Empowering Asia and the Pacific’s Economic Future: A Fireside Chat with Asian Development Bank President Kanda

Rachel Glennerster: Okay. Great. It's a great honor to welcome Masato Kanda, who is president of the Asian Development Bank, to CGD. Welcome. He's also chair of the board of directors and took on this role in February of this year, so quite new to the job. You arrived in interesting times. He previously served as special advisor to Japan's Prime Minister and Minister of Finance, having spent four decades in the Ministry of Finance in various roles, including on international affairs, budget management, financial services, policy planning, and coordination.

As Vice Minister of Finance for International Affairs, he played key roles in the G7 and G20 processes. He also served as chair of the OECD Corporate Governance Committee and alternate executive director for Japan at the World Bank. An honor to have you here, and great to start the conversation. We will have one round of questions at the end, but I'll mainly be asking the questions. President Kanda, you've taken office, as I say, at a challenging and pivotal time. Obviously, the region has a long history of successful development. What do you see as some of the key lessons from the past that will help Asia and the Pacific navigate the future?

Masato Kanda: Thank you very much. First of all, it's a great honor and a pleasure to join, and thank you very much for the invitation. I'm very much honored to talk in front of these distinguished guests and friends. Thank you very much indeed. Your first question is really insightful because it's really a turbulent time. This is a time to reflect upon the lessons and best practices from history, not only in Asia and beyond. Talking about the Asian economic history, probably the open economy, and the rapid technology diffusion, and the investment in infrastructure and the human capital propelled the Asia and the Pacific from rather low-income status to the global manufacturing diversified hub.

Now it is predominantly middle-income countries with the average middle class with strong purchasing power, which creates a self-reliant regional economy. Also notably, the regional corporation and integration through the ASEAN and other subnational, and most importantly, the private sector's connection of the global value chain, as well as foreign direct investment, most importantly, in green or technology. Nowadays, probably the semiconductor has created a pretty deep interrelationship, interconnectivity in the region, which I think offered some cushion against the external shock from outside the region.

Now, as you said, it is a rather interesting and very challenging time. Of course, it's difficult to cope with this very high uncertainty, but I think it is a great opportunity for the countries in the region to further diversify their industry and export destinations, and broaden the domestic consumption piece. There are many things making this opportunity to make our economies more resilient and stronger, and fighting against these external shocks. For instance, in order for more regional connectivity, we probably need to further deepen deeper trade or negotiation. For instance, including the service sector and also involving more countries, partner countries, beyond the region to Europe or other continents. There are many things we can do.

Rachel Glennerster: Yes. I think you are exactly right about that integration being so important. When I look at some other regions in the world, I work a lot on Africa and you just don't see anything like that kind of interrelationship and trade and investment across the region, which I agree has been so important in Asia. You mentioned uncertainties, and this is certainly an uncertain time. What do you see as the key risks on the horizon for the Asia and Pacific region, and how can stakeholders work together to help mitigate those risks?

Masato Kanda: Yes, there are many new risks. Probably the most important thing is the uncertainty. Investment doesn't like uncertainty. In addition to the trade conflicts and the shift in trade and other policies, maybe the spillover to the financial capital markets are really the big risks. Already we see the huge volatility in the financial market, including the foreign currencies, equity, and fixed income as well. The effect in the financial market, there are many channels. One is, of course, through the disruption of supply chains, inflation and the higher interest rate will suffocate the higher borrowing costs and the heavier debt burden. Also, the higher volatility in the financial markets would make the risk money escape from the market. It's already—actually, we’re witnessing it at the moment. There are many concerns.

In this situation, the first defense is, I believe there are many things, but probably the most important thing is to continue to stick to the right policy, including the sound macroeconomic policy as well as the continuing structural reform to make their economies stronger and more resilient to expand the domestic demand or they open up further. This is a really good opportunity to open further trade with the regional countries also beyond the continent. The second thing is to further enhance regional cooperation. There are many things, again, we can do. I'm pretty much interested in, for instance, the ASEAN initiative of the ASEAN power grid. Also, we are pretty keen to support regional digitalization and so on. One thing is to create more resilience for the country's economy. The second thing is to strengthen the resilience of the region.

