Asian Infrastructure Investment Bank 18K Annual report (foreign governments) | SEC 31 Mar 22

Exhibit 3

Description of the Registrant and Recent Developments

This description of the Asian Infrastructure Investment Bank (“AIIB” or the “Bank”) is dated March 31, 2022 and appears as Exhibit 3 to the annual report on Form 18-K of AIIB for the fiscal year ended December 31, 2021.


ASIAN INFRASTRUCTURE INVESTMENT BANK			3
Overview			3
Legal Status			3
Membership, Capital Structure and Reserves			4

CAPITALIZATION AND INDEBTEDNESS			9

SELECTED FINANCIAL INFORMATION			10

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			11
Overview			11
Impact of the COVID-19 Pandemic on the Bank’s Activities and Results of Operations			11
Critical Accounting Policies			12
Internal Control over Financial Reporting			12
Income Statement			13
Balance Sheet			16
Asset Quality			17
Debt Record			17
External Auditor Work Papers			17
Related Party Transactions			19
Recent Developments			20

OPERATIONS OF AIIB			21
Ordinary Resources and Special Fund Resources			21
Financial Instruments			22
Financing Portfolio			25
Proposed Financings			30
Financing Approval Process			31
Environmental and Social Framework			33
Economic Sanctions			34
AIIB Special Funds			35
The Multilateral Cooperation Center for Development Finance			36
The Global Infrastructure Facility			36
Quality of Loan Portfolio			36

RISK MANAGEMENT			38
Risk Philosophy			38
Risk Appetite Statement			38
Risk Management Architecture			38
Three Lines of Defense			39
Capital Adequacy			39
Risk Types			40

GOVERNANCE AND ADMINISTRATION			44
Board of Governors			44
Board of Directors			49
Board Committees			53
Senior Management			54
International Advisory Panel			56
Employees			57

SELECTED DEMOGRAPHIC AND ECONOMIC DATA			58

THE DELIVERY OF THIS DOCUMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS DOCUMENT (OTHERWISE THAN AS PART OF A PROSPECTUS CONTAINED IN A REGISTRATION STATEMENT FILED UNDER THE U.S. SECURITIES ACT OF 1933) DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF THE ASIAN INFRASTRUCTURE INVESTMENT BANK.

ASIAN INFRASTRUCTURE INVESTMENT BANK

Overview

AIIB is a multilateral development bank (“MDB”) with a mandate to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions. The Bank commenced operations on January 16, 2016 to help its members meet a substantial financing gap between the demand for infrastructure in Asia and available financial resources. The Bank aims to work with public and private sector partners to channel its own public resources, together with private and institutional funds, into sustainable infrastructure investment. The Bank maintains its principal office in Beijing, People’s Republic of China (“China”).

The Bank’s mission is “Financing Infrastructure for Tomorrow,” which reflects AIIB’s commitment to sustainability, be it financial, economic, social or environmental in nature. The Bank has identified the following thematic priorities:

•

Green Infrastructure: Prioritizing green infrastructure and supporting its members to meet their environmental and development goals by financing projects that deliver local environmental improvements and investments dedicated to climate action;

•

Connectivity and Regional Cooperation: Prioritizing projects that facilitate better domestic and cross-border infrastructure connectivity within Asia and between Asia and the rest of the world, and supporting projects that complement cross-border infrastructure connectivity by generating direct measurable benefits in enhancing regional trade, investment and digital and financial integration across Asian economies and beyond;

•

Technology-enabled Infrastructure: Supporting projects where the application of technology delivers better value, quality, productivity, efficiency, resilience, sustainability, inclusion, transparency or better governance along the full project life cycle; and

•

Private Capital Mobilization: Supporting projects that directly or indirectly mobilize private financing into sectors within the Bank’s mandate.

The Bank has developed, and continues to develop, a wide range of operational policies, strategies and frameworks designed to ensure that there is a direct link between the Bank’s mandate, mission and thematic priorities and the projects it finances. Sustainable development is an integral part of the Bank’s identification, preparation and implementation of projects. In April 2021, the Bank launched its “Sustainable Development Bond Framework” which, among other things, summarizes the Bank’s sustainability commitments and the reporting that the Bank will provide on its website concerning the environmental and/or social impacts of Bank financings. The Bank’s Sustainable Development Bond Framework and, unless otherwise indicated, information available on, or accessible through, AIIB’s website is not incorporated herein by reference.

Legal Status

AIIB was established and operates under the Articles of Agreement (the “Articles of Agreement”), an international treaty to which governments are parties and which was open for signature on June 29, 2015 and entered into force on December 25, 2015. The Bank is not a private institution and does not have private shareholders.

The Articles of Agreement provide that all the powers of AIIB shall be vested in the Board of Governors of AIIB (the “Board of Governors”). The Board of Governors has delegated a broad range of operational oversight functions to the non-resident Board of Directors of AIIB (the “Board of Directors”). See “Governance and Administration.” On January 16, 2016, the Board of Governors convened its inaugural meeting in Beijing and declared the Bank open for business.

