US Insists on Higher Borrowing Rates For Some ADB Member Countries

Forex News

The United States will insist on higher lending rates and the excommunication of some countries from development lending to the Asian Development Bank (ADB). A Manila-based development lender, which was founded in 1966 with a mandate to lift hundreds of millions of Asians out of poverty, the ADB has 67 member countries.

US Treasury officials complained to the World Bank last month that the ADB was lending too much to China and other major emerging markets, especially the China’s "One Belt, One Road" infrastructure initiative.

The ADB, whose major donors are Japan and the United States, agreed on reforms that will raise borrowing costs for higher-middle-income countries, including China. Some analysts suggest, that China's new programs could become serious rivals to the ADB and the World Bank. Chinese moves to expand its international influence also come amid heightened trade policy tension with the United States.

Earlier, Asian Development Bank President Takehiko Nakao said, that trade in Asia has been growing at a consistently fast clip since 2017 but could be disrupted if US-China trade disputes escalate. Many Asian economies are heavily dependent on trade and have been growing thanks to stable policies and open trade and investment regimes, Nakao said. About China’s Belt and Road Initiative, Nakao said developing countries need to take a careful look at projects backed by the program and avoid taking on unsustainable debt.