Rachel Glennerster: Right. Yes. The natural reaction to when there are tariffs or interruption of trade is for people to want to respond by reducing trade, whereas, actually, you're arguing that the right response is further openness. I'd agree with that. Can you share some examples of the ADB's work and how its support has made a tangible difference and helped transform countries and led to economic development? You've talked about the economy in general, but what specifically can and has the ADB done?

Masato Kanda: Yes. Thank you very much for asking because we are very much interested in the results on the ground. There are many examples, but, for instance, the ADF, Asian Development Fund, which is the largest grant fund for the poor and vulnerable countries, from these four years, we have lifted 400,000 people out of poverty, and we have provided extended services of the health and education and so on to 30 million people. 30 million. We can do many things, but more specifically, again, there are many examples, for instance, in Uzbekistan, our partnership with the Hamkor, the bank which is one of the commercial banks in Uzbekistan, connected the 50,000 SMEs, micro, small, and middle enterprises. Most of them are women-led, connecting to the market and services.

Of course, obviously, we could create jobs and also livelihoods for the poorest in the region. Another example is in Lao PDR, we supported the tourist industry, the infrastructure which conducted 50,000 people to the services and infrastructure. Of course, it enabled them to have the new businesses and great jobs, and particularly the most beneficial were women. These are some of the examples. We are really trying to make a difference on the ground and deliver tangible results on the ground. This is our mission, and we are confident we can continue and even enhance.

Rachel Glennerster: Great. Thanks. When we were talking outside, it was clear your passion for dealing with poverty shines through both in our earlier conversation and now. Connection also seems to be a theme running through everything you're saying. Let me turn to leadership. We've talked about—its challenging times, you've taken over as a leader of a very important institution at this time. What values do you think are important for leadership right now? How do you translate that into real-world engagement with all the different stakeholders you have to worry about, government, local communities, and other stakeholders?

Masato Kanda: This is a really unprecedented sort of uncertainty, of transformational age, so there's no textbook. Therefore, we've got to be very humble and listen to everyone and try to learn from history and as a civilization. Engagement starts with humility and listening and acting with purpose and determination. The conversation coming from my humble experience, just take example, a few. One is I traveled around more than 90 countries, and most of them as a backpacker when I was an Oxford student. Many of them were developing countries where I witnessed the poorest people, and actually, I myself faced life-or-death situations. And also, I was helped by the poorest people on the ground.

Another thing when I was at the World Bank, as you mentioned, I faced the 2008 global finance crisis. I tried very hard to create the Capitalization Fund to contain the spillover from Wall Street, the financial crisis, and also creating the new trade finance facility to revive the trade flows. Another thing, in 2011, when I was the budget examiner at the Ministry of Finance, I faced again a terrible disaster. The so-called North Japan Great Earthquake and the tsunami, including the Fukushima first nuclear reactor plant accident. I was in a sense, responsible for leading or coordinating the response to this thing. Obviously, there was no textbook, there was no precedent. I found you needed to be very much creative, innovative, proactive, and risk-taking. Most importantly, the collaboration is very much important. I couldn't do anything by myself alone. Of course, before acting collectively, I needed to listen to the people, from the Prime Minister to the victims on the ground, and the private and public, and the whole sectors. I learned quite a lot. After all, I could formulate some of the packages for the support for the victims and the revitalization of the affected.

This is very much important. The engagements need all these, with the living experiences. Upon my assumption of the office ofthe ADB, my first visit abroad was Cambodia, where I had a very privileged experience to witness, firsthand, two things. One is visiting the [unintelligible] Bridge where ecosystem preservation and supporting the library for the poor people can go hand in hand. Also, when I visited the school with upgraded STEM, I saw the many, many girls full of confidence and hope. I had a strong confidence that we can make a difference as long as we behave very humbly and strongly.

