BAKU, Azerbaijan, October 20. The Asian Development Bank (ADB) has signed a $3 billion sovereign exposure exchange agreement (EEA) with the World Bank, marking its first such arrangement with the institution and its sixth with other multilateral development banks (MDBs) since 2020, Trend reports.
The cumulative amount exchanged through these agreements now totals $9 billion.
The deal is designed to expand ADB’s lending capacity for its developing member countries by reducing portfolio concentration risks. Sovereign exposure exchanges allow MDBs to swap concentrated loan exposures for those in countries where their exposure is lower or nonexistent, freeing up capital and increasing lending headroom.
“In an era of overlapping challenges, strategic collaboration among MDBs has never been more critical,” said Roberta Casali, ADB Vice-President for Finance and Risk Management. “Exposure exchanges can be transformative because they allow us to work together systemically, reduce concentration risk, and expand our reach precisely when our member countries need us the most.”
Anshula Kant, Managing Director and World Bank Group Chief Financial Officer, emphasized the partnership: “This EEA with ADB demonstrates the World Bank’s strong commitment to work hand in hand with other MDBs to utilize every opportunity to expand the overall lending capacity in the MDB sector.”
ADB has been actively exploring ways to manage its capital efficiently to help the region navigate multiple simultaneous crises. In 2023, the bank unlocked $100 billion in additional lending capacity over the next decade by updating its Capital Adequacy Framework.
Founded in 1966, ADB is a leading multilateral development bank owned by 69 members, including 50 from the Asia-Pacific region. The bank supports inclusive, resilient, and sustainable growth across Asia and the Pacific, using innovative financial tools and strategic partnerships to address complex challenges, develop infrastructure, and safeguard the environment.