The Asian Development Bank (ADB) Board of Directors has approved the allocation of $3.4 billion in additional funds to help developing member countries (DMCs) respond to the global economic crisis.
ADB has established a $3 billion Countercyclical Support Facility (CSF) that will provide short-term, fast-disbursing loans. It will support DMCs aiming to ramp up fiscal spending to counter the crisis but who lack the financial means to do so amid tight global credit conditions and a sharp increase in funding costs. The CSF, which will be available to DMCs who qualify for loans from ADB's Ordinary Capital Resources (OCR), will be capped at $500 million per country.
ADB will also make available a further $400 million to the Asian Development Fund (ADF). This will benefit countries with no access to OCR. ADF resources are provided in the form of concessional loans and grants to low-income DMCs with limited debt repayment capacity. The additional ADF resources will be used toprovide funds to finance key development investments in low-income countries that are among the most fiscally constrained in responding to the crisis. ADB plans to increase its lending assistance by more than $10 billion in 2009-2010, bringing total ADB assistance for these two years to about $32 billion. This compares with about $22 billion in 2007-2008. Of the proposed $10 billion increase in lending, $1 billion is committed to support trade finance, $3 billion to the CSF and $6 billion to extending loans such as those for infrastructure investment.
ADB will also expand its crisis-related support through grants for policy analysis and capacity building. Loans under the new facility will have a five-year tenor, with a three-year grace period, and will cost around 200 basis points over ADB's financing cost, pricing that is lower than its special programme loans facility set up to help the region in the wake of the 1997-1998 Asian financial crisis.
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