Since it began operations five years ago this month, the Asian Infrastructure Investment Bank (AIIB) has—as its name suggests—focused on financing infrastructure. The bank’s articles of agreement state it will “foster sustainable economic development, create wealth, and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors”.
Its long-term strategy, approved last year, describes a mission of “financing infrastructure for tomorrow”. So far, the AIIB’s operations have been almost exclusively concentrated in developing Asia and the Pacific, although it has eligible borrowers on other continents.
The bank’s laser focus on infrastructure has enjoyed the strong support of its membership, and makes good sense in a global region with an estimated annual need of some $1.7 trillion in infrastructure financing through the year 2030. AIIB’s early operations highlighted the strong orientation toward infrastructure finance, particularly in the energy and transport sectors, which together accounted for 70% of the 23 projects approved in 2016 and 2017.
All other projects greenlighted during these two years also targeted infrastructure, such as the creation of a mechanism in India to mobilise private sector capital from long-term investors for infrastructure, improving water drainage in the Philippines, the construction of a fibre optic cable network in Oman, and enhancing access to urban infrastructure and services in slums in Indonesia.
Responding to the pandemic
The events of early 2020 soon pulled AIIB into the international response to the COVID-19 pandemic. As the virus spread across the Asian continent, member countries knocked on the bank’s doors in search of urgent financing to meet critical health needs, and to address the negative impacts of the pandemic and subsequent lockdowns on disadvantaged populations, businesses and the economy.
On 3 April 2020, the AIIB management announced plans to create a Crisis Recovery Facility, offering an initial $5 billion to alleviate and mitigate economic, financial and public health pressures arising from COVID-19. Two weeks later, AIIB reported that the amount made available through the facility would be doubled to $10 billion.
The institution’s quick response to a region-wide emergency will surely inspire members to return to the bank for financing when the next calamity strikes. In calmer times, demand from members won’t just be for roads and power plants.
The facility is designed to be flexible and adaptive to emerging demand. It is being used to finance the development of health system capacity, and provide medical equipment and supplies to combat COVID-19. It is financing long-term development of the health sector as well. Resources from the facility can also be used to supplement government social and economic response measures, such as those providing social protection and restoring productive capital (including human capital). Further, the facility is helping address liquidity constraints and maintain critical long-term investments that may have to be curtailed, delayed or suspended.
The AIIB is utilising several mechanisms to disburse the funds. These include the provision of additional financing for ongoing AIIB operations (for example, to build on existing client relationships and project structures), and joint financing with other development banks, in particular results-based programmes of the World Bank and the Asian Development Bank (ADB).
COVID support
AIIB kicked off a series of projects addressing COVID-19 with a $355 million emergency assistance loan to China. Approved in early April 2020, the loan has been used to strengthen the public health emergency response capacity in Beijing and Chongqing. The loan has also financed the provision of emergency supplies and equipment, strengthening of local centres of disease control, and improvement of treatment capacity in hospitals dealing with epidemic emergencies.
A month later, the bank approved a $500 million loan to India to prevent, detect and respond to the threat posed by COVID-19, and to strengthen national health systems for preparedness. Funded by the Crisis Recovery Facility, the loan is helping deliver a combination of emergency response and health system capacity building efforts.
Since May 2020, the AIIB has approved 25 projects supporting COVID-19 response or investing in healthcare technology and digital hospital companies in Bangladesh, Cambodia, China, Cook Islands, Georgia, Fiji, India, Indonesia, Kazakhstan, Kyrgyzstan, the Maldives, Mongolia, Pakistan, the Philippines, Russia, Turkey and Uzbekistan. Several of the projects have been co-financed with the ADB or World Bank, and the budgets for most of them are $100 million or more.
In just a handful of years, AIIB has broadened its portfolio from mainly energy and transport projects to a variety of operations responding to the crisis. It is not likely to return to business as it was before the pandemic. The institution’s quick response to a region-wide emergency will surely inspire members to return to the bank for financing when the next calamity strikes. In calmer times, demand from members won’t just be for roads and power plants.
The Crisis Recovery Facility, which has been expanded to $13 billion, is authorised to continue funding activities through mid-October of this year. The bank’s corporate strategy, approved after the pandemic had raged across Asia for many months, recognises that “AIIB can play a major role in supporting its clients transform their infrastructure sectors, including health and education infrastructure”, and commits the institution to increase social infrastructure operations to respond to client needs.
As the virus spread across the Asian continent, member countries knocked on the bank’s doors in search of urgent financing to meet critical health needs, and to address the negative impact of the pandemic and subsequent lockdowns on disadvantaged populations, businesses and the economy.
There are several more COVID-19 projects in AIIB’s pipeline, including ones providing credit lines to Georgian SMEs and Turkish exporters to address liquidity constraints caused by the pandemic. The bank also intends to co-finance a policy-based loan extended by the ADB to help the Thailand government provide social assistance to informal workers and farmers, and strengthen the healthcare sector.
Recognising that Asia’s recovery will not achieve its potential until a large share of the population is vaccinated, AIIB President Jin Liqun stated recently that the Beijing-based bank would begin to provide financing for vaccines for its member countries.
The pandemic has seen AIIB provide billions of dollars for government social spending, healthcare and medical equipment in its member countries, marking a significant shift in the bank’s short term operational priorities. Although AIIB’s COVID response lending will taper off as Asian countries recover from the crisis, it’s clear that the social sectors will have their place in AIIB’s future portfolio.

Bart W. Édes
Bart W. Édes is a policy analyst, commentator, and author of Learning From Tomorrow: Using Strategic Foresight to Prepare for the Next Big Disruption. He is a Professor of Practice at McGill University, and Distinguished Fellow at the Asia Pacific Foundation of Canada. Édes focuses on developing Asian economies, international trade and sustainable development, and transformative trends reshaping the world.