President of the three-month-old Asian Infrastructure Investment Bank, Jin Liquin, and World Bank Group President Jim Yong Kim signed a co-financing framework agreement on Wednesday that would allow the two institutions to jointly develop projects in 2016.
The Beijing-based AIIB has long been considered a potential rival to the World Bank, and received initial opposition from the United States — the World Bank’s largest shareholder — over concerns that the new institution would not adhere to environmental and social safeguards or procurement standards. Last year, the Obama administration proposed that the AIIB partner with U.S.-supported development institutions such as the World Bank and the Asian Development Bank. World Bank management has publicly welcomed the Asian financial institution’s emergence as a global player.
This first co-financing framework agreement comes during the World Bank’s spring meetings in Washington, D.C., the first full gathering of World Bank stakeholders since the AIIB opened its doors in January. The two institutions are discussing almost a dozen co-financed projects in sectors including water, transport and energy in Central, South and East Asia.
Speaking to reporters on Thursday, Kim said the World Bank will likely be in charge of project preparation and the implementation of certain safeguards for the first joint projects, since “the AIIB is just getting up and running” and “only now increasing their staff.”
The AIIB is expected to contribute about $1.2 billion in financing in 2016, “with World Bank joint projects anticipated to account for a sizable share,” according to a World Bank statement.
“The AIIB is very grateful for the generous and timely support offered by the World Bank Group throughout our establishment process,” AIIB President Jin Liqun said in a statement on Wednesday. “We look forward to a long and fruitful relationship with ongoing cooperation in project co-financing and other areas,” he added.
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