Asian Infrastructure Investment Bank Establishes $10 Billion Fund Facility to Support Countries Affected by West Asia Conflict

Asian Infrastructure Investment Bank Launches USD 10-Billion Fund Facility to Support Member Countries Affected by West Asia Conflict

The Asian Infrastructure Investment Bank (AIIB) has launched a USD 10-billion fund facility to provide support to its member countries affected by the conflict in West Asia. The Beijing-headquartered bank, in which India is the second-largest shareholder after China, announced the Energy, Food Security and Economic Resilience Facility on Thursday.

The facility offers a time-bound financing envelope of up to USD 10 billion over two years, supplementing AIIB's regular financing instruments. It provides exceptional financing support to its members and clients in addressing their acute needs for energy security, food security, and economic resilience. The AIIB, which began functioning in 2016, has more than 100 approved members worldwide, including China, India, Bangladesh, Pakistan, Iran, Iraq, Australia, Israel, Kuwait, Nepal, Oman, Russia, Singapore, Sri Lanka, and the UAE.

The bank is capitalised at USD 100 billion and is AAA-rated by major international credit rating agencies. According to AIIB's official records, China is its largest shareholder with 26.54 per cent voting shares, followed by India (7.58 per cent), Russia (5.9 per cent), and Germany (4.1 per cent).

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The financing facility will be provided in the form of fast-disbursing budgetary support, financing of critical expenditures and imports, and liquidity support to affected members and clients. It may also offer liquidity financing to infrastructure companies or financial intermediaries to cover short-term working capital, refinancing, and business continuity needs of companies as impacted by the conflict.

The AIIB will work closely with peer multilateral development banks, the International Monetary Fund (IMF), and other development partners to provide financing support. The facility will enable members to address development impacts stemming from external shocks while strengthening long-term resilience.

The AIIB's initiative follows an announcement by a group of multilateral development banks, which have pledged to strengthen support for countries affected by the economic fallout of the ongoing conflict. In a joint statement issued on May 18, the Asian Development Bank, African Development Bank Group, Council of Europe Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank Group, and the World Bank Group responded to requests from governments and clients seeking assistance to address disruptions in energy and fertiliser markets, trade routes, and broader spill-over effects on jobs, fiscal positions, and external balances.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

In view of the West Asia conflict and the closure of the Strait of Hormuz, a key trade route used for over one-fifth of the global supply of oil and gas, economies of several countries, including India, have been adversely affected. The International Energy Agency has termed the crisis as the largest supply disruption in the history of the global oil market.