ADB is pleased to have assisted 3 countries – all small states – to access $70 million in grants from the Green Climate Fund (GCF) over the past 18 months. We hope the GCF Board might consider further proposals in July to provide 24/7 water to all households in the low lying atoll nation of Kiribati, as well as to help Tonga provide renewable energy to outer island communities. As we proceed with these projects, we hope very much that GCF will also provide grants to small island states where ADB and World Bank provide 100% grants.
Fourth, ADB is investing in new private sector opportunities in small states. As I mentioned in October, in the past 2 years ADB made its first two non-sovereign investments in small states:
A $3 million investment in April 2016 to help Mountain Hazelnuts in Bhutan promote production by smallholders farmers; and a $3 million investment in September 2017 to establish a new 2.2 MW solar plant in Samoa.
Fifth, cooperation with partners is a feature of our work globally, but especially in small states.
We are working especially closely with the World Bank in small island states. The Pacific small states, for instance, are the only place in the world where we have joint offices with the World Bank (now in every country in the region). Similarly, small states are the only place where ADB and World Bank jointly – rather than parallel – cofinance projects. By working together, we’re able to assist countries undertake larger, more transformative investments than we could individually. For instance, landing broadband cables across the Pacific will take the combined resources of both banks.
Sixth, and finally, ADB is working to introduce innovative products and streamline our internal systems to make them more flexible and “fit for purposes”.
One particular innovation has been the introduction of contingent financing mechanisms to assist countries following disasters. ADB introduced its first ever post-disaster contingent credit for Cook Islands in December 2016. And in December last year, our Board approved a Pacific regional contingent disaster response facility that included Samoa, Tonga, and Tuvalu. After Cyclone Gita unfortunately hit Tonga in early February this year, ADB was able to provide $7 million to the government within days of the disaster to assist with immediate needs as well as reconstruction. Over two thirds of this was over and above what we would have otherwise been able to make available to Tonga.
In closing I would like to emphasize that ADB looks forward to holding our annual meetings in Fiji in May 2019 – the first time ever that we will do so in a small island developing member country. This will be an opportunity for us to further strengthen our focus on small states and I look forward to welcoming some of you there at this occasion.
1 Includes Regular OCR, COL, and ADF grants combined, as well as approved allocations from regional set asides.