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ADB to raise lending rates for wealthier member countries

Tuesday, November 19, 2019, 17:26 GMT+7
ADB to raise lending rates for wealthier member countries
Construction of new buildings alongside older establishments is seen within the business district in Makati City, metro Manila, Philippines January 25, 2017. Photo: Reuters

MANILA -- 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 will take effect on Jan. 1, 2021, countries that will belong to higher income sub-groups will 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 will pay up to 30 basis points additional maturity premium depending on the loan tenor, the ADB said.

The new scheme will allow wealthier borrowers with market access 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 mobilize domestic resources, and access to capital markets,” ADB President Takehiko Nakao said in a statement.

Income generated from the new pricing will 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 struggling Bangladesh and Pakistan to booming China and India, with its largest donors Japan and the United States.

Reuters

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