The Articles of Agreement endow AIIB with full juridical personality and, in particular, the full legal capacity (i) to contract, (ii) to acquire, and dispose of, immovable and movable property, (iii) to institute and respond to legal

proceedings and (iv) to take such other action as may be necessary or useful for its purpose and activities. The Articles of Agreement provide that the Bank enjoys, in the territory of each of its members, the following immunities, exemptions and privileges:

•

The Bank enjoys immunity from every form of legal process, except in cases arising out of or in connection with the exercise of its power to raise funds, to guarantee obligations, or to buy and sell securities, in which case actions may be brought in a court of competent jurisdiction in the territory in which the Bank has an office, has appointed an agent for service of process or has issued or guaranteed securities. Moreover, no action may be brought against the Bank by a member or an instrumentality of such member; instead they have recourse to special procedures for settlement of disputes as described in the Articles of Agreement, in the by-laws and regulations of the Bank, or in contracts entered with the Bank.

•

The property and other assets of the Bank are immune from all forms of seizure, attachment or execution before delivery of a final judgment against the Bank, and from search, requisition, confiscation, expropriation or any other forceful taking by executive or legislative action. The archives of the Bank and all documents belonging to it or held by it are inviolable, regardless of location or who holds them.

•

All Governors, Directors, Alternate Governors, Alternate Directors, the President, Vice-Presidents and other officers and employees of the Bank are immune from legal process with respect to acts performed by them in their official capacity, except when the Bank waives this immunity.

•

The Bank, its assets, property, income and its operations and transactions are immune from all taxes and customs duties, and the Bank is immune from any obligation relating to the payment, withholding or collection of any tax or duty.

•

All of the property and assets of the Bank are free from restrictions, regulations, controls and moratoria of any nature (subject to the Articles of Agreement).

•

The salaries, emoluments and expenses which the Bank pays to its Directors, Alternate Directors, President, Vice-President(s) and other officers and employees of the Bank are exempt from taxation, save to the extent that a member has explicitly reserved its right to tax such payments to its nationals or citizens.

Membership, Capital Structure and Reserves

Membership

Membership in AIIB is open to members of the International Bank for Reconstruction and Development (“IBRD” or the “World Bank”) or the Asian Development Bank (“ADB”). In the case of an applicant that is not a sovereign or not responsible for the conduct of its international relations (e.g., a political subdivision such as a semi-autonomous territory), application for membership in the Bank must be presented or agreed by the member of the Bank responsible for its international relations.

In October 2014, 22 countries signed a memorandum of understanding to establish the Bank. By the end of March 2015, 57 countries committed to being part of the process to design and establish the Bank. Negotiations on the Articles of Agreement concluded on May 22, 2015 and by the end of 2015, 57 prospective members signed the Articles of Agreement. Signatories to the Articles of Agreement were required to ratify, accept or approve the Articles of Agreement no later than December 31, 2016, or such later date as determined by the Board of Governors by an affirmative vote of a majority of the total number of Governors, representing not less than a majority of the total voting power of AIIB’s members (a “Special Majority Vote”). For those signatories that did not ratify, accept or approve the Articles of Agreement by December 31, 2016, the deadline for such ratification, acceptance or approval was extended; the current deadline is December 31, 2022.

Members of IBRD or ADB which were not signatories to the Articles of Agreement may be admitted by a Special Majority Vote of the Board of Governors. In respect of membership for non-signatories to the Articles of Agreement, the Bank has established procedures for membership. These procedures include initial informal

discussions with the Corporate Secretariat of the Bank followed by a firm written expression of interest in membership addressed to the Corporate Secretary and signed by an applicant’s duly authorized person with the rank of minister or above. If the applicant receives an informal consensus for admission from the Board of Directors, the Bank would then determine the indicative terms and conditions of membership of the applicant consistent with the Articles of Agreement. At this point, a formal application would then be made by the applicant, which would be signed by the applicant’s competent authority, such as Head of Government, Head of State or Foreign Minister. Upon receipt of the membership application, the terms and conditions of membership (including the maximum number of shares of the Bank to which the applicant may subscribe) would be recommended by the Board of Directors to the Board of Governors for its approval. Following approval by a Special Majority Vote of the Board of Governors, the applicant would prepare the necessary domestic authorization and legislation to become a member, and take other steps required for membership, including making payment of a first installment for subscribed paid-in shares, appointing a Governor and Alternate Governor and assigning votes to a Director.

There are 57 signatories to the Articles of Agreement, two of which, as of February 28, 2022, had not yet ratified, approved or accepted the Articles of Agreement. Consequently, as of February 28, 2022, the Bank had 55 founding members.

As of February 28, 2022, the Bank had 89 members (46 regional and 43 non-regional). See “Table 1: Membership and Capital Allocation” below.

