Statement by the Honorable Taro Aso
Deputy Prime Minister of Japan and ADB Governor for Japan
at the Fifty-third Annual Meeting of the Board of Governors of
the Asian Development Bank
(September 18, 2020)
Mr. Chairperson of the Board of Governors, Mr. President, Governors, Ladies and Gentlemen:
First of all, I would like to express my respect to the ADB staff members who are dedicating themselves to their tasks under the leadership of President Asakawa amid the unprecedented difficulties due to the spread of the COVID-19 pandemic.
While it is regrettable that the annual meeting cannot be held in person, I would like to express my sincere gratitude to the ADB staff for its efforts in preparing for the virtual meeting.
2. Response to the COVID-19 pandemic and ADB’s Role
To deal with the health, economic, and financial impact of the COVID-19 pandemic, governments and International Financial Institutions around the world have been taking various actions and enhancing coordination.
At this juncture, ADB has provided emergency assistance including in the procurement of medical equipment to various countries since this January. In April, ADB announced an emergency assistance package of $20 billion, including the establishment of a special measure to streamline its operations for quicker and more flexible delivery of assistance.
Japan highly appreciates such efforts by ADB and provided emergency support of $150 million through the Japan Fund for Poverty Reduction (JFPR) and the Asia Pacific Disaster Response Fund (APDRF) to help developing member countries (DMCs) strengthen their capacity to contain the spread of COVID-19.
Although it is difficult at present to forecast when the COVID-19 pandemic can be brought under control, Japan expects ADB to continue providing appropriate support in accordance with the situation of infection in each country.
3. Japan’s Development Priorities
In order to contain the COVID-19 pandemic and achieve economic recovery from COVID-19 as well as sustainable economic growth, Japan believes that the following four development priorities, which Japan has worked for, are becoming increasingly important. Japan expects ADB to continue and enhance its efforts in these areas.
Japan has called for the importance of enhancing pandemic preparedness and response, and has cooperated with ADB in promoting universal health coverage (UHC) in DMCs. The COVID-19 pandemic has reconfirmed that building resilient health systems in developing countries plays an important role in not only the improvement of quality of health services but also sustainable economic growth.
Japan will further strengthen cooperation with ADB in achieving UHC in Asia and the Pacific under three new pillars: (i) building institutional framework for UHC, (ii) accelerating human resources development for UHC, and (iii) investing in infrastructures for UHC.
＜Quality Infrastructure Investment＞
Promoting “Quality Infrastructure Investment” is essential for sustainable economic growth after COVID-19. Japan has been cooperating with ADB to promote “Quality Infrastructure Investment” in Asia and the Pacific through various co-financing projects.
The “G20 Principles for Quality Infrastructure Investment”, which were agreed at G20 summit under Japan’s G20 presidency last year, include such elements as efficiency in terms of life-cycle cost, transparency of procurement, open access, and debt sustainability. These are exactly in line with what Japan and ADB have been promoting. Japan hopes that these principles will be further incorporated in ADB’s operations.
As DMCs take fiscal stimulus measures for responding to COVID-19, the risk of debt vulnerability in Asia and the Pacific requires closer attention. Debt vulnerability in developing countries is one of the major risks faced by the global economy, and urgent actions are needed to address the risk properly.
In order to ensure stable capital flows and achieve sustainable economic growth, it is critical to ensure debt transparency and sustainability. Japan expects ADB to cooperate with the IMF and the World Bank in promoting measures to enhance debt management capacities and debt transparency in DMCs.
＜Domestic resource mobilization＞
In order to fundamentally solve debt sustainability issues, it is essential to strengthen domestic resource mobilization and to build a fiscal structure which does not excessively rely on external borrowing.
From this viewpoint, Japan welcomes ADB’s assistance for capacity building on tax systems in DMCs.
Japan expects ADB to play a leading role in cooperation on tax systems in Asia and the Pacific under the leadership of President Asakawa.
Japan will strengthen support for these development priorities through Japan Trust Fund in ADB in order to effectively deal with various challenges in Asia and the Pacific.
4. ADF replenishment
As ADB is expected to play an increasingly vital role in the areas mentioned above, Japan is very pleased that the negotiations on the replenishment of the Asian Development Fund (ADF), which is a financing resource to support vulnerable countries, have been successfully concluded. Japan highly appreciates that Japan’s development priorities such as regional health security, quality infrastructure investment and debt sustainability are highlighted in the ADF13 strategy, and Japan has expressed to make a contribution of around 107.6 billion yen subject to the approval of the Diet, which corresponds to the indicative contribution share of 35%.
In vulnerable small island developing states (SIDS), the fall in tourism demand has led to severe economic and social consequences within and beyond the tourism sector. As SIDS are also facing other difficult challenges including natural disasters and climate change, Japan welcomes the scaling up of grant support for SIDS during the ADF13 implementation period.
ADB should also prioritize assistance for lower-income countries and vulnerable countries under the Ordinary Capital Resources (OCR) as well in order to make effective use of ADB resources. With respect to assistance to upper middle-income countries (UMICs), ADB should focus on areas where it can add the most value and on sharing of knowledge and best practices in such areas as regional public goods and climate change, as highlighted in “Strategy 2030”.
In particular, with regards to UMICs above the graduation income threshold under the graduation policy, ADB should carry out systematic analyses and assessments of their readiness for graduation during the Country Partnership Strategy (CPS) preparation process, and a concrete path toward graduation should be clarified while prioritizing its assistance in areas conducive to graduation.
The world is still in the midst of an unprecedented crisis, and ADB has a very significant role to play in containing the pandemic and achieving early economic recovery. Japan expects that ADB will take innovative and effective steps through the “One ADB” approach under the leadership of President Asakawa while continuing to carefully listen to the voice of Asia and the Pacific.
Japan will provide continued and strong support to ADB’s efforts and contribute to robust economic recovery and further development in Asia and the Pacific beyond COVID-19 pandemic in close cooperation with ADB.