Rachel Glennerster: It's interesting to hear you talk about leadership as listening, but I agree, it's a very important part of leadership. Then when you were talking about backpacking around the region, that I also had the privilege of backpacking around Asia when I was in my early 20s.

Masato Kanda: Oh, good. [laughs]

Rachel Glennerster: You learn an awful lot that way.

Masato Kanda: Yes, how to survive this very great experience.

Rachel Glennerster: Also, when you come back, when you're more senior, it's hard to get those experiences again.

Masato Kanda: You're quite right. Actually, my backpacking stopped after my marriage. [laughter] Of course, my wife didn't allow me. I proposed to her to, "Let's go together with the backpack," but she refused. Afterwards, I needed to make a reservation and stay in a hotel. Probably 10 times or 100 times more costly because, the backpacker, probably, you are the same there, the best hotel is their user hostel, and quite often, just staying at their bus stop. [laughs]

Rachel Glennerster: It's also hard as a leader to have those more direct experiences with people because your colleagues in the organization don't want you to. You're protected a bit too much, I feel, sometimes from that.

Masato Kanda: Yes. Of course, it's my responsibility to protect the institutions. The worst thing is to set a bad reputation because of my behavior. For instance, I'm not allowed to be a hostage of a terrorist or something. [laughs] It's a really difficult situation.

Rachel Glennerster: Yes. Let me turn to the private sector. Obviously, the future growth of Asia and the Pacific depends a lot on a robust private sector, and that's one of the reasons that the region has done so well is the growth of the private sector. How can the ADB help catalyze collaborations with the private sector that help generate growth and innovation, in particular, that is needed for growth?

Masato Kanda: Oh, thank you very much. You’re right on because, actually, I wanted to be asked. Private sector is our first priority now. We have very big ambitions. We have already doubled from these two years, doubled, but our mission is to further quadruple, four times, four fours to the $13 billion annually in 2030. This is very much challenging.

Rachel Glennerster: Just to understand, to quadruple the amount of lending to the bank?

Masato Kanda: Lending, yes, annual commitments.

Rachel Glennerster: Okay.

Masato Kanda: This is quite challenging, but this is not only needed for the global economy, the regional economy, to make more vibrant through the introduction of more market mechanisms and provisions. Also, I think this is very much important for the culture change of our own institutions. Ideally, all staff are a hybrid, knowing both public and private, public interest mind and also the private sector efficiency mind. This is the culture's change as well. The amount is not so important, but how to make an impact. There are many things we can do.

Not only the direct intervention through the money injection, but we have strong influence on, for instance, the policy change through the dialogue with the government, including deregulation or even the privatization. There are many things. Also, we do this cutting-edge innovative financial instrument. Another thing, not only the investment, but we have very big services called the PPP, public-private partnership, transaction advisory services. Already, there are many achievements. For instance, our headquarter is in Manila, the Philippines. The tw0-billion Manila International Airport transaction support upgraded significantly the services through the reform and the digitalization and their human capital investment, benefiting the 62 million annual visitors to Manila. There are many things we can do. I'm very much thrilled.

Rachel Glennerster: Some people would argue that the benefit of the private sector is it knows what it's doing. It's very influential in reducing poverty, and it's the big driver of poverty reduction. When governments come in to try and help it, or not governments in this case, but a public institution, that in some ways undermines the benefits of it being the private sector. How do you balance that, knowing that the private sector is so important for growth and poverty reduction, and therefore wanting to support it, but interfering in it, in some ways risks undermining the benefits? How do you think about that part?

Masato Kanda: Yes, that's a really good point. It's been a struggle I experienced during my time in the Ministry of Finance. Usually, the public intervention by the government was influenced by some vested interests or political negotiations. Sometimes it involves adverse selection or moral hazards. In the worst case, actually, the already successful companies don't want help from the government.

Rachel Glennerster: Don't want, yes.

