NDB underlines funding for green areas

Sustainable development will be one of the New Development Bank's major investment themes as it expands investment in emerging markets and developing economies in the next five years, its top executives said at a forum on Tuesday.

Climate change mitigation will be one focus of the NDB's strategy between 2022 and 2026, as the majority 40 percent of the bank's $30 billion financing to be provided by 2026 has been reserved for such green goals, NDB President Marcos Troyjo said in his address to the forum.

The development bank will focus on specific areas like clean energy, transportation, water and sanitation, said Troyjo. While social and digital infrastructure is another focus of the NDB's investment targets, the institution will mainly support projects that are climate-and disaster-resilient, technology-enabled and socially inclusive, he said.

Liu Kun, China's finance minister and the NDB's governor for China, said at the forum that the bank should play a crucial role in helping emerging economies and developing countries to realize green development and address the multiple challenges brought by uncertainties in the global market.

To help member countries better achieve their sustainable goals, the NDB will increase its presence in capital markets with innovative tools and seek diversified resources, especially from the private sector, said Troyjo.

Zhou Qiangwu, vice-president of the NDB, said a major trend among multilateral financial institutions is to seek more resources from the private sector, so that the financing can be used to better serve the development of entities in the private sector.

The NDB will seek more renminbi financing from the onshore bond market. In the next five years, the bank will make more innovative attempts, including equity financing, and roll out insurance policies and diversified loans, he said.

Apart from supporting member economies' sustainable goals, the NDB will direct 30 percent of its total financing in local currencies between 2022 and 2026. It will also provide 30 percent of the total financing to non-sovereign operations during the same period.

The bank will also launch financing projects jointly held by other multilateral development banks, according to the NDB's new development strategy.

Established by Brazil, Russia, India, China and South Africa — BRICS — in 2015, the NDB has approved over 80 projects valued at over $30 billion to date. About 23.3 percent of its financing was denominated in the local currencies of the member countries.

Although the $30 billion financing may seem relatively smaller compared to that provided by other international organizations, it is still a big achievement for the 7-year-old NDB, said Zhou. More importantly, the financing provided by the NDB can leverage more capital from the market, which is especially important for infrastructure construction and technology advances among emerging economies, he said.