As of February 28, 2022, the Bank also had 16 prospective members (five regional and 11 non-regional). Prospective members denote those jurisdictions whose membership applications have already been approved by the Board of Governors, but that have not become members yet. As of February 28, 2022, the Bank’s prospective regional members were: Armenia, Iraq, Kuwait, Lebanon and Papua New Guinea. As of February 28, 2022, the Bank’s prospective non-regional members were: Bolivia, Djibouti, Kenya, Libya, Morocco, Nigeria, Senegal, South Africa, Togo, Tunisia and Venezuela. For prospective members, the deadline for accession is December 31, 2022, except to the extent such deadline is extended by the Board of Governors.

If a member fails to fulfill any of its obligations to the Bank, the Board of Governors may suspend such member by an affirmative vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of AIIB’s members (a “Super Majority Vote”). A suspended member automatically ceases to be a member one year from the date of its suspension, unless the Board of Governors decides by a Super Majority Vote to restore the member to good standing. Other than the right of withdrawal, a suspended member is not allowed to exercise any rights under the Articles of Agreement, but remains subject to all obligations under the Articles of Agreement.

Capital Structure

The authorized capital of the Bank consists of US$100,000,000,000 divided into paid-in shares having an aggregate par value of US$20,000,000,000 and callable shares having an aggregate par value of US$80,000,000,000. As of December 31, 2021, the members had subscribed an aggregate of US$96,775,100,000 of the Bank’s share capital, of which US$19,355,000,000 was paid-in and US$77,420,100,000 was callable.

Payment of subscribed, paid-in capital is due in five installments, except for members designated as less developed countries, which may pay in up to ten installments. As of December 31, 2021, US$19,047,842,140 had been received from members, all in convertible currency, US$149,962,151 was due but not yet received and US$157,195,709 was not yet due. Capital subscriptions may be paid in United States dollars or in other convertible currency. However, to the extent that a member is a less developed country, the member may pay a portion of up to 50% of each installment in the currency of the member, with the Bank having discretion as to what amount is equivalent to the full value in terms of U.S. dollars and the member maintaining the value of all such currency held by the Bank should the member’s currency depreciate in the Bank’s opinion.

The authorized capital stock of the Bank may be increased only by a Super Majority Vote.

Total voting power of each member consists of the sum of its basic votes, share votes and, in the case of a founding member, its founding member votes. A member’s basic votes equal 12% of the aggregate sum of basic votes, share votes and founding member votes of all the members, divided by the number of members. Share votes consist

of the number of shares of the capital stock of the Bank subscribed to by that member. All rights, including voting rights, acquired in respect of paid-in and associated callable shares for which payments are due but have not been received are suspended until full payment is received by the Bank. Each founding member is allocated 600 founding member votes.

