Asian Development Fund - Private Sector Window (PSW)

The Private Sector Window (PSW) is a theme-based component of the Asian Development Fund (ADF), which is the Asian Development Bank’s (ADB) largest source of grants. ADB uses the PSW “to promote private sector growth, expand investment, and mobilize private finance” in group A countries and group B small island developing states (SIDS). Group A countries are eligible only for concessional resources. ADB introduced the PSW in ADF 13 as a pilot, and continues it as a pilot in ADF 14 (2025 to 2028). In ADF 14, eligibility has been expanded to group B SIDS. Private finance markets in these countries are often small, young and weakly governed. Investors see them as high risk, which raises financing costs. The primary objective of the PSW is “to increase access to finance and lower the cost of financing”. ADB aims to use the PSW “to catalyze co-investments from commercial lenders and investors”. The PSW provides grant resources through ADB’s nonsovereign operations. It offers three financing solutions, which may be combined: - Local currency: protects against losses from local currency devaluation and encourages local currency lending. - Blended finance: lowers financing costs to make transactions with a demonstration effect commercially viable. - Loan guarantee: backstops payment defaults, including on a first-loss basis. The PSW extends ADB’s nonsovereign operations into agribusiness and fisheries, social sectors, tourism, financial services, manufacturing and noncore infrastructure. It also reinforces ADB’s existing work in climate and renewable energy.

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