RTTNews - Tuesday, the Asian Development Bank's Board of Directors approved the allocation of $3.4 billion in additional funds to help developing Asian countries in coping with the global economic crisis.
In a statement, the bank said its $3 billion Countercyclical Support Facility or CSF will provide short-term, fast-disbursing loans to support the member nations attempting 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 ceiling for the CSF will be $500 million per country and developing member countries who qualify for loans from ADB's Ordinary Capital Resources or OCR will be eligible.
Further, the ADB will provide $400 million to the Asian Development Fund or ADF to benefit nations with no access to the OCR. The ADF aid would be in the form of concessional loans and grants to low income developing member countries with limited repayment capacity.
According to the ADB, conditions for accessing the CSF include a significant slowdown in growth, exports and remittances, fiscal constraints and difficulty in sourcing finance from international capital markets on favorable terms. Further, the developing member countries will have to implement a specific countercyclical development program, supported by the CSF, that includes investment in public infrastructure, or a social safety net scheme targeting the poor and vulnerable.
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. The bank noted that the pricing is lower than its special program loans facility set up to help the region in the wake of the 1997-1998 Asian financial crisis.
Going forward, the ADB intends 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. Breaking down the $10 billion increase, ADB said $1 billion will be committed to support trade finance, $3 billion to the CSF and $6 billion to extending loans such as those for infrastructure investment.
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