Sitharaman urges ADB to speed up financing deals; US, China spar over funding | Mint

Milan (Italy): Finance minister Nirmala Sitharaman on Monday urged the Asian Development Bank (ADB) to cut the processing time for its lending transactions and either enhance or better manage the capital available for lending

Her call came at the multilateral body’s 58th annual meeting, which also saw the US and China spar over funding for Chinese projects.

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Sitharaman urged the ADB to make quick progress on capital expansion and capital management measures so that its lending limits do not affect the borrowing programmes of developing countries.

Sitharaman referred to specific instruments the multilateral bank can use, including hybrid capital, exposure exchange agreements allowing risk swapping with other institutions and callable capital that can be sought from shareholders.

“It’s an old adage that time is money. It holds relevance still. Process reforms for reduction in processing time, both for sovereign and non-sovereign operations, shall benefit the developing member countries significantly,” Sitharaman said.

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ADB has cumulatively backed 789 projects in India up to April this year, with close to $60 billion in loans, guarantees, equity investments, guarantees and technical assistance in the sovereign category and close to $8 billion in private sector projects, as per data available from the bank.

While the US asked the ADB to graduate China’s status from a developing to a developed country, China described itself as the largest developing country and urged the multilateral bank to continue to uphold the spirit of multilateralism and principle of political neutrality.

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The ADB has backed over 1,300 projects in China with over $45 billion support for sovereign projects and over $5 billion for private sector projects, up to April 2025. An official privy to the discussions in the development bank explained that annual borrowings by China now are a small amount but Beijing is keen to retain its developing country status due to its implications on other matters like global trade.

The ADB’s ‘graduation’ policy assesses a country’s improved economic status based on macroeconomic, social and human development index parameters to see if its need for ADB financial support has come down. This frees up resources that can be allocated to poorer countries. South Korea has graduated from being a developing country under this policy, the official explained.

Margaret Kuhlow, temporary alternate governor in ADB representing the US, said, “Efficient use of resources requires greater focus on less developed countries where ADB’s support makes the biggest difference for poverty and growth, and application of the graduation policy in countries with higher incomes and ample access to other financing. In particular, concrete steps must be taken to put the People’s Republic of China on a clear path to graduation.”

The lending cooperation between China and ADB is mutually beneficial, said a statement from Lan Fo’an, ADB governor representing China.

“Recently, certain members have cast doubt on the People’s Republic of China’s lending cooperation with ADB, even raising the issue of ‘graduation’. People’s Republic of China considers such claims to be untenable,” said the statement from Lan Fo’an made available by the ADB, adding that China has not yet met all the criteria under the bank’s graduation policy as per a 2023 assessment.

Meanwhile, India’s finance ministry on Monday denied reports in the media that Sitharaman has discussed issues related to Pakistan with ADB president Masato Kanda and the Italian finance minister in Milan. “It is clarified that this is not true and has no basis in fact,” the ministry’s clarification said. 

“These media reports are incorrect,” the ADB added.

The writer is in Milan at the invitation of ADB.