(Sukuk.net) The Asian Development Bank (ADB) and the Islamic Development Bank (IDB) have signed a co-financing agreement, which will allow them to work together on projects in common member countries, Reuters reported.

Under the agreement, both institutions will provide loans up to $2 billion each over the next three years to finance projects in Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyzstan, Maldives, Pakistan, Tajikistan, Turkmenistan and Uzbekistan.

The agreement is based on a three-year business plan that includes a common vision, strategic framework and best practice ideas in development financing.

The co-financing will target transactions in the infrastructure (including irrigation), utilities, and urban sectors. However, it may also cover education, health and other sectors in select countries.

This agreement is time-bound and in line with the Accra High Level Forum and other international declarations on development effectiveness and harmonization, according to an IDB statement.

In addition, this agreement provides a new platform from which both institutions will attempt to raise third party funds for investments in the common member countries.

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