JEDDAH - The Islamic Development Bank (IsDB) and Asian Development Bank (ADB) signed a landmark co-financing agreement which will allow them to work together on projects in common member countries (Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan).

The agreement calls on both institutions to provide up to $2 billion equivalent each over the next three years to finance projects in their common member countries.

The agreement - which is the first of its kind - is based on a 3-year business plan that includes a common vision, strategic framework, and best practice ideas in development financing, the IsDB said in a statement issued on Tuesday.

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

"This agreement is unique, timely and in line with the Accra High Level Forum and other international declarations on development effectiveness and harmonization", said Vice President Cisse of the Islamic Development Bank.

"In addition, this agreement provides a new platform form which both institutions will attempt to raise third party funds for investments in the common member countries. This is a breakthrough in collaboration between international financial institutions", said Juan Miranda, director general of the Central and West Asia Department of the Asian Development Bank.

"The agreement takes us into a long-term partnership mode and it is consistent with the Strategy 2020 of the Asian Development Bank and Vision 1440H of the Islamic Development Bank", said Walid Abdelwahab, director of Country Operations (Asia) of the IsDB.IsDB.

Werner Liepach, principal director of co-financing operations of ADB, added: "Co-financing is a precondition for effective development work these days and what is particularly enriching in this case is that we have two multilateral development institutions working together on a common platform for the benefit of their common clients."

Separately, another MoU was signed between the Turkish International Cooperation and Development Agency (TIKA) and the Islamic Development Bank Group on Sunday formulating a comprehensive agreement of cooperation between the partners in promoting economic and social development of their common countries.

The MoU, signed by TIKA President Musa Kulaklikaya and IDB President Dr. Ahmad Mohamed Ali at IDB headquarters here, states that the partnership between the parties will render their respective activities more effective and beneficial to the countries of common interest.

TIKA, acting on behalf of the government of the Republic of Turkey, is dedicated to contributing towards sustainable social and economic development in partner countries through technical cooperation activities and development projects. Given the similar realm of visions of both institutions, the partnership between IDB and TIKA aims to better facilitate development in their member countries.

"We appreciate all your efforts in what you are doing in our member countries," said Dr. Ali. "We look forward to having a closer cooperation. We would be happy to be your active partner." The MoU specifies the areas of cooperation to include capacity building, agriculture, environmental planning and management, and health, among others. According to the signed agreement, TIKA and IDB will cooperate in the promotion of the above areas in member countries of both parties.

Meanwhile, Fitch Ratings has affirmed the IDB's ratings at Long-term Issuer Default (IDR) 'AAA' with Stable Outlook and Short-term IDR 'F1+'. The ratings are based on the strong support the bank derives from its shareholders, its very limited recourse to leverage and its established track record in terms of asset quality.

© The Saudi Gazette 2008