Since the launch of the Facility, demand has been increasing from AIIB members for Facility financing, resulting in an increasing share of Facility projects in AIIB’s rolling investment program. When considering Facility financings, Management looks at our members’ requests, the merits of the financing proposal, our credit and member exposure, cofinancing opportunities and our capacity. The objective is to achieve balance between members, considering the indicative size of Facility financing requests, members’ needs, and quality of financing requests and other available financing resources. Consideration has been given to the overall size of the Facility and to complementarity, including member limits of other multilateral development banks.
Our operations will always be consistent with our primary purpose as set out in Article 1.1 of our Articles of Agreement: “(i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors; and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions.”
While significant uncertainties remain over the depth and length of the COVID-19 crisis, opportunities exist for a more sustainable economic recovery. Infrastructure spending is a promising pathway for creating jobs and supporting long-term growth through the maintenance and construction of greener and more inclusive infrastructure. While the COVID-19 crisis presents challenges and constraints and requires more vigilance in certain areas (for example, in maintaining high project standards), it also presents opportunities to pursue certain objectives that we have enshrined in our Corporate Strategy (for example, supporting private sector, spending on green and technology-enabled infrastructure as part of members’ economic recovery strategies, extending financing to more members).
Special Fund Window
As the COVID-19 pandemic has become more globally widespread and severe, lower-income countries have become particularly vulnerable. AIIB established the Special Fund Window under the COVID-19 Crisis Recovery Facility to provide interest rate buy-down for eligible sovereign-backed financing for lower-income members.
By December 2020, the Special Fund Window had supported four projects, in Bangladesh, Cambodia, the Kyrgyz Republic and the Maldives, totaling USD217.3 million.
Serving Client Needs
COVID-19 caused a global health and humanitarian crisis and widespread economic disruption. In addition to the direct impact on health and healthcare services, the loss of inbound tourism and trade and supply chain and financial market disruptions exacted a significant economic toll. Developing economies especially require support from the international financial community, especially if they have weak healthcare infrastructure and systems, weak macroeconomic and financial sector fundamentals and high dependence on tourism, oil exports and/or remittances.
As the crisis evolved, the needs and demands of AIIB’s members and clients rapidly changed. AIIB responded quickly and was proactively adaptive in the emergency. We temporarily scaled back in areas where demand had reduced and scaled up in areas—within AIIB’s mandate—where members and clients needed more support. We mobilized support beyond our usual ability and financing modalities. Since the COVID-19 Crisis Recovery Facility (Facility) is intended to be flexible and adaptive to emerging demands, processing of financings was streamlined. While our operational focus remained the same, we had to be agile and flexible. The Facility enabled us to provide emergency financing beyond our usual operations to meet client needs.
We designed the Facility to support the needs of our members in the following areas:
- Public health financings to help our members respond to the immediate threats posed by COVID-19. Our support helped members purchase medical equipment, strengthen their capacity for virus detection, testing and monitoring and improve their communications strategy to contain the spread of the virus. Some projects helped prepare national health systems for pandemics in the longer term.
- Intermediary financings to alleviate liquidity constraints and provide working capital support for a range of companies in infrastructure and other productive sectors that are affected by the pandemic and essential to sustain the economy. Beneficiaries range from large corporates to micro-, small and medium-sized enterprises and, in some cases, women-led businesses. Each project caters to the liquidity needs of a specific economy and client, either directly or through financial intermediaries.
- Financings to strengthen economic resilience and to support policy that allowed us to go far beyond our core operations to provide fast-disbursed budgetary support. We provided supplemental funding to governments to support their social and economic response and recovery measures, including social protection and economic assistance for low-income households, fiscal policies, protection of jobs and key industries (exports, services, micro, small and medium-sized enterprises) and sector reforms (including in infrastructure and private sector development).