Sustaining recovery through new uncertainties

• • • ADB’s Response to the Evolving Challenges in Asia and the Pacific, speech to the Board of Governors Business Session, at the 55th Annual Meeting, 27 September 2022

By Masatsugu Asakawa

We last met in May of this year, when you approved ADB’s financial statements and allocation of net income. I spoke briefly to express my appreciation for your support, which allowed us to continue ADB’s important work. I also expressed my intention to deliver a full report later in the year if conditions allow.

Governors, we have come together this week for our first in-person Annual Meeting since 2019. I welcome you to Manila, and those joining online. I thank the chair of our board of governors, His Excellency the president of Sri Lanka. And I thank the government of the Philippines as we hold these meetings at ADB headquarters.

I have said before that I believe we will be able to look back with pride at what ADB accomplished for the region during an unprecedented time of challenge. I am pleased to report that we have been delivering on our commitment to serve our developing member countries (DMCs) through these challenges. We are also preparing carefully to support our DMCs through new uncertainties on their path to recovery.

ADB Operations in 2021

Let me begin with our performance in 2021.

Last year, ADB committed $22.8 billion in loans, grants, equity investments, guarantees and technical assistance.

• Our COVID-related support amounted to $13.5 billion, including $4.1 billion to facilitate vaccine access.
• Our private sector commitments totaled $4.3 billion, accounting for about one quarter of our total number of committed projects.
• We provided $3.5 billion for climate change mitigation and adaptation.
• For the first time, 100% of our committed projects included elements that directly improve the lives of women and girls.
• Grants to our DMCs most in need totaled $193 million through the Asian Development Fund.

These strong achievements demonstrated our interconnected support for both pandemic response and long-term development priorities.

They were enabled by our second-largest borrowing program ever, which raised $35.8 billion through the capital markets. We also sold a record volume of thematic bonds. And for the first time, we issued blue bonds to improve ocean health, and education bonds.

We launched innovative financing initiatives, including the Energy Transition Mechanism (ETM). Alongside our new Energy Policy, ETM demonstrates ADB’s full commitment to support a just, clean energy transition.

Meeting the region’s evolving needs

Let me turn now to the work that lies ahead to ensure strong and lasting growth as the region faces major downside risks including food security, inflation, and debt.

Allow me to stress three important operational directions.

First, we are stepping up in our role as the Climate Bank for Asia and the Pacific.

• We are introducing the Innovative Finance Facility for Climate in Asia and the Pacific. IF-CAP holds great promise to scale up climate financing.
• We are also preparing a Climate Change Action Plan to help DMCs achieve their mitigation and adaptation goals.

Second, we are addressing the setbacks to social and economic progress from the pandemic, including learning losses for young people.

• Drawing on our ideas to scale up climate finance, we are exploring ways to leverage new levels of investment in education.
• We are also focused on health and social protection — with particular attention to women and girls, and to vulnerable groups, including aging populations.

Third, we are ensuring that ADB’s support evolves to respond to new uncertainties. This includes recognizing your concerns about a slowdown in investment and higher borrowing costs.

• So, we are enhancing the role of policy-based lending for crisis response.
• We are working to strengthen domestic resource mobilization, because it will lessen the reliance on external financing.
• We continue to build collective resilience through regional cooperation initiatives.
• And, we are addressing food security with $14 billion in support from 2022 to 2025. This includes budget support, and project and private sector finance. We are also strengthening food systems for the long term, through climate-smart agriculture and nature-based solutions. I appreciate that you have made this issue the focus of the governors’ Plenary tomorrow.

Governors, in all the areas I have described, we must ensure that our lower income, conflict-affected, and small-island developing members are not left behind. I urge your support for additional concessional resources under the Asian Development Fund.

Before I conclude, let me note that our total commitments in the first half of 2022 were low compared to before the pandemic. But they showed an improvement by commitment volume over last year.

As governments ease restrictions and staff return to the field, we expect a return to pre-pandemic levels. We will also focus on the quality of our operations.

I am also optimistic that our current organizational reforms will prepare ADB and its extraordinary staff to serve our developing member countries effectively in the coming years.

At the same time, it is important for us to act on the guidance from our board working groups, such as the report on gender diversity on the ADB board of directors.

Closing

Governors, let me close by thanking you for your guidance and support for all of ADB’s efforts to meet the evolving needs of our region.

The people you represent continue to inspire us with their strength and friendship. Those values will drive the work ahead of us, as we strive for a more prosperous, inclusive, resilient, and sustainable Asia and the Pacific.