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1. How Effectively Is the Asian Development Bank Responding to COVID-19? An Early Assessment

Author:
Azusa Sato, Rakan Aboneaaj, and Scott Morris
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
In 2020, the Asian Development Bank (ADB) joined efforts by other multilateral development banks (MDBs) to rapidly scale up support to developing countries to address COVID-19. Beyond headline numbers, there has been less focus on how ADB’s support was distributed by country income group, sector, modality, and product. Using an updated dataset on commitments and disbursements between 2018 and end of December 2020, we compare “pre-crisis” and “crisis period” trends. We overlay ADB data on other publicly available datasets reflecting population size, mobility levels, and government fiscal stimulus to evaluate the responsiveness and size of ADB support vis-à-vis other MDBs. Our findings show ADB’s response was most significant in the countries that most needed support—low income economies with sharp GDP declines and limited fiscal response capacity. The health and public sector management sectors had significant surges in commitments, and impacted the modality used. While there was a rise in grant and concessional financing in 2020, non- concessional loans and sovereign operations still dominated during the crisis period. We suggest further work on how these changes impact development outcomes, with a view to recalibrating the bank’s strategies in some sectors and products in the medium term.
Topic:
Development, Finance, Pandemic, COVID-19, and Banking
Political Geography:
Asia

2. How China lends: A rare look into 100 debt contracts with foreign governments

Author:
Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, and Christoph Trebesch
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
China is the world’s largest official creditor, but basic facts are lacking about the terms and conditions of its lending. Very few contracts between Chinese lenders and their government borrowers have ever been published or studied. This paper is the first systematic analysis of the legal terms of China’s foreign lending. The authors collect and analyze 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania, and compare them with those of other bilateral, multilateral, and commercial creditors. Three main insights emerge. First, the Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt. Second, Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep the debt out of collective restructuring (“no Paris Club” clauses). Third, cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies. Even if these terms were unenforceable in court, the mix of confidentiality, seniority, and policy influence could limit the sovereign debtor’s crisis management options and complicate debt renegotiation. Overall, the contracts use creative design to manage credit risks and overcome enforcement hurdles, presenting China as a muscular and commercially savvy lender to the developing world.
Topic:
Foreign Policy, Debt, Government, and Banking
Political Geography:
China and Asia

3. Promoting Investment in Research for Development Outcomes: A Research Ventures Fund at the World Bank

Author:
Scott Morris
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
This note proposes a new Research Ventures Fund (RVF) at the World Bank to better prioritize R&D investments in support of development progress. The RVF would employ financing mechanisms that are consistent with research needs: significant scale and scope, patience, and tolerance for failure. Existing development-oriented research consortia like CGIAR would provide a promising start for RVF funding allocations. Donors to the IDA-19 replenishment should take the first step in securing funding for the new fund in 2019.
Topic:
Development, International Cooperation, Science and Technology, World Bank, Finance, Research, and Banking
Political Geography:
Global Focus

4. ABCs of the IFIs: The African Development Bank, the Asian Development Bank, and the International Fund for Agricultural Development

Author:
Scott Morris, Erin Collinson, and Alysha Gardner
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
The African Development Bank (AfDB), the Asian Development Bank (ADB), and the International Fund for Agricultural Development (IFAD) are among the international financial institutions seeking pledges from donor countries as part of upcoming replenishment cycles in 2019 and 2020. The United States is a leading donor to these funds and has played a crucial role in shaping the institutions’ agendas throughout their histories.
Topic:
Agriculture, Development, Finance, Banks, Institutions, and Banking
Political Geography:
Africa and Asia

5. Lending Terms for IFAD Projects

Author:
Scott Morris and Jessie Lu
Publication Date:
11-2019
Content Type:
Research Paper
Institution:
Center for Global Development (CGD)
Abstract:
Donor support for agriculture development is not keeping pace with developing country demand or the need for finance implied by Sustainable Development Goal 2. In order to increase the overall volume of resources available for these needs, IFAD is pursuing a reform agenda that considers providing loans on harder terms to its client countries. This study assesses whether this hardening of lending terms will affect country demand for projects. Using the World Bank experience as a proxy, this paper examines whether graduation from the International Development Association to the International Bank for Reconstruction and Development affects the sector portfolios of countries and the types of investment demands within agriculture through both statistical and qualitative country case study analysis. We find that as countries graduate, there is a relative shift away from “soft” sector investments and a different mix of investments within the agricultural sector. We argue that IFAD’s consideration of harder lending terms should also include consideration of how to respond to a different mix of country demand within the agricultural sector. Specifically, the fund should consider some scaling up of projects, increased emphasis on capital investments, and a greater emphasis on policy engagement with client countries.
Topic:
Agriculture, Development, Investment, Sustainability, and Banking
Political Geography:
Global Focus