The Asian region is one of the most dynamic and productive on Earth, but it is held back from realizing its full potential by huge constraints in crucial infrastructure caused by a lack of investment. 2018 also marked the 20th anniversary of the Asian Financial Crisis. Many lessons have been learned, particularly with regard to macroeconomic prudence, including the need for sound fiscal rules and adequate reserves. Recently, increased attention has focused on the issue of how investment had fallen in many Asian economies in the years after the crisis, contributing to the infrastructure gap we see today.
In 2016, AIIB was created to address this infrastructure gap, and with the aim of fostering greater regional and global integration through connectivity. We are fully aware that Asia’s sustained development can only be achieved through greater connectivity with the rest of the world. There are tremendous opportunities for infrastructure to align with changes in trade and economic geography. For example, when it comes to renewable energy trade, the match between supply and demand may well extend beyond artificial boundaries. Similarly, many connectivity infrastructure projects would only make economic sense if linked up as a network to other countries and regions.
At AIIB, we work to promote sustainable economic and social development by investing in infrastructure and other productive sectors in our members,
both in Asia and beyond. Sustaining high-quality infrastructure for improved economic, social and environmental outcomes is a global effort which AIIB is part of. Since its inception in January 2016, AIIB has provided financing in loans and other lending modalities, with commitments totaling close to USD7.5 billion (as of the end of 2018), including a number of projects outside Asia, and we hope to approve projects worth another USD4 billion in 2019.
While public spending still provides the bulk of needed infrastructure investments, fiscal constraints and debt sustainability considerations limit the extension of public finance. As it has long been recognized, the key is to ignite the “animal spirits” of private sector investors into infrastructure development. To do so, we need to build and sustain the set of supportive conditions. This is also clear in our strategy to mobilize private capital, approved by our Board of Directors in 2018.