Interview: AIIB's impressive performance indicates China's commitment to shared prosperity among nations: Bangladeshi experts

Source: Xinhua| 2017-07-10 16:54:58|Editor: An
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by Naim-Ul-Karim, Liu Chuntao

DHAKA, July 10 (Xinhua) -- The impressive performance of the Asian Infrastructure Investment Bank (AIIB) has signaled China's broader commitment to shared prosperity among nations, Bangladeshi officials and experts have said.

They said Moody's highest rating of the bank not merely confirmed its "world class" governance structure, independent Internal Audit Office and Ethics Office, but also provided a signal to the international community that the bank is all set to grab the center stage.

The rating will help increase confidence in the new lending organization, they said.

The AIIB performance has once again demonstrated that a China-initiated institution can meet international standards for best practice, they added.

The AIIB, launched formally in December 2015 to help meet the estimated 26 trillion U.S. dollars need for infrastructure spending in Asia through 2030, is an international financial institution that particularly aims to support the building of infrastructure in the Asia-Pacific region.

Moody's Investors Service recently gave the bank its highest possible rating, with a stable outlook.

The triple-A rating was given because of "the strength of the AIIB's governance frameworks, including its policies on risk management, capital adequacy and liquidity," said Moody's, one of the top three major credit rating agencies.

Rashed Al Mahmud Titumir, chairman of Unnayan Onneshan, a think-tank, told Xinhua that, "China's leadership in financing mega infrastructure projects independently and through the AIIB indicates its broader commitment to shared prosperity among nations, and hence other countries and members need to follow suit to enhance multilateralism and conditionality-free, country context-specific multilateral facing financial institutions."

There is no denying that much needed infrastructure has to be financed for the expansion of production capacity. And it would in turn result in the creation of employment that the country needs to move from the current jobless situation amid high youth unemployment in South Asia, said Titumir, also a professor of Economics at Bangladesh's top Dhaka University.

The highest level of credit rating from Moody's for the AIIB is a remarkable achievement for a newborn bank.

"Its strong balance sheet, with subscribed capital by the sponsors has made it already bigger than many other multinational development banks," said MS Siddiqui, a professor at Dhaka's Daffodil International University.

He added, "It has good Compliance, Effectiveness and Integrity Unit and the AIIB has a good administrative hierarchy working under its president and the president reports to an independent Board of Directors."

"The Bank has proven its ability with the implementation of the multinational Belt and Road Initiative aimed at building infrastructure in Asia," MS Siddiqui said.

The bank has so far dispatched about 2.49 billion U.S. dollars in financing for 16 infrastructure projects in nine countries including Bangladesh.

Out of these, a 165 million U.S. dollar loan was provided for a Power Distribution System Upgrade and Expansion Project in Bangladesh. The project is designed to expand electricity coverage by providing 2.5 million new service connections in rural areas and upgrade grid substations and convert overhead distribution lines into underground cables in northern Dhaka.

"The project will supplement other development partner efforts by providing additional financial resources to connect more rural and urban consumers, further reduce distribution losses, and improve the quality and reliability of power supply in Bangladesh," said Siddiqui.

Besides the Power Distribution System Upgrade and Expansion Project, the AIIB has also provided Bangladesh loans worth 60 million U.S. dollars to address the country's gas supply deficit.

Siddiqui said the beginning of successful loan sanctioning and identifying the best infrastructure projects, followed by a higher level of credit rating, proved the necessity of this bank in Asia along side other banks.

Towfiqul Islam Khan, a research fellow at Bangladesh's leading think tank, the Center for Policy Dialogue (CPD), said the AIIB has the potential to serve the growing financing needs of developing countries in Asia like Bangladesh for infrastructure.

"The positive credit rating will help bolster confidence in the new lending organization," said Khan.

For Bangladesh, he said, it will be critical to strategically utilize the finance offered from the AIIB.

"To this end, Bangladesh will need to identify the appropriate infrastructure projects and build its own capacity to implement them in a timely and cost effective manner."

Bangladesh's Economic Relations Department (ERD) Additional Secretary, Md Zahidul Haque, told Xinhua that Moody's highest rating made the Bangladeshi government feel even more confident in AIIB, which has already approved financing to support Bangladesh infrastructure development projects.

"As a member of the bank, we are encouraged by its impressive performance," Haque said.

He said the AIIB comes as a big blessing for Bangladesh because it is an alternative funding avenue for Dhaka to source financing for infrastructure projects.

Haque said, "We're now exploring ways to acquire more AIIB support in the future for Bangladesh projects."

He added that the entire ERD highly regards the bank for its remarkable achievements in such a short time.

"We are confident that the bank will really be able to contribute to help meet the future infrastructure spending needs in countries in Asia and beyond."

Bangladeshi Finance Minister AMA Muhith had earlier said he expects sizable funding for major infrastructure projects from the AIIB.

Bangladesh joined the AIIB in March 2016.