AIIB needs to ‘step up’ to help countries finance sustainable, resilient infrastructure: FM Nirmala Sitharaman

Niramala Sitharaman exhorted AIIB to strive for standardisation and greater provision of innovative financial tools and products (file photo)

At a time when the world is facing multiple challenges with climate change making its presence increasingly felt, the need for sustainable and resilient infrastructure is higher than ever, Finance Minister Nirmala Sitharaman said on September 25.

However, geopolitical tensions and unsustainable debt burden is limiting ability of many countries to finance this infrastructure, and this puts the onus on Asian Infrastructure Investment Bank (AIIB) to step up in this situation and the AIIB Governors have the responsibility to ensure that multilateral finance agency delivers, Sitharaman said while attending the Governors’ Business Roundtable at the 9th Annual Meeting of Board of Governors of AIIB, in Samarkand.

While praising AIIB’s "client centric approach, its agile response" during the COVID-19 pandemic, "execution of several special funds to deepen client outreach and the recent initiatives like climate-focused policy-based financing", the minister stated that as envisaged by the G20, "much more needs to be done; both in terms of scale and impact," according to a post on X by the finance ministry.

Sitharaman exhorted AIIB to strive for standardisation and greater provision of innovative financial tools and products, besides playing a catalytic role in mobilising private sector resources, not just in terms of capital but also its technical expertise, innovation, and market-driven approaches.

Beyond financial innovations, the "AIIB should consider expanding its range of non-lending services such as timely technical and project preparation assistance, particularly for the low-income countries," Sitharaman said during her address.

The minister pointed to India's experience with large-scale expansion of physical infrastructure combined with the multiplier effects of digital public infrastructure (DPI), which can prove to be a powerful driver of sustained growth. She asked AIIB to look into facilitating the transfer of such best practices from India and other Asian countries in expanding to important geographies like the low-income countries while simultaneously preserving its Asian context.