Asian Development Bank sees ample room to boost lending to deal with crises

By Tetsushi Kajimoto

TOKYO (Reuters) – The Asian Development Bank (ADB) sees no immediate need to boost its capital base, thanks to years of efforts to streamline operations and boost lending capacity in response to the challenges posed by the COVID pandemic, a senior official said.

Multilateral development banks can expand their lending capacity through capital increases and balance sheet optimization, said Tomoyuki Kimura, who heads the bank’s strategy and policy department, noting the increasingly bigger role played by emerging economies in ADB’s operations.

“It’s inevitable for emerging economies to play a bigger role in ADB,” Kimura said in an interview conducted on Tuesday.

“However, it would be a political matter to determine if their roles, economic size, and influence can be thoroughly reflected in the size of their own shares.”

Kimura said the ADB does not take a position on the issue of shareholding, which he said should be worked out by its members.

In September, the ADB approved capital management reforms unlocking $100 billion in new funding capacity over the next decade to address regional crises.

These and other measures taken by the ADB will empower the lender to provide up to $360 billion of its own financing to its developing members and private sector clients over the next decade, with the capacity to offer low-cost, long-maturity funding.

“We have ample room to boost lending for the time being,” Kimura said.

While Japan and the United States serve as the largest shareholders at ADB, the group of emerging nations, including China and India, hold a 40% share, giving them significant influence as their presence steadily grows.

Kimura said the ADB sees no friction over shareholding among its members.

“The voices of emerging economies are reflected in the selection of our executives and in our daily operations.”

(Reporting by Tetsushi Kajimoto; Editing by Shri Navaratnam)