The Asian Infrastructure Investment Bank (AIIB) announced its very first loan approval for Fiji last week, making Fiji the first country in the Pacific region to access financing from the China-led multilateral development bank.
AIIB, which has been closely linked to China’s Belt and Road Initiative, was proposed by China’s President Xi Jinping in 2013 and was established in 2016 with a current membership of 103 countries including Australia and New Zealand but with the notable absence of the United States of America and Japan.
Since becoming a member of AIIB in 2017, Fiji has never accessed its loans facility but has now jumped on board with the approval of US$50 million financing from AIIB for COVID-19 related work.
“Funding for Fiji is part of the Sustained Private Sector-Led Growth Reform Program co-financed by the Asian Development Bank (ADB). The governments of Australia and New Zealand are also providing supplemental grant funding to Fiji,” AIIB announced in a statement.
The loan, it said, was to support the government’s efforts to “provide assistance to the formal sector, including small and medium enterprises and their employees, and members of the informal sector, including women micro-enterpreneurs, such as hawkers.”
“It is incumbent upon us to make sure the most vulnerable people have the tools they need to weather the effects of this public health challenge. AIIB is providing support to the Republic of Fiji to strengthen the country’s containment and treatment measures, and fiscal stimulus to help soften the effects of the COVID-19 pandemic,” D.J. Pandian, AIIB’s Vice President, Investment Operations.
The total loan package from the four donor partners is worth US$252.2million, of which US$200 million is from the ADB, announced last week in Suva, US$50million from AIIB and grants worth US$700,000 and US$1.5million from Australia and New Zealand respectively.
AIIB confirmed to Islands Business in an email that this was its first financing project for Fiji and the Pacific region in general, where other members include Vanuatu, Samoa and Cook Islands, with prospective members being Papua New Guinea and Tonga.
“AIIB is working to engage with the Pacific. We try to be attuned to the specific needs of the region. The Covid-19 pandemic has taken a heavy toll on their economies, in particular on tourism. We will try to work with these members to help mitigate the negative impact,” senior Press Officer Alice Lo said.
“In addition, we currently have Dame Meg Taylor, Secretary-General to the Pacific Islands Forum, on AIIB’s International Advisory Panel. We can benefit from her ideas about how to work with the Pacific members in addressing their specific challenges,” Lo added.
The loan, according to AIIB, is part of its COVID-19 Crisis Recovery Facility (CRF), “which provides up to US$13 billion of financing to both public and private-sector entities facing serious adverse impacts as a result of the pandemic.”
“As of August 13, 2020, AIIB’s Board of Directors has approved a total of 19 projects under the CRF, amounting to over USD6.16 billion to support 15 members in navigating the challenges of these highly uncertain times. AIIB is reviewing additional projects from its clients,” the bank said.
In its most recent Board of Directors annual meeting held last week, President Xi called on the Bank to act as a platform for building a global community “with a shared future for mankind”.
“For countries to develop together, infrastructure connectivity serves as an important physical foundation. The AIIB should commit itself to serving the development needs of all its members and providing more high-quality, low-cost and sustainable investment for both traditional and new types of infrastructure. This will give renewed impetus to economic and social development in Asia and beyond,” he said.