Note4Students
From UPSC perspective, the following things are important :
Prelims level: ADB
Why in the News?
The Asian Development Bank (ADB) will boost climate-related lending by up to $7.2 billion following an agreement by the United States and Japan to provide risk guarantees for some existing loans.
- This marks the first-ever use of sovereign guarantees for climate finance.
ASIAN DEVELOPMENT BANK
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| About |
ADB was founded in 1966 following the Conference on Asian Economic Cooperation organized by the United Nations Economic Commission for Asia and the Far East.
- Headquarters: Located in Manila, Philippines.
- Status: Official UN Observer.
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| Aims and Objectives |
- Reducing poverty in Asia and the Pacific region.
- Provide Program Assistance that provides loans (hard/soft), technical assistance, and grants.
- Enhances effectiveness through policy dialogues, advisory services, and co-financing to mobilize additional financial resources.
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| Goals and Targets |
- ADB raises funds primarily through bond issues on global capital markets.
- The ADB has set a climate finance target of $100 billion from 2019 to 2030. The U.S. will guarantee $1 billion of existing ADB loans, while Japan will underwrite $600 million.
Advantages of the Guarantee Structure:
- Expands ADB’s lending capacity.
- Lending space will be used over 5 years, while the guarantees will last for 25 years.
- Example: A sustainable aviation fuel initiative in Pakistan using cooking oil, with ADB covering about half of the $90 million cost.
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| Membership |
- Total Members: 67 countries, with 48 from Asia and the Pacific.
- Membership Eligibility: Includes members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and non-regional developed countries.
- Major Shareholders: Japan and the United States (Each hold 15.607% of shares), China ( 6.444%), India (6.331%), Australia (5.786%).
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