AIIB joins World Bank and ADB on infrastructure projects

22 April 2016

The World Bank and Asian Development Bank (ADB) have signed agreements with China’s recently established Asian Infrastructure Investment Bank (AIIB), to jointly fund infrastructure development in Asia.

The projects include a highway in Pakistan, an expressway running from the capital of Tajikistan to its border with Uzbekistan, and a ring road in Kazakhstan’s largest city, Almaty.

The agreements signal an acceptance of AIIB into the global lending community, and could be a springboard to many more such deals, with both the World Bank and ADB keen to utilise AIIB’s US$ 100 billion in capital.

As for AIIB, jointly funding infrastructure projects with the two multilateral lenders offers the opportunity for it to quickly grow its portfolio and consequently improve its credit rating.

Both the World Bank and ADB have made it clear that they will be the senior partners in any joint ventures in the short-term.

World Bank President Jim Yong Kim said, "The AIIB is only now increasing their staff. So likely, the first projects will be that we do all of that project preparation. We do all the work that requires huge amounts of staff in a large and institutional infrastructure, and then they will simply co-finance."

The ADB’s joint tender document states, “ADB is the lead financing partner for the project and administers it on behalf of the other co-financiers. Bidding shall be carried out in accordance with ADB’s procurement guidelines and procedures.”

According to reports, the AIIB is expected to lend $ 10 billion to $ 15 billion annually over the next five or six years.

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