The Asian Development Bank (ADB) signed an agreement with the International Finance Facility for Education (IFFEd) that will enable at least $500 million in new concessional education funding for lower middle-income countries (LMICs) in Asia and the Pacific.
Under the financing partnership, IFFEd—a sovereign-backed Swiss foundation established in 2023 to invest in education and skills in LMICs—will guarantee $125 million of ADB’s sovereign loan exposure across all sectors, known as a synthetic portfolio, and provide an initial $50 million in grants.
By blending IFFEd’s guarantees to ADB with grants that will comprise 10 percent of every loan, the first-of-its-kind arrangement facilitates a four times leverage ratio of the guarantee, boosting the amount of capital ADB can lend while lowering borrowing costs for the bank’s developing member countries (DMCs).
“By pooling catalytic and concessional financing, this initiative means our lower middle-income DMCs can scale up their investments in education and skills—vital to building knowledge-based economies—along with other sectors at the same time,” said ADB vice-president for sectors and themes Fatima Yasmin.
