AIIB to co-finance projects with World Bank and ADB

Asian Infrastructure Investment Bank President Jin Liqun (left) and World Bank Group President Jim Yong Kim exchange documents during a signing ceremony for a framework agreement that outlines the co-financing parameters of AIIB-World Bank investment projects.[Photo/Xinhua]

As a sign of its multilateral approach, the China-led Asian Infrastructure Investment Bank has said it will co-finance projects with the World Bank and the Asian Development Bank.

The three banks will approve the first group of co-financed projects in June, AIIB President Jin Liqun said in Washington on Wednesday.

The rationale is that the three can share the risk involved in infrastructure development, he said.

"Infrastructure projects are very large. It's not a very good idea for a single bank to spend $2 billion or $3 billion on one project," Jin said, adding that there is vast room for cooperation among multilateral development banks.

On Wednesday, Jin and World Bank Group President Jim Yong Kim signed a framework agreement that outlines the co-financing parameters of AIIB-World Bank investment projects. The agreement paves the way for the two institutions to jointly develop projects this year.

The AIIB expects to approve about $1.2 billion in financing this year, with World Bank joint projects likely to account for a sizable share, the World Bank said.

The World Bank said that it is discussing with the AIIB nearly a dozen co-financed projects in sectors including transportation, water and energy in Central, South and East Asia. Under the agreement, the World Bank will prepare and supervise the projects in accordance with its policies and procedures in such areas as procurement and the environment.

In his speech at the Asia Society Policy Institute on Wednesday, Jin gave a broad interpretation of infrastructure, saying that the AIIB could provide financing for nonphysical infrastructure such as health and education in the future.

In an earlier forum, Jin said there is "a huge funding gap" for infrastructure that all the multilateral development banks combined cannot fill. He said emerging MDBs don't seek to overtake the existing ones, but rather complement the existing system by improving the governance and effectiveness of institutions.

"It is absurd to think that a new restaurant on a restaurant street will drive out existing ones," he said.