Eligible low-income African countries can now secure non-concessionary resources from the
The proposal allows the Bank to respond proactively to the improved economic conditions in the Regional Member Countries (RMCs) over the past decade, by providing eligible low-income countries with access to resources from the Bank's non-concessionary sovereign window, for financing viable projects.
Sovereign resources are resources drawn from the public window or sovereign window to finance public sector operations, as opposed to the private sector window, which provides non-sovereign guaranteed loans.
The policy underscores the
About 37 countries or nearly 70% of the RMCs currently fall under the low-income countries category that is eligible only to concessionary resources from the
However, the paper argues that diminishing concessionary resources would be inadequate to finance and sustain the current high rates of growth and transform the structure of
Access to the AfDB's sovereign resources by low-income countries would be available to low or moderate risk of debt distress countries and subject to IMF's Debt Sustainability Assessment (DSA), sustainable macroeconomic position as well as stringent oversight by the Bank's Credit Risk Committee, among other safeguards.
In approving the proposal, the Board underscored the fact that the policy responds to the drive to channel more resources to the low-income countries, in line with its client assessment and the Bank's Ten Year Strategy. The policy would also enable the Bank to broaden its base of potential clients.
In addition, the policy will enhance the Bank's delivery capacity by improving the role of its non-concessional envelope in supporting the development agenda of the continent through sovereign instruments. Moreover, the move will help diversify the Bank's sovereign portfolio, minimize concentration risk within the portfolio and increase the Bank's footprint on the continent.
Board members emphasized the need for internal capacity building, especially with regards to improving the DSA as well as leveraging other knowledge products that would enhance the Bank's effectiveness in policy design and development of the RMCs.
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