Masato Kanda: Only the failing companies may ask the political support. This is really the danger. What we are doing is recognizing this risk, so try to have the most transparent and efficient market. We are very much strongly against the corruption at any rate. To minimize this kind of risk, probably deregulation and sometimes privatization would be the option. This is not only just creating the bankable projects and downstream, but upstream. We are very much intensively talking with the government to make the dynamic market, which is good for them because it can create jobs which will stabilize their political situation, and also it would create their additional tax revenues for the investment in the future.

Rachel Glennerster: Clearly projects that do privatization are a good way for the government to be involved in promoting the private sector. Recent capital management reforms have significantly boosted the ADB's lending capacity. How are you going to use that increased capacity to support development? What are your ideas for using it?

Masato Kanda: This is a rather enormous amount of new resources. $100 billion over 10 years. This is really the 50% increase in the annual lending commitment from $24 billion now to $36 billion in 2034. How to utilize it, we will prioritize. There are many things and interrelated, but if I may say first, the private sector development of climate action and the regional integration and cooperation and digital transformation, and finally the empowerment resilience. Of course, they're interrelated, but there are many things we've got to do. Probably the more important thing is not the sector because, as I mentioned, everything is interrelated. My focus is totally integrated solutions. Sovereign and non-sovereign, and the many sectors work together.

I hate the silos or compartmentalizing the bureaucracy in many institutions. It's really difficult. In order to do that, of course, the multidisciplinary team is being created. ADB is quite happy because already, from the start, the sovereign and the non-sovereign public and private are under the same roof. We don't have IFs here or these kinds of things. Another thing is further decentralization. I'd like to empower the country office and resident mission because we need to be closer to the client on the ground to be agile and proactive to the very much transforming demands in a speedy way.

For the culture, ideally want the more agile and proactive and more risk-taking and more open attitude of my staff. As I mentioned, this is my belief from my experiences, and particularly important because of this age of uncertainty and the rapidly transforming environment. Already, I feel the clients' countries are asking us for help in even more speedy and more creative way. We are determined to respond.

Rachel Glennerster: You mentioned regional integration, and we've talked about connections and the importance of connection and regional integration throughout this discussion. I wonder how you manage to achieve that when you have a country lending model where you lend to countries specifically. Sometimes that makes it quite hard to do projects that promote integration because you have to have more than one country involved. I certainly know at the World Bank, people complain that those regional projects are extremely difficult to pull off, or the projects that build connections between countries are really hard. They're arguing about how much of the loan goes to them versus the other one. How are you managing to square that, the decentralization to the country level and the lending that's on a country-level basis, but also promoting the interrelationship between them and doing investment that goes across? How do you square that?

Masato Kanda: Yes, that's a really good point. There are several ways, but first is to directly engage with their ASEAN or other subnational integration. Already, we have succeeded, for instance, their local currency bond market and to some extent decentralization. I have already committed to supporting the ASEAN power grid. There are many things we can do directly to talk with the entity as a whole. You're quite right, it needs the individual countries' approval in many cases. Particularly, there are many issues, harmonization or even territorial disputes. We are also talking directly to the individual countries, from the prime minister level to the local people level.

Two things. We have a very rich connection with the region. Another thing, it's not good for us to be proud by ourselves, but we are in a sense regarded as a trusted partner of choice. In this difficult situation, maybe our neutrality, political neutrality, and the trust entrusted by the countries will give us the power to convene and make a platform for regional cooperation. This is also our responsibility because, talking back to our charter, it is our mandate. Two things there. Growth development and cooperation. Regional cooperation was our mandate from the start.

Rachel Glennerster: Great. That helps. Sorry, losing my place here. Looking beyond today's challenges, what's your vision for the economic future of Asia and the Pacific?

