Manila
An agreement has been signed between the Asian Development Bank (ADB) and the International Finance Facility for Education (IFFEd) to provide at least USD 500 million in concessional education funding for lower middle-income countries (LMICs) in Asia and the Pacific. IFFEd, established in 2023 as a Swiss foundation, will guarantee USD 125 million of ADB’s sovereign loan exposure across all sectors and contribute an initial USD 50 million in grants.
This partnership, by combining IFFEd’s guarantees and grants, will allow a four-time leverage ratio on the guarantee, increasing the capital ADB can lend while lowering borrowing costs for developing member countries (DMCs). Grants will comprise 10 percent of every loan, making this arrangement the first of its kind.
The education system in LMICs is currently facing significant challenges, with over 50 percent of students unable to read simple text by age 10, despite attending school. Many graduates also lack the skills needed for employment, contributing to job vacancies that cannot be filled.
The agreement is aimed at addressing these issues by supporting investments in education and skills development, which are considered essential for building knowledge-based economies. The partnership is expected to help LMICs enhance education alongside other critical sectors, contributing to long-term economic growth and addressing broader global challenges such as health, climate, and equity goals.
