ADB to raise lending rates for wealthier member states

Reuters . Manila | Published: 00:00, Nov 20,2019

 
 

The Asian Development Bank said on Tuesday it would raise lending rates for high-income countries beginning 2021 to boost its reserves and expand its lending capacity in the long term.

Under the diversified pricing structure that would take effect on January 1, 2021, countries that would belong to higher income sub-groups would pay higher maturity premiums for longer-term loans, the Manila-based lender said in a statement.

ADB said it would update the income categories of member countries before the implementation of the new loan pricing using the latest gross national income (GNI) per capita data.

Upper middle-income countries with per capita GNI of $6,976 to $12,375 would pay up to 30 basis points additional maturity premium depending on the loan tenor, the ADB said.

The new scheme will allow wealthier borrowers that continue to borrow from the lender to contribute more to ADB’s capital resources.

‘The current flat pricing structure offered to our recipient countries borrowing only market-based loans does not reflect the high level of diversity among these countries in their income levels, capacities to mobilise domestic resources, and access to capital markets,’ ADB president Takehiko Nakao said in a statement.

Income generated from the new pricing would supplement ADB’s existing funds meant to support policy advice, institution building, and knowledge sharing in developing member countries, the lender said.

Founded in 1966 with a mandate to lift hundreds of millions of Asians out of poverty, the Japanese-led ADB has 68 member countries ranging from Bangladesh and Pakistan to booming China and India, with its largest donors Japan and the United States.

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