AIIB launches US$10 billion facility to help nations hit by Iran war fallout
The new facility will help nations deal with urgent energy, food and economic resilience needs, according to the bank
The Asian Infrastructure Investment Bank (AIIB) has launched a US$10 billion facility to support members affected by conflict in the Middle East, the multilateral development lender announced on Thursday.
“While providing financing to address members’ critical short-term needs including access to energy and food, as well as sustaining their reform momentum, AIIB commits itself to continue strong engagement and support for our members’ efforts in infrastructure development, green transition and sustainable growth.”
The facility will deliver aid through fast-disbursing budget support, financing for critical imports and liquidity support to affected members, according to the bank.
It can also back government response programmes and help countries shore up economic resilience amid the fallout from the conflict. Infrastructure companies and financial intermediaries, meanwhile, can tap it for short-term working capital and business continuity needs.
If the conflict drags on, developing Asia could see its gross domestic product shrink by 1.3 per cent and inflation climb by 3.2 per cent between 2026 and 2027, the report said.
The pain will extend beyond Asia as parts of East Africa face outsize risks due to limited refining capacity and fragile agricultural supply chains, according to the lender.
The AIIB will work closely with other multilateral development banks, the International Monetary Fund and other development partners to provide financing support, the bank said.
The bank announced earlier this month that it was reviewing a proposed US$250 million fund to help Bangladesh mitigate the macroeconomic and social effects of the war.
The AIIB said in a statement the South Asian country faces a number of challenges as a result of the conflict, including surging energy and food import costs, risks of interruption for crucial remittances from Gulf countries and sector-wide disruptions that are widening deficits and fuelling inflation. The bank added the country’s poverty rate was expected to rise to 8.7 per cent, putting roughly 600,000 jobs at risk.
The proposed programme will support structural economic reforms in fiscal management, the governance and investment climate for state-owned enterprises, as well as trade policy and logistics, the bank said.
The programme would be co-financed with a sovereign-backed US$750 million loan from the Asian Development Bank, providing a total of US$1 billion in emergency budget support for the Bangladesh government, according to the statement.