Table 1: Membership and Capital Allocation⁽¹⁾


			Total Subscriptions					Voting Power
Member	Year of Accession		Amount (million US$)		Percent of Total			Share Votes		Founding Member Votes		Basic Votes		Total Votes		Percent of Total
Regional
Afghanistan		2017		86.6		0.0893	%		520		—		1,524		2,044		0.1808	%
Australia		2015		3,691.2		3.8081	%		36,912		600		1,524		39,036		3.4533	%
Azerbaijan		2016		254.1		0.2621	%		2,541		600		1,524		4,665		0.4127	%
Bahrain		2018		103.6		0.1069	%		1,036		—		1,524		2,560		0.2265	%
Bangladesh		2016		660.5		0.6814	%		6,605		600		1,524		8,729		0.7722	%
Brunei Darussalam		2015		52.4		0.0541	%		524		600		1,524		2,648		0.2343	%
Cambodia		2016		62.3		0.0643	%		623		600		1,524		2,747		0.2430	%
China		2015		29,780.4		30.7237	%		297,804		600		1,524		299,928		26.5327	%
Cook Islands		2020		0.5		0.0005	%		5		—		1,524		1,529		0.1353	%
Cyprus		2018		20.0		0.0206	%		200		—		1,524		1,724		0.1525	%
Fiji		2017		12.5		0.0129	%		125		—		1,524		1,649		0.1459	%
Georgia		2015		53.9		0.0556	%		539		600		1,524		2,663		0.2356	%
Hong Kong, China		2017		765.1		0.7893	%		7,651		—		1,524		9,175		0.8117	%
India		2016		8,367.3		8.6323	%		83,673		600		1,524		85,797		7.5899	%
Indonesia		2016		3,360.7		3.4672	%		33,607		600		1,524		35,731		3.1609	%
Iran		2017		1,580.8		1.6309	%		9,485		600		1,524		11,609		1.0270	%
Israel		2016		749.9		0.7737	%		7,499		600		1,524		9,623		0.8513	%
Jordan		2015		119.2		0.1230	%		1,192		600		1,524		3,316		0.2933	%
Kazakhstan		2016		729.3		0.7524	%		7,293		600		1,524		9,417		0.8331	%
Korea		2015		3,738.7		3.8571	%		37,387		600		1,524		39,511		3.4953	%
Kyrgyz Republic		2016		26.8		0.0276	%		188		600		1,524		2,312		0.2045	%
Lao PDR		2016		43.0		0.0444	%		430		600		1,524		2,554		0.2259	%
Malaysia		2017		109.5		0.1130	%		1,095		600		1,524		3,219		0.2848	%
Maldives		2016		7.2		0.0074	%		72		600		1,524		2,196		0.1943	%
Mongolia		2015		41.1		0.0424	%		411		600		1,524		2,535		0.2243	%
Myanmar		2015		264.5		0.2729	%		2,381		600		1,524		4,505		0.3985	%
Nepal		2016		80.9		0.0835	%		809		600		1,524		2,933		0.2595	%
New Zealand		2015		461.5		0.4761	%		4,615		600		1,524		6,739		0.5962	%
Oman		2016		259.2		0.2674	%		2,592		600		1,524		4,716		0.4172	%
Pakistan		2015		1,034.1		1.0669	%		10,341		600		1,524		12,465		1.1027	%
Philippines		2016		979.1		1.0101	%		9,791		600		1,524		11,915		1.0540	%
Qatar		2016		604.4		0.6235	%		6,044		600		1,524		8,168		0.7226	%
Russia		2015		6,536.2		6.7432	%		65,362		600		1,524		67,486		5.9701	%
Samoa		2018		2.1		0.0022	%		21		—		1,524		1,545		0.1367	%
Saudi Arabia		2016		2,544.6		2.6252	%		25,446		600		1,524		27,570		2.4389	%
Singapore		2015		250.0		0.2579	%		2,500		600		1,524		4,624		0.4091	%
Sri Lanka		2016		269.0		0.2775	%		2,690		600		1,524		4,814		0.4259	%
Tajikistan		2016		30.9		0.0319	%		278		600		1,524		2,402		0.2125	%
Thailand		2016		1,427.5		1.4727	%		14,275		600		1,524		16,399		1.4507	%
Timor-Leste		2017		16.0		0.0165	%		160		—		1,524		1,684		0.1490	%
Tonga		2021		1.2		0.0012	%		12		—		1,524		1,536		0.1359	%
Turkey		2016		2,609.9		2.6926	%		26,099		600		1,524		28,223		2.4967	%
United Arab Emirates		2016		1,185.7		1.2233	%		11,857		600		1,524		13,981		1.2368	%
Uzbekistan		2016		219.8		0.2268	%		2,198		600		1,524		4,322		0.3823	%
Vanuatu		2018		0.5		0.0005	%		5		—		1,524		1,529		0.1353	%
Viet Nam		2016		663.3		0.6843	%		6,633		600		1,524		8,757		0.7747	%
Total Regional				73,857.0		76.1965	%		731,526		21,600		70,104		823,230		72.8259	%

Non-Regional
Algeria		2019		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Argentina		2021		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%


