ADB APPROVES US$3.4 BLN IN ADDITIONAL FUNDS

From Arul Rajoo

BANGKOK, June 16 -- The Asian Development Bank's (ADB) has approved an
allocation of US$3.4 billion (US$1=RM3.51) in additional funds to help
developing member countries respond to the global economic crisis.

ADB will set up a US$3 billion Counter-cyclical Support Facility (CSF) that
would provide faster and cheaper short-term loans than ADB's existing special
programme loan facilities.

"It will support member countries aiming 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 Manila-based bank
announced Tuesday.

ADB will also make available a further US$400 million to the Asian
Development Fund (ADF).

ADF loans are provided on concessional terms to ADB's poorer developing
member countries with limited debt repayment capacity.

The additional ADF resources will be made available through loans and grants
that could provide crucial budget support and funds to finance key development
projects in poorer countries that are among the most fiscally constrained in
responding to the crisis.

The CSF, which will be available to developing member countries who qualify
for loans from ADB's Ordinary Capital Resources, will be capped at US$500
million per country.

ADB said conditions for accessing the facility include a significant
slowdown in growth, exports and remittances, fiscal constraints and difficulty
in sourcing finance from international capital markets on favourable terms.

The bank said it plans to increase its lending assistance by more than US$10
billion in 2009-2010, bringing total ADB assistance for these two years to
about US$32 billion, compared to about US$22 billion in 2007-2008.

Of the proposed US$10 billion increase in lending, US$1 billion is committed
to support trade finance, US$3 billion to the counter-cyclical facility and US$6
billion to extending loans such as those for infrastructure investment.

Loans under the CSF facility will have a five-year tenure, with a three-year
grace period, and will cost around 200 basis points over ADB's financing cost,
pricing that is lower than its special programme loans facility set up to help
the region in the wake of the 1997-1998 Asian financial crisis.

Export-dependent Asia has been hard hit by slumping demand for its goods in
major global economies, such as the US and Europe.

The ADB forecasts economic growth in its 44 developing member countries at
3.4 percent in 2009 and 6.0 percent in 2010 while the current account surplus as
a percentage of gross domestic product is likely to fall to 4.9 percent this
year from 5.3 percent in 2008 and further drop to 4.7 percent in 2010.
-- BERNAMA