ADB has approved capital management reforms that unlock $100 billion in new funding capacity over the next decade to address the region’s overlapping, simultaneous crises. The expansion of available funds will be further leveraged through mobilizing private and domestic capital to move from the billions to trillions required to tackle the climate crisis.

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 $36 billion—an increase of approximately $10 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. 

Transcript

In an age when transboundary crises such as extreme weather events, conflicts, and financial instability occur simultaneously, often compounding each other's effects, there is a growing call for multilateral development banks to evolve and help countries in need. 

The stakes are high in Asia and the Pacific, where the battle against climate change will be won or lost.   

Billions are already being invested.   

Trillions more are needed. 

But where will this money come from?  
ADB is heeding calls for MDBs to expand financing volumes through innovation and more efficient capital management in support of the growing needs of developing member countries.  

In September 2023, ADB updated its Capital Adequacy Framework, unlocking $100 billion in new funding over the next decade. 

 ADB’s annual lending capacity will rise to more than $36 billion—an increase of approximately $10 billion, or 40%. 

This will be done by optimizing ADB’s prudential level of capitalization, while strengthening related aspects of its risk management framework.  

The reforms also create a Countercyclical Lending Buffer to support developing members facing unexpected regional crises. 

The expansion will be further leveraged through the mobilization of private and domestic capital to move from the billions to trillions called for to achieve the Sustainable Development Goals, in the context of climate change.  

These measures are designed to ensure ADB maintains its triple A credit rating so that it can provide more funds for its members at low cost and with long maturities.  

Changes in each of these areas could expand ADB’s capacity to support DMCs in their efforts to achieve sustainable and inclusive growth.
 
MDBs have a vital role to play.  

In recent crises, ADB and other MDBs have shown they can rapidly evolve to meet the changing needs of the people.
It will take further bold reforms to transform the way MDBs operate and support developing members face future challenges. 

The stakes could not be any higher, but the journey has already begun.  

SHARE THIS PAGE