			Total Subscriptions					Voting Power
Member	Year of Accession		Amount (million US$)		Percent of Total			Share Votes		Founding Member Votes		Basic Votes		Total Votes		Percent of Total
Austria		2015		500.8		0.5167	%		5,008		600		1,524		7,132		0.6309	%
Belarus		2019		64.1		0.0661	%		641		—		1,524		2,165		0.1915	%
Belgium		2019		284.6		0.2936	%		2,846		—		1,524		4,370		0.3866	%
Benin		2020		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Brazil		2020		5.0		0.0052	%		50		600		1,524		2,174		0.1923	%
Canada		2018		995.4		1.0269	%		9,954		—		1,524		11,478		1.0154	%
Chile		2021		10.0		0.0103	%		100		—		1,524		1,624		0.1437	%
Côte d’Ivoire		2020		5.0		0.0052	%		41		—		1,524		1,565		0.1384	%
Croatia		2021		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Denmark		2016		369.5		0.3812	%		3,695		600		1,524		5,819		0.5148	%
Ecuador		2019		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Egypt		2016		650.5		0.6711	%		6,505		600		1,524		8,629		0.7634	%
Ethiopia		2017		45.8		0.0473	%		366		—		1,524		1,890		0.1672	%
Finland		2016		310.3		0.3201	%		3,103		600		1,524		5,227		0.4624	%
France		2016		3,375.6		3.4825	%		33,756		600		1,524		35,880		3.1741	%
Germany		2015		4,484.2		4.6262	%		44,842		600		1,524		46,966		4.1548	%
Ghana		2020		5.0		0.0052	%		40		—		1,524		1,564		0.1384	%
Greece		2019		10.0		0.0103	%		100		—		1,524		1,624		0.1437	%
Guinea		2019		5.0		0.0052	%		40		—		1,524		1,564		0.1384	%
Hungary		2017		100.0		0.1032	%		1,000		—		1,524		2,524		0.2233	%
Iceland		2016		17.6		0.0182	%		176		600		1,524		2,300		0.2035	%
Ireland		2017		131.3		0.1355	%		1,313		—		1,524		2,837		0.2510	%
Italy		2016		2,571.8		2.6533	%		25,718		600		1,524		27,842		2.4630	%
Liberia		2021		5.0		0.0052	%		40		—		1,524		1,564		0.1384	%
Luxembourg		2015		69.7		0.0719	%		697		600		1,524		2,821		0.2496	%
Madagascar		2018		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Malta		2016		13.6		0.0140	%		136		600		1,524		2,260		0.1999	%
Netherlands		2015		1,031.3		1.0640	%		10,313		600		1,524		12,437		1.1002	%
Norway		2015		550.6		0.5680	%		5,506		600		1,524		7,630		0.6750	%
Peru		2022		154.6		0.1595	%		1,546		—		1,524		3,070		0.2716	%
Poland		2016		831.8		0.8581	%		8,318		600		1,524		10,442		0.9237	%
Portugal		2017		65.0		0.0671	%		650		600		1,524		2,774		0.2454	%
Romania		2018		153.0		0.1578	%		1,530		—		1,524		3,054		0.2702	%
Rwanda		2020		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Serbia		2019		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%
Spain		2017		1,761.5		1.8173	%		17,615		600		1,524		19,739		1.7462	%
Sudan		2018		59.0		0.0609	%		240		—		1,524		1,764		0.1560	%
Sweden		2016		630.0		0.6500	%		6,300		600		1,524		8,424		0.7452	%
Switzerland		2016		706.4		0.7288	%		7,064		600		1,524		9,188		0.8128	%
United Kingdom		2015		3,054.7		3.1515	%		30,547		600		1,524		32,671		2.8902	%
Uruguay		2020		5.0		0.0052	%		50		—		1,524		1,574		0.1392	%

Total Non-Regional				23,072.7		23.8035	%		230,246		11,400		65,532		307,178		27.1741	%

Grand Total				96,929.7		100.0000	%		961,772		33,000		135,636		1,130,408		100.0000	%

Note:

(1)	Subscription and voting figures are as of February 28, 2022.

As shown in the table above, China holds the largest percentage of voting power, with 26.5327% of the total as of February 28, 2022. Because Super Majority Votes require in part the affirmative vote of Governors representing not less than three-fourths of the total voting power of AIIB’s members, any member with over 25% of AIIB’s total voting power could effectively prevent actions requiring a Super Majority Vote from occurring. See “Governance and Administration–Board of Governors” for further information on the types of measures that require a Super Majority Vote.

Withdrawal and Suspension

Pursuant to Article 37 of the Articles of Agreement, any member may withdraw from the Bank at any time by delivering a notice to the Bank, and such withdrawal will become effective (and the withdrawing member’s

membership will cease) on the date specified in the notice but no sooner than six months after the date that notice is received by the Bank. At any time before the withdrawal becomes effective, the member may cancel its notice of intention to withdraw. A withdrawing member remains liable for all direct and contingent obligations to the Bank to which it was subject as of the date of delivery of the withdrawal notice. At the time membership ceases, the Bank shall arrange for the repurchase of the withdrawing member’s shares by the Bank as a part of the settlement of accounts with such member.

Pursuant to Article 38 of the Articles of Agreement, if a member fails to fulfill any of its obligations to the Bank, the Board of Governors may suspend such member by a Super Majority Vote. See “Governance and Administration–Board of Governors.” A suspended member shall automatically cease to be a member one year from the date of its suspension, unless the Board of Governors decides by a Super Majority Vote to restore the member to good standing. While under suspension, a member shall not be entitled to exercise any rights under the Articles of Agreement, except the right of withdrawal, but shall remain subject to all its obligations.

Reserves

Pursuant to Article 18(1) of the Articles of Agreement, the Board of Governors shall determine at least annually what part of the net income of AIIB shall be allocated, after making provision for reserves, to retained earnings or other purposes and what part, if any, shall be distributed to the members.

CAPITALIZATION AND INDEBTEDNESS

The following table sets forth AIIB’s capitalization and indebtedness as of December 31, 2021 and does not give effect to any transaction since December 31, 2021. Since December 31, 2021 and through March 23, 2022, the date of the signing of the 2021 Audited Financial Statements (as defined below), there have been no material changes to the capitalization and indebtedness of the Bank, except for the issuance by the Bank of an aggregate amount of US$1,119.7 million equivalent fixed rate notes under AIIB’s Global Medium Term Note Programme and an aggregate amount of US$359.8 million equivalent of fixed rate notes under its A$ and NZ$ Debt Issuance Programme.