Masato Kanda: Yes, vision. We envision ultimately the prosperous, inclusive, and sustainable and resilient Asia and the Pacific while eradicating absolute poverty. My strong personal thinking is putting people first. Transforming the lives of the poor and the most vulnerable, inspiring optimism and building a brighter future for the next generation. This is what we are aiming at. It is not so easy, but I think this rather fluid uncertain situation gives us the opportunities. We've got to turn these challenges into opportunities for the future. If we are courageous enough and humble enough and proactive enough and risk-taking enough, I believe we can make a difference for the people in Asia and the Pacific.

Rachel Glennerster: How do you see the ADB's role in achieving that vision? That's a very grand and important vision. How does the ADB fit into that vision?

Masato Kanda: It is fitted in their center. There are many elements. One is, of course, the resources are not there all, but fortunately, as I mentioned, in the context of the Capital Adequacy Framework, we've got an additional $100 billion without any additional money from donor countries. We have many, many higher-leverage instruments. We have firepower. Secondly, most importantly, we have enjoyed the trust from the countries, and we have a very strong field presence. We try it. Probably we are one of those who are most knowledgeable about the needs of the grant, and as I suggested that I will further strengthen our field presence to be closer to the client. Thirdly, we are very much fortunate to have a very talented and dedicated staff. We will utilize these resources more effectively by the cultural change. The more integrated approaches and also more decentralization and many things, and including, as we discuss, the private sector shift as well.

Rachel Glennerster: You mentioned you have various different instruments. Can you tell me a little bit about how you use different instruments to achieve different goals?

Masato Kanda: Yes. The most simple way is the poorest and most vulnerable countries will tend to benefit from the grants. Just in a sense, they're given money, particularly the poorest countries and sometimes the so-called thematic projects. Not the poorest countries, but for the project with the very big external effects, so the public goods, sometimes it might be justified to give the grants to these countries.

The most economically successful countries can borrow from the rather ordinary time, mostly the commercial time in a sense. There is a graduation, the dependent on not only the income level but also the debt sustainability level. Obviously, the higher debt situation can't afford the more borrowing. Probably the more concessional time or more grants could be provided. It quite depends. There is a variety. Most importantly we are now very much focused on blended finance. Mobilizes more of the private financing to not scale up the magnitude, but also introducing the market incentive to the project as a whole.

Rachel Glennerster: This is something that we at CGD bang on a lot about, using the right instrument for the right—what you set out makes a lot of sense, but it's amazing how many institutions use a lot of grant money for really quite rich countries. Having that differentiation is probably important. I think we have time for some audience questions. At the back, yes you. We'll take several and then ask for a response.

Monica: Hi, my name is Monica. I work at Tetra Tech. I have a question on critical minerals. How does the ADB perceive its role in shaping the critical mineral supply chain in Asia and the Pacific, especially amid the global competition?

Rachel Glennerster: Great. Over here.

Tim Wainwright: Thank you very much, President Kanda. My name is Tim Wainwright. I'm the Chief Executive of WaterAid UK. There's also a WaterAid Japan, you may know. First of all, just wanted to say, we really welcome the commitments that the ADB made on water security at the Riyadh One Water Summit. I'm delighted by that. At WaterAid, we recently carried out a study of the most popular cities in the world in developed and developing countries and looked at their vulnerability to climate change, looking at weather data over 42 years, looking at social vulnerability and physical vulnerability.

This revealed many of the South Asian megacities to be experiencing much more wetter, more extremes of wet, and also instead of 10 storms, all the water comes at once. You have big flooding risks, major issues with sanitation if it's not well managed. Some of the most vulnerable cities were in Pakistan, for instance, Faisalabad, Lahore, and so on. Obviously, you talked a lot about resilience, but this is a major threat to the resilience of those cities and would undermine their economy in Pakistan, again, if you look at the impact of the floods on their GDP. I wondered if you had any thoughts on both your role, but also I heard your passion around the role of the private sector and what you think would be ways of tackling this big risk for the world. Thank you.

Rachel Glennerster: Okay. One more.

