The facility will provide grants and guarantees to help drive environmental infrastructure improvements in urban centers. It will support ADB's goal of raising the quality of life in Asian cities, where the population is growing by 44 million people a year, putting a huge strain on services and the environment.

As Asia's cities boom, governments in developing member countries who have limited resources are struggling to fund environmental infrastructure and social services, where the scope for cost recovery is low. As a regional development bank, ADB has been actively engaging its development partners to mobilize funding to meet additional costs of urban investments which effectively address such issues as climate change and poverty reduction.

An Urban Environmental Infrastructure Fund has been established under the facility, with the Government of Sweden committing an initial Skr100m Swedish Krona (around $14 million equivalent), and a guarantee facility of Skr500m Swedish Krona (around $70 million equivalent). Separate urban trust funds may also be set up under the Facility. The Regional and Sustainable Development Department will manage the facility, with the Office of Cofinancing Operations handling donor contributions and guarantees.

“The aim of the facility is to raise and invest cofinancing from development partner agencies and it provides a key mechanism for coordinating existing and new resources for urban infrastructure investments,” said Xianbin Yao, Director General of ADB's Regional and Sustainable Development Department.

The facility can provide both grants and guarantees for both public and private sector urban projects to ensure they incorporate poverty reduction and environmental features, such as climate change mitigation and adaptation measures. It will fund a wide range of technical assistance to help lay the groundwork for such urban projects, and provide a mechanism for coordinating project loans, grants and guarantees, and for the exchange of technology and other knowledge products.

“This new facility will give ADB the ability to bridge project financing gaps to incorporate features which deliver environmental and poverty reduction benefits and which have a strong demonstration effect with respect to sustainability and cost effectiveness,” said Tadashi Kondo, Head of ADB's Office of Cofinancing Operations.#