The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved the creation of a Special Fund Window (SFW) to make its financing more affordable to its less developed members. This is an additional effort by AIIB to further support its less developed members especially by reducing the cost of lending for Infrastructure for Tomorrow (i4t).
The SFW is a blended financing facility that will provide interest rate buy down to eligible sovereign-backed financing projects that are aligned with AIIB’s Corporate Strategy and identified according to AIIB’s regular rigorous investment process.
“Infrastructure investments and connectivity are crucial for lower-income countries to regain a growth momentum and to achieve long-term sustainable development goals in the post-COVID-19 era, while also dealing with climate change,” said AIIB President and Chair of the Board Jin Liqun. “Through the SFW, AIIB can support its less developed members with affordable pricing while still being consistent with the core elements of our business model to finance i4t. Although modest in scale, we are glad to be able to complement other multilateral development banks by bringing much needed additional financing to lower-income members.”
“Our Corporate Strategy commits to broadening the range of clients AIIB can support, with particular focus on our less developed members,” said Sir Danny Alexander, AIIB Vice President for Policy and Strategy. “For the first time, with the support of donors, this new facility will enable AIIB to offer more affordable loan pricing to these members. Combined with our Project Preparation Special Fund which makes grants to support the preparation of high quality projects, we hope this new facility will help meet the needs of our less developed members and global efforts to support sustainable development and tackle climate change.”
AIIB has made gradual efforts to expand its offering to less developed members, including through AIIB’s Project Preparation Special Fund. In 2020 and in response to the pandemic, AIIB created a Special Fund Window under the COVID-19 Crisis Recovery Facility offering an interest rate buy-down mechanism for financing extended to less developed members. The new SFW will build on the experiences gained and further extend AIIB’s financing to these members.
The SFW includes unique features that demonstrate innovation in the field of blended finance. It will be funded by voluntary contributions from AIIB’s members. Decision-making authority will reside with AIIB’s existing multilateral governance structure, and the SFW will operate according to the rules and regulations approved by AIIB’s Board of Directors. For operational efficiency reasons, the SFW implementation will be fully incorporated into AIIB’s regular investment process.
Projects under the SFW would contribute to supporting AIIB’s Corporate Strategy priorities and targets. AIIB’s Corporate Strategy (2021-2030) combines the Bank’s firm commitment to sustainability with a clear operational focus on (1) Green Infrastructure, (2) Connectivity and Regional Cooperation, (3) Technology-enabled Infrastructure and (4) Private Capital Mobilization. It sets targets on climate financing (50 percent of actual financing approvals by 2025), cross-border connectivity (25-30 percent of actual financing approvals by 2030) and private sector financing (50 percent of total approved financing by 2030).
The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is financing the Infrastructure for Tomorrow—infrastructure with sustainability at its core. We began operations in Beijing in January 2016 and have since grown to 105 approved members worldwide. We are capitalized at USD100 billion and Triple-A-rated by the major international credit rating agencies. Working with partners, AIIB meets clients’ needs by unlocking new capital and investing in infrastructure that is green, technology-enabled and promotes regional connectivity.