The Asian Development Bank (ADB) on May 4 announced plans to scale up lending resources and improve private capital mobilisation to support developing member countries (DMC), including Cambodia, through challenges and uncertainties on their post-Covid-19 recovery journey.
While international food and energy prices have generally moderated since their peak last year, the possibility of a major escalation in the Ukraine conflict looms large, threatening to push commodity prices and inflation back up, potentially prompting additional monetary tightening, ADB president Masatsugu Asakawa warned, as noted by a statement from the bank.
Asakawa was addressing the Board of Governors Business Session at the ADB’s 56th Annual Meeting in Incheon, South Korea, the statement said.
“Higher debt and interest rates have also magnified the risks to financial stability. This can be seen in the banking sector issues experienced recently in the US and Europe,” he said, underscoring the importance of tackling the main challenges facing the Asia-Pacific region.
“To better support our DMCs, ADB is actively evolving our mission, increasing our resources, and undertaking organisational reforms. We are especially committed to investing in global and regional public goods, to help mitigate the increasing global threats,” the statement quoted him as saying.
International Monetary Fund (IMF) resident representative for Cambodia Yasuhisa Ojima has announced that the Kingdom’s economy is tipped to grow by 5.8 per cent and 6.2 per cent in 2023 and 2024, respectively, on the back of policy support and tourism gains, despite signs of weaker external demand.
“However, this dynamic outlook does not imply that policymakers in the region can afford to be complacent. The pressures from diminished global demand will weigh on the outlook. Headline inflation has been easing, but remains above targets in most countries, while core inflation has proven to be sticky,” he said in an Op-Ed published by The Post this week.
“Although spillovers from turmoil in the European and US banking sectors have been limited thus far, vulnerabilities to global financial tightening and volatile market conditions, especially in the corporate and household sectors, remain elevated.
“Growth is expected to fall to 3.9 per cent five years out, the lowest medium-term forecast in recent history, thus contributing to one of the lowest medium-term global growth forecasts since 1990.
“Risks to the outlook are to the downside, reflecting the possibility of stickier global and regional price pressures, the disconnect between markets’ anticipation of monetary policy paths and major central banks’ communications, additional turmoil in global financial markets, adverse spillovers to the region from China’s medium-term growth slowdown, and deeper geo-economic fragmentation.
“Uncertainty around the outlook in Cambodia is also particularly high, with downside risks from slower external demand and tightening financial conditions and upside risks from a stronger than expected recovery in tourism,” he said, adding that “monetary policy should remain tight until inflation falls durably back within target”.
According to Asakawa, ADB last year “committed $20.5 billion in loans, grants, equity investments, guarantees, and technical assistance.
“Our overall commitments were lower than in 2021, while we focused on improving project readiness and quality. As a result, ADB expects higher commitments in 2023.
“In 2022, we saw ADB’s highest-ever climate finance commitments, reaching $6.7 billion. Our commitments for food security investments were $3.7 billion, more than double compared to 2021. ADB’s Private Sector Operations Department committed $3.9 billion, with a continued increase in non-sovereign co-financing amounting to $7 billion.
“Gender mainstreaming in ADB operations reached its highest level, with 97 per cent of our committed operations supporting gender equality. Asian Development Fund [ADF] commitments reached $938 million in 2022, nearly triple the commitment in 2021.
“ADB will increase lending resources and enhance private capital mobilisation to support DMCs facing various crises. The ongoing review of our Capital Adequacy Framework will prepare us to optimise our balance sheet and, potentially, boost our lending capacity,” he said. '