Developing countries in Asia and the Pacific should take the opportunity to build resilient financial systems as they recover from the COVID-19 pandemic, says an Independent Evaluation report released by the Asian Development Bank (ADB).
“The post-COVID-19 recovery period is an opportunity to move toward more resilient domestic financial markets, stronger financial regional cooperation, and robust reforms and programs for mobilizing local savings and private sector finance,” said Independent Evaluation Department (IED) Director General Emmanuel Jimenez.
ADB’s developing member countries need financing for infrastructure projects and support for vulnerable groups, including micro, small, and medium-sized enterprises. Their commitments under the 2015 Paris Agreement have put additional pressure on the finance sector to engage more in green and climate change financing.
“ADB, in addition to providing financing, policy, and technical support to help economies with their immediate challenges, can also enhance the chances for a more financially sustainable recovery through long-term capital market development,” Mr. Jimenez added.
The report states that financial institutions are important conduits in an economic recovery as their actions have a cross-cutting impact across all sectors, industries, and economic activities.
The report underscores that a well-run and diverse finance sector is central to financial stability, economic growth, and the efficient allocation of capital resources. "With increasing inequality and difficulties with access to finance, digital finance, and financial technology will play an important role in improving finance sector services," said the evaluation team leader Paolo Obias.
“ADB is well-placed to offer support to the finance sector through regulatory guidance, institutional capacity building, standard setting, technical assistance, as well as debt and equity investments,” said the evaluation co-team leader Alexander Wellsteed.
This evaluation comes at a time when ADB is finalizing its finance sector directional guide, which provides ADB strategic direction in delivering coherent, relevant, efficient, and effective finance sector investments.
About Independent Evaluation at ADB
ADB's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.