Opening remarks by Roberta Casali, ADB Vice-President for Finance and Risk Management, at the Tbilisi Silk Road Forum, 26 October 2023, Tbilisi, Georgia
Your Excellencies, distinguished delegates, ladies and gentlemen.
On behalf of the Asian Development Bank, I am pleased to welcome you all to the Silk Road Forum organized by the Government of Georgia, and supported by the ADB and other partners. I'd like to take this opportunity to thank the Government of Georgia for hosting the forum, and the people of Georgia for their gracious hospitality.
I would like to highlight four key messages today:
First, ADB is a strong advocate of regional cooperation and integration.
ADB has been a key partner in supporting regional cooperation and integration, which has contributed to Asia's emergence as a manufacturing powerhouse over the past four decades.
In this context, ADB has spearheaded key subregional economic cooperation programs, bringing neighboring countries together, in pursuit of shared goals. One of these programs is the Central Asia Regional Economic Cooperation Program, or CAREC.
Since its inception in 2001, the CAREC Program has been actively working with its member countries and development partners to mobilize resources in support of greater regional prosperity and resilience. CAREC has invested more than $47 billion worth of projects to help improve regional physical connectivity and economic ties among CAREC countries and with the rest of the world. For example, the construction and rehabilitation of Georgia’s East-West highway—which carries over 60% of its transit trade—will reinforce integration of your region with the markets in Europe and East Asia.
Yet, we still have a long way to go. The CAREC subregion remains among the least integrated in the world but with an enormous untapped potential, given its strategic position as a land bridge connecting some of the world’s largest economic centers, with underdeveloped trade routes and economic links.
This brings me to my second message: regional cooperation is crucial in diversifying economies and export markets through enhancing connectivity and ensuring supply chain resilience.
As one of the most crucial trade networks in world history, the “Silk Road” profoundly impacted the development of cultures, economies, and civilizations. In recent years, efforts to revive the Silk Road as a modern trade corridor have gained momentum. One major trade artery—the Trans-Caspian International Transport Route, otherwise known as the Middle Corridor —plays an important role in enhancing regional connectivity and strengthening resilience to supply chain disruptions.
Just as the historic Silk Road comprised a network of cities where goods were created and value was added, the Middle Corridor brings immense opportunities for countries along the route to diversify their economies and export markets.
However, it also exposes the network’s limitations and challenges. Close multi-stakeholder coordination along the route, as well as careful planning, monitoring, and analysis of the effectiveness of investment activities, are needed. The recent signing of a memorandum of understanding by some CAREC countries to pilot the CAREC Advanced Transit System and Information Common Exchange is a good example of this. A more seamless flow of goods means more economic growth.
Let me now turn to the third issue, which is critical to our region’s resilient future: tackling climate change.
The Central Asia and Caucasus countries are facing more intense and frequent extreme weather events that are causing loss of life and livelihoods, and threatening food, water, and health security for millions of people, with disproportionate impacts on women and the vulnerable groups.
As Asia and the Pacific’s climate bank, ADB is adopting new and innovative strategies to help combat this challenge, including a new energy policy, and aligning our operations with the Paris Agreement. ADB has elevated its ambition to deliver $100 billion of our own resources in climate finance between 2019 and 2030. ADB has already committed $21 billion toward climate change projects, of which more than $6 billion has benefited CAREC countries.
We recently updated our Capital Adequacy Framework, which will expand ADB's annual lending capacity by about $10 billion, or about 40% higher than our current capacity, while safeguarding our AAA credit rating. This will enable us to provide up to $360 billion of our own financing to our developing member countries over the next decade. These are critical resources to address the region’s overlapping, simultaneous crises, including climate change.
ADB also spearheaded the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP). We are leveraging a market-based approach to accelerate a Just Transition from fossil fuels to clean energy through a scalable Energy Transition Mechanism (ETM), and ensure that no one is left behind.
We all have a critical role to play to complement national initiatives and scale up resources to effectively respond to the region’s climate change-related challenges. A CAREC Climate Change Vision will be presented for endorsement by CAREC countries in the Ministerial Conference to be held next month here in Tbilisi. This Vision identifies collective actions to advance the regional climate agenda including supporting just energy transition, investing in climate-smart infrastructure, strengthening disaster risk resilience, and improving institutional capacity.
My fourth and final message refers to the importance of strengthening private sector development.
We all know that ADB and other MDBs' financing alone is not enough. Trillions and not billions of dollars are required to tackle the simultaneous development challenges, that our countries in Asia and the Pacific face. Private capital mobilization will play a critical role in filling this financing gap.
In 2022, ADB through its private sector operations committed $1.1 billion for 37 projects, with 40% in the form of climate finance. These are investments to address the challenges of climate change, food security, gender equality, and recovery from COVID-19 in developing member countries.
ADB continues to support the development of sustainable financing market. In the past 3 years, ADB has become a pioneer in supporting Environmental, Social and Governance bonds, including the first green bond and the first gender bond, in Georgia and the Caucasus region. In August 2023, ADB made its first ever investment in a sustainability-linked bond which was also the Caucasus' largest sustainability-linked issuance to-date.
Under our New Operating Model, we seek to scale up our support for upstream, midstream and downstream private sector development to mobilize more of the much-needed private capital. We are delighted to support innovative financing with our partners in the CAREC region and look forward to many such opportunities in the future.
Ladies and gentlemen, we have our work cut out for us. But it also means a unique opportunity for us to build a more sustainable and resilient future.
I look forward to productive discussions during the next 2 days of the forum, and I hope we can find a collective way forward for tackling the hurdles to regional cooperation and integration.
I wish you all a fruitful forum!