	As of December 31, 2021
	(in thousands of US$)
Borrowings		19,267,851
Members’ equity
Paid-in capital		19,355,000
Reserve for accretion of paid-in capital receivables		(3,463	)
Reserves for unrealized loss on fair-valued borrowings arising from changes in own credit risk		(61,622	)
Retained earnings		876,003

Total members’ equity		20,165,918

SELECTED FINANCIAL INFORMATION

The financial information included herein as of and for the years ended December 31, 2021, December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017 is derived from AIIB’s audited financial statements for those periods, which are included in Exhibit 2 to this annual report on Form 18-K, Exhibit 2 to AIIB’s annual report on Form 18-K for the fiscal year ended December 31, 2020, Exhibit 2 to AIIB’s annual report on Form 18-K for the fiscal year ended December 31, 2019, Exhibit 2 to AIIB’s annual report on Form 18-K for the fiscal year ended December 31, 2018 and Exhibit 2-A to AIIB’s annual report on Form 18-K for the fiscal year ended December 31, 2018, respectively. AIIB’s audited financial statements for those periods were audited by AIIB’s independent auditor PricewaterhouseCoopers. AIIB’s financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).

AIIB’s audited financial statements as of and for the years ended December 31, 2021, December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017 present fairly, in all material respects, the financial position of the Bank as of December 31, 2021, December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017, respectively, and its results of operations and its cash flows for the years ended December 31, 2021, December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017, respectively, in accordance with IFRS. At its meeting held on March 23, 2022, the Board of Directors recommended to the Board of Governors that it approve AIIB’s financial statements as of and for the year ended December 31, 2021 (the “2021 Audited Financial Statements”) pursuant to its authority under Article 23 of the Articles of Agreement. The 2021 Audited Financial Statements have been submitted for approval to the Board of Governors.

The selected financial information should be read in conjunction with the Financial Statements and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report on Form 18-K.


	Year ended December 31,
	2021			2020			2019			2018			2017

	(in thousands of US$)
Selected Profit and Loss Information
Interest income		243,692			343,148			435,550			250,761			124,193
Interest expense		(189,522	)		(92,186	)		(35,156	)		—			—

Net interest income		54,170			250,962			400,394			250,761			124,193
Net fee and commission income/(expense)		23,263			14,775			11,911			12,654			(866	)
Net gain on financial instruments measured at fair value through profit or loss		237,171			139,478			78,642			56,622			53,783
Net loss on financial instruments measured at amortized cost		(6,848	)		(17,738	)		—			—			—
Share of loss on investment in associate		(217	)		(441	)		—			—			—
Impairment provision		(23,211	)		(93,438	)		(21,677	)		(39,608	)		(9,088	)
General and administrative expenses		(164,102	)		(162,789	)		(125,695	)		(84,737	)		(56,098	)
Net foreign exchange (loss)/gain		(70,081	)		36,890			(315	)		44			(58	)

Operating profit for the year		50,145			167,699			343,260			195,736			111,866
Accretion of paid-in capital receivables		4,783			7,556			57,617			103,780			140,442

Net profit for the period		54,928			175,255			400,877			299,516			252,308
Other comprehensive income
- Items will not be reclassified to profit or loss Unrealized loss on fair-valued borrowings arising from changes in own credit risk		(37,919	)		(23,703	)		—			—			—

Total comprehensive income		17,009			151,552			400,877			299,516			252,308


	As of December 31,
	2021		2020		2019		2018		2017

	(in thousands of US$)
Selected Balance Sheet Information
Total assets		40,238,139		32,081,580		22,631,644		19,562,269		18,972,606
Total liabilities		20,072,221		11,937,823		2,645,473		49,851		13,587
Total members’ equity		20,165,918		20,143,757		19,986,171		19,512,418		18,959,019

Total liabilities and members’ equity		40,238,139		32,081,580		22,631,644		19,562,269		18,972,606

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the “2021 Audited Financial Statements” in Exhibit 2 of this annual report on Form 18-K.

Overview

AIIB is an MDB with a mandate to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions. The Bank commenced operations on January 16, 2016 to help its members meet a substantial financing gap between the demand for infrastructure in Asia and available financial resources. The Bank aims to work with public and private sector partners to channel its own public resources, together with private and institutional funds, into sustainable infrastructure investment. The Bank maintains its principal office in Beijing, China.

•

Private Capital Mobilization: Supporting projects that directly or indirectly mobilize private financing into sectors within the Bank’s mandate.

Impact of the COVID-19 Pandemic on the Bank’s Activities and Results of Operations

The Bank currently remains fully operational and continues to conduct its activities in the normal course of business. As a precautionary measure, the Bank has put in place procedures to prevent any potential disruptions to its governance and project approval schedule. The Bank has adopted prudent measures to ensure the health and safety of its employees, including imposing travel restrictions and remote working arrangements when appropriate and rescheduling public events or holding them in virtual format until a normalized situation resumes, and it continues to monitor the situation closely.

