ADF-13: Financing Capacity and Innovation Charles Boamah Vice President, FNVP Tunis - 12 June 2013 Tunis – June 2013
Financing Capacity and Innovation Optimizing Financing Capacity 1 Innovating for greater impact 2 Tunis – June 2013
Optimizing Financing Capacity 1 Tunis – June 2013
Optimizing Financing Capacity Maximizing the Fund’s capacity with a dual standard encashment schedule Major changes in the core assumptions of the ACC model • Merge donor and internally generated liquidity • Increase level of expected loan repayments • Increase level of expected MDRI Compensation • Additional ADB Net Income to cover part of the ADF share of costs of return to Abidjan Tunis – June 2013
Improving Level of ACC First Rep. Meeting Second Rep. Meeting + 329 +241 +82 1381 1259 1052 1032 1018 950 Low Consolidation Transformation Revised liquidity framework translates into greater ACC impact for Donor contributions Tunis – June 2013
Differentiating Lending Terms UNDP Full HDI ADF Regular including GNI pc 50/10 => 40/10 61% concessionality AHIDI Index ADF Advance Differentiation Revised Index 50/10 => 40/5 of Lending (ADF-only countries) 51% concessionality Terms ADF Blend African 30/8 => 30/5 Infrastructure Development 35% concessionality Index Revised AHIDI is a better indicator of economic development and capacity to sustain debt New terms compliant with Debt Sustainability Framework Concessionality above or equal to other MDBs Tunis – June 2013
Financial Impact Differentiation and new lending terms have limited immediate impact, but will significantly increase the ACC from ADF-16 onwards 3,00 ACC Level 2,63 In Billion UA 2,50 2,19 +37% 2,00 1,50 1,03 1,01 1,00 0,50 ADF-16 ADF-13 ADF-16 ADF-13 - Current Terms AHIDI Differentiation Tunis – June 2013
ADF-13 Financing Scenarios 7 500 (In Million UA) ADF-13 IOP 1381 6 000 1259 2007 4 500 1032 3 000 5442 4944 4027 3787 1 500 0 ADF-12 Low Consolidation Transformation Subscriptions ACC UA 7,567 million Indicative Operational Program Tunis – June 2013
What Deputies agreed to in February Item for Decision Accepted Proposal Exchange rate reference period February 1 to July 31 2013 Standard Encashment Calendar 10 Year as in ADF-12 Accelerated Encashment Revised Framework Additional measures to enhance Accelerated repayment clause and financial sustainability voluntary repayment framework Reduce maximum maturity of ADF- Loans from 50 to 40 years, with 10 years of grace period. ADF Lending Terms Principle of differentiating ADF-only countries Tunis – June 2013
What do we expect from Deputies today? Item for Decision Proposal 5% Replenishment Technical Gap Dual Standard Encashment Schedule Encashment Schedules Advance Commitment Capacity Revised Core Assumptions Revised AHIDI index Regular : from 50/10 to 40/10 Differentiation and revised lending terms Advance : from 50/10 to 40/5 Blend : from 30/8 to 30/5 Low: -18% real growth over ADF-12 Consolidation: 0% real growth over ADF-12 Indicative financing framework Transformation: 10% real growth over ADF- 12 Tunis – June 2013
Innovating for greater development impact 2 Tunis – June 2013
ADF Partial Credit Guarantee Leverage Multiplier Assist LICs with low risk of debt distress and adequate debt management capacity to access capital markets 2 X Guarantee against the Invest- 4 X risk of sovereign default ment ADF Guaran- No set aside, financed ADF tee through PBA allocations (25 %) UA 600 UA 75 UA 300 million million million investment PBA Guarantee Deducted Tunis – June 2013
Private Sector Facility Leverage Multiplier Separate autonomous legal entity Credit enhancement to 5 X Additio the ADB on a portfolio of nal transactions in LICs LIC Extends ADB’s ability to project 4 X ADB s mobilize additional Finan private investment in PSF cing LICs UA 3.3 billion UA 165 UA 660 One off UA 165 million additional LIC million million total projects seed contribution seed additional investment contribution PSO Tunis – June 2013
What do we expect from Deputies today? Item for Decision Proposal Partial Credit Guarantee Innovative financing Private Sector Facility Tunis – June 2013
ADF-13 Tunis – June 2013
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