Audience Member: Thank you very much. President Kanda, thank you very much for your remarkable vision, stressing such a wide range of issues, including your personal experiences around on the ground. I would like to address the issue of instruments to mobilize the private sector. You mentioned the role of trust funds. You have a very exemplary trust fund, which I visited last September when I was visiting your private sector department, Mr. Dasgupta, and the head of the CGIF. CGIF is a hidden jewel within ADB, which is not known very well. It provides guarantees with a single or double rating to ASEAN Plus Three.

I think that you could actually take that and take risk mitigation for the private sector mobilization goals that you have, and leverage it up to the entire region of Asia. We have some ideas we could give you. I'm the head of a company advisory firm, and I actually set up a company like that in Asia 30 years ago. I'd like to talk to you about that if there is interest, but I would like to know how to leverage up risk mitigation instruments such as you have CGIF, which is hidden under the roof, hidden in the marble floor. Actually, the first floor. It's not hidden, but it's in the corner. I think you should centralize it, you should elevate it. What do you think about that?

Rachel Glennerster: Okay. You have lots of things that you could talk about.

Masato Kanda: Yes. Okay. Probably there are too many, I may miss. Thank you. All are quite relevant, good questions. The critical mineral, this is one of my focuses, particularly during the G7 presidency of Japan in 2023. I initiated the project called RISE, the Regulatory and Inclusive Supply Chain Enhancement, which is trying to diversify the supply chain, notably the critical mineral, while maintaining the climate action and strengthening the development in the developing and emerging countries. Critical mineral is very much, of course, important for sustaining the climate action because many of the instruments for the renewables and so on are relying on the critical minerals, and also the current digitalization, including the cutting-edge semiconductors, need more critical minerals.

One thing is the absolute amount of critical minerals in short, and it is rather concentrated in a small number of countries or even just one country in some cases. Definitely, we need to diversify the supply chain of critical minerals, but the challenge is sometimes it becomes rather a political issue, national security issue. It is so important for the national governments. Another thing is it's rather costly to produce the critical minerals under the highest environmental and social standards. We can't compromise this kind of standard.

We need to find the way to create a diversified supply chain of critical minerals while at the same time maintaining the highest standards. This is quite challenging, but, for instance, it was, as you suggested, the ASEAN countries, they asked us, ADB, to support their development of critical minerals and the transmission and so on, so we commit to more engagement in critical minerals. It is not so easy, but we are very much interested in that. For water, of course, this is one of the most important, in a sense, the existential issue for human beings their whole life. There are many elements, but from the past, water has been a source of war. You see the Middle East and the other countries, and still, it's a source of regional conflict. It is really difficult, but at the same time, this is really the issue for life. Without water, not only industry, but even human life is threatened, so it's very difficult. The [unintelligible] is very much ironical, particularly from the climate change, perhaps, but sometimes too much water and sometimes no water.

Floods and droughts coexist. This is a problem, but this means in some way we can redistribute our channel or pool with the assistance of technology. We may be able to provide more affordable quantities, particularly to the poorest people on the ground. This is one of the agendas I'm very much interested in. Already we have many, many projects under the name of industry, or climate change, or agriculture, of course, irrigation is one of the most important things, and also urban. We may have even more integrated approaches to water.

I was engaged into some extent, for instance, the PPP projects and the sustainability of the local water enterprises when I was the budget examiner in the Japanese Ministry of Finance. Always it is very much difficult to water supply in terms of the long-term maintenance. Particularly the charging is always difficult, and political discussions coming in. They are just talking about today's water supply. Of course, it's important, but what happened 10 years, 20 years later? We are now suffering pretty much with rotting water pipelines all over the world. This is a really quite dangerous situation over there. The so-called old infrastructure, which is another thing we need to address, and the risk mitigation and projects, you're quite right.

Of course, I know quite well of the—because I was the co-chair of the ASEAN Plus Three in 2023, and I've been working with ASEAN more than one decade. There are many risk mitigation tools. There is always the very big one, the total risk leverage system. For the individual private sector project, we have many instruments to risk distribution amongst the parties involved. Most interestingly, we are now working quite intensively on the disaster risk mitigation, disaster risk finance in ASEAN, or the Pacific Island countries, together with ASEAN. Always, you're quite right, give the limited amount of the real money. Financial innovation is always welcomed. Thank you for your advice.

