The Asian Development Bank is encouraged to increase its local currency finance for member countries to avoid the impact of foreign exchange risks, says ADB president Masatsugu Asakawa. He highlighted the bank intends to increase raising bonds in local currency in an effort to reduce the forex risks being faced by member countries.
The institute would like to increase the local financing as long as market conditions and demand are pertinent. The ADB, in 2021, listed 10-year masala bonds (rupee denominated bonds) worth Rs 300 crore on the global securities market platform of India INX. Asakawa said the $25 Billion investment into India over the next five years is subject to approval from the Board. A decision has not been made yet.
Moreover, the ADB slashed India’s GDP growth forecast for FY23 to 6.4% from an earlier project of 7%. For FY24, it expects the growth rate to be 6.7% driven by private investment and growth in the industry. India has been recording an increase in investments in sectors like infrastructure spending, clean energy, and climate financing from multilateral lending institutions.
Food Crisis and Climate Change
ADB recognizes India is the largest requirement in South Asia right now. “India’s economic growth will be beneficial for the entire South Asian region, including countries like Sri Lanka and Pakistan that are facing separate food and energy crises.” The bank announced plans in April to provide about $14 billion over 2022-2025 to ease a worsening food crisis in Asia and the Pacific. ADB aims to improve long-term food security by strengthening food systems against the impacts of climate change and biodiversity loss.
Asakawa, on Tuesday, announced the institute’s newest climate financing program “Innovative Finance Facility for Climate in Asia and the Pacific” (IF-CAP). “The climate events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold actions now.” The executive described IF-CAP as an exciting, innovative program that will have a real impact. And this is another example of how ADB serves as the climate bank for Asia and the Pacific.