ADB boosts Asia-Pacific food security financing to $14bn

MANILA: The Asian Development Bank will provide $14 billion in loans over four years to help poor countries improve food security as prices soar and climate change bites, the Philippines-based lender said Tuesday. The bank, which provides loans and grants for projects in the poorest countries in the Asia-Pacific region, said the financing would target among other things food production and distribution, and climate mitigation.

“Food insecurity is threatening to reverse decades of development progress in Asia and the Pacific,” ADB president Masatsugu Asakawa told reporters in a virtual news conference

Asakawa said there are many factors for the “worsening situation” including Russia’s invasion of Ukraine and the COVID-19 pandemic, which have disrupted supply chains and helped push food prices to “record highs”. “We also have to keep in mind that the current food security crisis will get even worse if we fail to address climate change,” Asakawa said.

He added that the battle against a warming planet would be “won or lost in Asia and the Pacific”.  The bank, which has 49 members stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia, usually allocates $2 billion a year for food security loans. That is expected to reach $3.3 billion this year, and $10.7 billion from 2023 to 2025, ADB said. It estimates nearly 1.1 billion people in the region “lack healthy diets due to poverty and food prices”.

The announcement comes after the bank recently cut its 2022 growth forecast for the region, to 4.3 percent from its April projection of 5.2 percent. ADB warned of significant risks for the region’s outlook as central banks around the world struggle to rein in inflation and recurrent lockdowns in China hammer the world’s second-largest economy. The bank also raised its inflation forecast to 4.5 percent from 3.7 percent.

The ADB cut its 2022 growth forecast for developing Asia last week. While easing pandemic restrictions had spurred consumer spending and investment in the region, the Philippines-based bank warned of “global headwinds” to the recovery as food and fuel prices soared and central banks hiked interest rates.

As a result, the bank slashed its 2022 growth forecast for developing Asia — which refers to the 46 members of the ADB, stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia — to 4.3 percent. That compares with its April forecast of 5.2 percent growth. The region grew by 7.0 percent in 2021.

ADB chief economist Albert Park warned “risks loom large” for the region’s outlook and urged governments to remain “vigilant”. “A significant downturn in the world economy would severely undermine demand for the region’s exports,” Park said. “Stronger-than-expected monetary tightening in advanced economies could lead to financial instability. And growth in the PRC (China) faces challenges from recurrent lockdowns and a weak property sector.”

China’s growth forecast for 2022 was reduced to 3.3 percent from 5.0 percent, as Beijing pursues a zero-Covid strategy that has devastated the world’s second-largest economy. Chinese officials are under pressure to curb even the smallest virus outbreaks swiftly, ahead of a key political meeting in October where President Xi Jinping is expected to secure an unprecedented third term. Officials have imposed targeted lockdowns and travel restrictions, disrupting businesses and forcing millions of people to stay home. – AFP

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