Rachel Glennerster: Yes, we have time for a couple more questions.

Audience Member 2: There are at least 70 countries who send their engineers to come and learn in DC, scientific diplomacy, places like Johns Hopkins. How do they interact with the ADB? Do you have an office or events going on in DC, or how should they connect with the ADB, and particularly with green engineering projects and COP30 or G20?

Rachel Glennerster: I was going to take another couple. Yes.

Sabina Rogers: Hi. Thank you. I'm Sabina Rogers from the ACTION Global Health Advocacy Partnership. Our particular interest is more in ODA and the concessional financing, and what role the ADB has in that side of development. Just wanted to get your thoughts on what you can share about what the ADB is planning or thinking or where your thoughts are around filling in the gaps of the massive reductions in ODA. Not just in the US, but also the UK, France, other European countries, other donor countries, whether it's for nutrition, food security. There are some major replenishment moments happening right now with the Gavi the Global Alliance. There's The Global Fund to Fight AIDS, TB, and Malaria, CEPI, GFF. It's just unending. Your thoughts on how you might be tackling that challenge.

Rachel Glennerster: Just to say, before you answer, there are a number of sessions on this topic at CGD over the next few days, so if you're interested in that topic, do come back to some of our other sessions. Please go ahead.

Masato Kanda: Thank you very much. Indeed, we have office in Washington, DC called the North American Regional Office. My colleague here can give you the others. Also, you can, online, ask the questions to the headquarters. We have another informative home page, and the rather easy access, so very much welcomed. On the reduction, of course the many are very much concerned, but to be honest, we have limited resources, and we will act according to our priorities, strategic priorities. This is the first thing. At the same time, we have many, many partnerships with other agencies. For instance, in the fragile countries, we're working with the UN agencies, and for health or agriculture, again we are working with other partner institutions. In this way, not filling the gap, but as a partner, we can continue to work together. We're simply not in the position to fill the gap.

Rachel Glennerster: We should wrap up, but I think there's a very interesting question for MDBs about, because a lot of the aid cuts have come in the area of health, and in a lot of places, there hasn't been lending for some basic health services. It's being seen as if Gavi should provide grants. I think it does raise the question of, with such a reduction in some of these health grants out there, as to whether the MDBs will need to start lending to countries for basic health services in a way that they haven't. Obviously, there have been health loans before, but traditionally, they haven't done immunization, loans for immunization, or other things. I do think there's an interesting question there about whether MDBs have to change a little bit about what they do in response. Obviously, there are a lot of areas where you can't fill the gaps, but there may need to be some changes.

Masato Kanda: Yes, we can't. I do think of course we need to demonstrate how we are efficient. Under donations, we have tried to increase by 50% without any additional money from donors. This kind of effort would be needed to maintain support from the donor countries. I'm very much trying to further increase our efficiency and effectiveness. For the instrument, it quite depends on the country's situation. We have strategic priorities, and we are trying to align with country programs for national development. Also, we need to think about the fairness amongst the client countries, following the question there, the income level, or their debt dependency level. These things are also in consideration.

For health, it is one of our priorities when we are talking about resilience and empowerment. Health is very much important. For instance, the ADB is quite supportive of universal health coverage. We are proud of us being one of the first to support the COVID-19 vaccine operations. We will continue this tradition to be a very good contributor in health areas as well.

Rachel Glennerster: Great, thank you. I think we need to wrap up now, but I want to thank you for coming to CGD—

Masato Kanda: My pleasure.

Rachel Glennerster: —and being willing to take questions from the audience and answering so fully. Good luck in your taking over in such a challenging time, but it sounds like ADB is in a strong position and with a good vision for the future, so good luck.

Masato Kanda: Thank you very much. Thank you very much, indeed. Thank you.