While the severity and duration of the COVID-19 pandemic is difficult to predict, it has had and likely will continue to have a material adverse effect on the Bank’s results of operations.

The Bank’s financial performance is highly dependent on its ability to generate income from its liquidity and loan investment portfolios. See “–Income Statement.”

As a result of lower interest rates, due in part to governments and central banks around the world responding to the decline in global economic demand caused by the COVID-19 pandemic, the Bank has experienced downward pressure on income earned from both its liquidity and loan investment portfolios and expects to continue experiencing such downward pressure in the coming quarters.

Due to the COVID-19 pandemic, in the year ended December 31, 2021, the fair value of the Bank’s investments in money market funds and portfolios of high credit quality securities managed by external asset managers experienced volatility, and such volatility is expected to continue in the coming quarters. Furthermore, the COVID-19 pandemic has had and is expected to continue to have an adverse effect on the credit position of the Bank’s loan portfolio, which is highly dependent on credit conditions in the member jurisdictions where the Bank’s largest sovereign-backed and non-sovereign-backed borrowers are located.

In addition, while the Bank has experienced and may continue to experience demand for financings under the Bank’s COVID-19 Crisis Recovery Facility (the “CRF”) (see “Operations of AIIB–Financing Portfolio–AIIB Response to the COVID-19 Pandemic”), which are generally disbursing more rapidly than disbursements for AIIB’s other financings, certain of the Bank’s existing investment projects may be delayed or curtailed as clients evaluate the impact of the COVID-19 pandemic or may be implemented at a pace that is slower than expected. In addition, the Bank may experience a temporary decline in demand for non-sovereign-backed financings, and consequently a weaker investment pipeline, should project sponsors and beneficiaries postpone infrastructure investments. A slowdown in project implementation or a protracted decline in demand for investment financings may lead to lower disbursement rates, which may negatively affect AIIB’s ability to generate income on investment financings.

Lastly, AIIB may raise additional debt financing in various markets. All net proceeds from AIIB’s offerings of debt are added to AIIB’s ordinary resources, which will be used to fund AIIB’s financings, including, but not limited to, those under the CRF. All borrowings will be subject to limits set by AIIB’s Board of Directors. In accordance with existing limits set by AIIB’s Board of Directors, AIIB may incur in the year ending December 31, 2022: (i) borrowings with a final maturity of one year or more in an aggregate amount of up to US$10 billion equivalent, which amount may be supplemented by any early redemptions, repurchases or prepaid outstanding obligations by AIIB and (ii) short-term borrowings, with a maturity of less than one year, of up to US$1 billion equivalent outstanding at any time. Any increases in these authorized amounts are subject to approval by the Board of Directors of AIIB.

Critical Accounting Policies

AIIB’s financial statements are prepared in accordance with IFRS. The financial year of the Bank begins on January 1 and ends on December 31 of each year.

The Bank has adopted all of the IFRS standards and interpretations effective for annual periods beginning with the financial year commencing on January 16, 2016, the date the Bank commenced operations. AIIB’s financial statements are prepared under the historical cost convention, except for those financial assets and liabilities measured at fair value. The financial statements are prepared on a going concern basis. AIIB’s functional and presentation currency is the U.S. dollar.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in its process of applying the Bank’s policies. The areas involving a higher degree of judgment or complexity or areas where judgments or estimates are significant to the 2021 Audited Financial Statements are disclosed therein under Note B.

Internal Control over Financial Reporting

The management of the Bank is responsible for establishing, implementing and maintaining effective internal control over financial reporting for financial presentation and measurement in conformity with IFRS. The Bank’s control over financial reporting is reviewed by the Audit and Risk Committee of the Board of Directors, and is designed to provide reasonable assurance with respect to the preparation of financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, the effectiveness of an internal control system can change with circumstances, such as changes in business and operating environment, including the increased relevance of technology and considerations on outsourcing of functions, systems and platforms.

The management of the Bank assessed the effectiveness of the Bank’s internal control over financial reporting as of December 31, 2021, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Bank’s management asserts that, as of December 31, 2021, the Bank maintained effective internal control over its financial reporting as set out in the 2021 Audited Financial Statements.

PricewaterhouseCoopers was engaged to perform a reasonable assurance engagement on the assessment by the Bank’s management that the Bank maintained effective internal control over financial reporting as of December 31, 2021, as stated in its report included in Exhibit 2 of this annual report on Form 18-K.

Income Statement

Interest Income

Interest income mainly consists of (i) interest earned on cash, cash equivalents and deposits (primarily, term deposits and certificates of deposit), (ii) interest earned on loan investments, including the amortization of front-end fees and other costs related to loan origination and (iii) interest earned on bond investments.

