Wahyu Dwi Anggoro
IDXChannel - The Asian Development Bank (ADB) today approved capital management reforms that unlock USD100 billion in new funding capacity over the next decade to address overlapping, simultaneous crises in the Asia-Pacific region.
The reforms were introduced through an update of ADB’s Capital Adequacy Framework (CAF). They expand the bank’s annual new commitments capacity to more than USD36 billion—an increase of approximately USD10 billion, or about 40%.
The expansion is achieved by optimizing ADB’s prudential level of capitalization while maintaining its overall risk appetite. The reforms also create a Countercyclical Lending Buffer to support ADB developing member countries (DMCs) facing unexpected crises.
The measures, which will enable ADB to provide up to USD360 billion of its own financing to its DMCs and private sector clients over the next decade, are designed to ensure ADB maintains its AAA credit rating and its ability to provide DMCs with funding at low cost and with long maturities.
The reforms further safeguard ADB’s AAA credit rating through the introduction of a recovery plan that would prevent capital erosion during periods of financial stress. ADB’s capital adequacy framework is reviewed every 3 years.
