India eligible for a pie of ADB's $3 bn additional funds

The Asian Development Bank (ADB) has said India can access part of the $3 billion additional funds allocated by the bank to help developing nations in tackling the global economic crisis. The bank has come up with the 'Countercyclical Support Facility' (CSF) aimed at helping developing nations in their effort to ramp up their fiscal spending. "Eligible countries can now apply for access to the funds. India, as an ordinary capital resources (OCR) designated country, is eligible to apply for access to the $3 billion CSF," an ADB spokesperson told PTI in an e-mailed statement. The amount for each country from the facility would be capped at $500 million. The programme would provide short- term, fast-disbursing loans. On Tuesday, the bank had said the facility would "support Developing Member Countries aiming to ramp up fiscal spending to counter the crisis, but who lack the financial means to do so amid tight global credit conditions and a sharp increase in funding costs". The loans under the new facility would have a lower cost than charged for loans disbursed during the East Asian crisis. The loans could be repaid in eight years. "Loans under the new facility will have a five-year tenure, with a three-year grace period, and will cost around 200 basis points over ADB's financing cost, pricing that is lower than its special program loans facility set up to help the region in the wake of the 1997-1998 Asian financial crisis," ADB had said. The bank has laid out a set of conditions for nations to access the CSF. They include significant slowdown in growth, exports and remittances, fiscal constraints and difficulty in sourcing finance from international capital markets on favourable terms. Further, the countries would also have to "put in place a specific countercyclical development programme, to be supported by CSF, which includes investment in public infrastructure, or a social safety net scheme targeting the poor and vulnerable", ADB had said. The ADB's board of directors have approved additional funds worth $3.4 billion to help developing nations in responding to the global economic turmoil. Out of the total amount, the multilateral lending agency would offer $400 million to the Asian Development Fund. India is not eligible for the extra $400 million since the fund is for giving grants and loans at very low interest rates to poorest borrowing countries to help them reduce poverty. ADB spokesperson said India is not "eligible to apply for grants or loans through the Asian Development Fund, which is open only to ADF designated countries".