ADB to set up new fund to help developing countries cope with crisis

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NUSA DUA, Indonesia, May 2 Kyodo -
The Asian Development Bank plans to establish a $3 billon fund to help
developing countries cope with the global financial crisis, the bank's
president said Saturday.
Haruhiko Kuroda made the announcement during a press briefing on the sidelines
of the 42nd ADB Annual Meeting at a resort town on Indonesia's Bali Island.
Called the Countercyclical Support Facility, or CSF, the new fund, which is
still subject to the approval by the ADB board, has been designed
''specifically to serve as an effective countercyclical instrument to fight the
adverse impacts of the crisis,'' Kuroda said.
''I believe this will be a very welcome initiative to assist faltering
economies and, most importantly, protect the poor from the worst impacts of the
crisis,'' he added.
The CSF is to provide emergency short-term loans ''faster and cheaper'' for
this year and next year than other existing special loan facilities of the ADB.
''It would be less costly, significantly,'' Kuroda added.
Borrowing under the CSF will cost around 200 basis points over the ADB's
financing cost.
That is lower than the ADB's special program loan facility set up after the
1997-1998 Asian financial crisis to help the region deal with balance of
payment difficulties, which are not the problem for many developing-member
countries.
The announcement of the new ADB product came two days after the ADB board
agreed to triple the bank's capital base from $55 billion to $165 billion,
giving it much-needed resources to respond to the global economic crisis.
The increase allows the ADB to substantially increase its support to countries
affected by the global downturn, enabling it to provide an additional $10
billion from its Ordinary Capital Resources over the next few years for
crisis-related assistance.
The CSF will be part of the assistance.
Export-dependent Asia has been hard hit by slumping demand for its goods in
major global economies such as the United States and European countries.
A number of Asian governments have boosted spending to spur domestic
consumption to counter falling offshore demand, but not all of them are able to
do so.
Moreover, with the global downturn likely to be deeper and longer than
previously expected, economies in the region are likely to come under increased
pressure.
In a report released Saturday, the ADB estimates more than 60 million
individuals who would have been lifted above developing Asia's income poverty
line of $1.25 per day had the region's high growth continued in 2009 will
remain mired in poverty.
''The figure could reach nearly 100 million by the end of 2010,'' the report
titled ''Global Economic Crisis: Challenges for Developing Asia and ADB's
Response'' says.
''If the impact on the vulnerable (those earning less than $2 per day) is
considered, the number of affected people will rise to 80 million in 2009 and
130 million by 2010,'' it projects.
Large numbers of newly jobless workers from the region's struggling export
industries and laid-off migrant and overseas employees are at risk of
descending into absolute poverty.
So, ''the lost opportunity cost is high as well,'' the report says.
The ADB annual meeting, which will open officially on Monday and end Tuesday,
brings together finance ministers, senior government officials, business
leaders, academics and civil society representatives from across Asia and the
Pacific to discuss ways to effectively address poverty and ensure sustainable
economic growth in the region.
==Kyodo