Years Ended December 31, 2021 and 2020. AIIB’s total interest income decreased to US$243.7 million for the year ended December 31, 2021 from US$343.1 million for the year ended December 31, 2020, mainly as a result of a decrease in interest income earned on cash, cash equivalents and deposits that was only partially offset by an increase in interest income on loan investments and bond investments. Interest income from cash, cash equivalents and deposits decreased to US$59.6 million for the year ended December 31, 2021 from US$219.8 million for the year ended December 31, 2020, mainly due to a lower interest rate environment and to the reallocation of a portion of the cash and deposit balances to other types of investments. Interest income from loan investments increased to US$160.2 million for the year ended December 31, 2021 from US$102.9 million for the year ended December 31, 2020, mainly due to an increase in AIIB’s loan volume. Interest income from bond investments increased to US$24.0 million for the year ended December 31, 2021 from US$20.4 million for the year ended December 31, 2020, mainly as a result of an increase in bond investments.

For the year ended December 31, 2021, 66% of AIIB’s total interest income was from loan investments, 24% was from cash, cash equivalents and deposits and 10% was from bond investments. For the year ended December 31, 2020, 30% of AIIB’s total interest income was from loan investments, 64% was from cash, cash equivalents and deposits and 6% was from bond investments.

Interest Expense

Years Ended December 31, 2021 and 2020. AIIB’s interest expense increased to US$189.5 million for the year ended December 31, 2021 from US$92.2 million for the year ended December 31, 2020 as a result of an increase in outstanding bond issuances. During the year ended December 31, 2021, AIIB issued (i) US$3,000 million principal amount of 0.50% notes due 2026 on January 27, 2021, (ii) US$2,500 million principal amount of 0.50% notes due 2024 on September 16, 2021, (iii) a total of US$751.3 million equivalent of fixed rate notes under its A$ and NZ$ Debt Issuance Programme and (iv) a total of US$1,564.6 million equivalent of fixed rate notes and US$700.0 million of floating rate notes under AIIB’s Global Medium Term Note Programme.

Net Interest Income

Net interest income is interest income less interest expense.

Years Ended December 31, 2021 and 2020. Mainly for the reasons set forth above, AIIB’s net interest income decreased to US$54.2 million for the year ended December 31, 2021 from US$251.0 million for the year ended December 31, 2020.

Net Fee and Commission Income

Net fee and commission income mainly consists of loan commitment and service fees charged to borrowers less co-financing service fees paid in respect of co-financing arrangements.

Years Ended December 31, 2021 and 2020. AIIB’s net fee and commission income increased to US$23.3 million for the year ended December 31, 2021 from US$14.8 million for the year ended December 31, 2020, mainly as a result of an increase in loan commitment and service fees resulting from higher loan volumes. Loan commitment and service fees increased to US$24.1 million for the year ended December 31, 2021 from US$16.1 million for the year ended December 31, 2020.

Net Gain on Financial Instruments Measured at Fair Value through Profit or Loss

Net gain on financial instruments measured at fair value through profit or loss mainly reflects the change in fair value of AIIB’s investments in (i) money market funds, (ii) bond investments of high credit quality measured at fair value through profit or loss, (iii) limited partnership funds managed by general partners who make investment decisions on behalf of the limited partners of such funds, (iv) investments in trust, (v) a fixed-income portfolio managed by an external asset manager whose primary objective is to develop climate bond markets in Asia, (vi) portfolios of high credit quality securities managed by external asset managers engaged by AIIB and (vii) high credit quality certificates of deposit which are actively managed as part of the Bank’s treasury portfolio, as well as changes in the fair value of AIIB’s own borrowings and derivatives.

Years Ended December 31, 2021 and 2020. AIIB’s net gain on financial instruments measured at fair value through profit or loss increased to US$237.2 million for the year ended December 31, 2021 from US$139.5 million for the year ended December 31, 2020. The net gain for the year ended December 31, 2021 was mainly due to fair value gains on AIIB’s borrowings, certificates of deposit and investments in certain funds, offset in part by fair value losses on the derivatives AIIB has entered into to hedge AIIB’s borrowings, on the fixed-income portfolio managed by an external asset manager whose primary objective is to develop climate bond markets in Asia and on portfolios of high credit quality securities managed by external asset managers. The net gain for the year ended December 31, 2020 was mainly due to fair value gains on AIIB’s portfolios of high credit quality securities managed by external asset managers engaged by AIIB and on derivatives entered into to hedge AIIB’s borrowings, partially offset by fair value losses on such borrowings.

Net Loss on Financial Instruments Measured at Amortized Cost

Net loss on financial instruments measured at amortized cost reflects the change in amortized cost of the Bank’s investments in (i) a fixed-income portfolio which comprises primarily Asian infrastructure-related bonds and (ii) a fixed-income portfolio of high credit quality securities with a hold-to-maturity strategy managed by an external asset manager engaged by AIIB.

Years Ended December 31, 2021 and 2020. AIIB’s net loss on financial instruments measured at amortized cost was US$6.8 million for the year ended December 31, 2021 and US$17.7 million for the year ended December 31, 2020. The net loss for the year ended December 31, 2021 mainly resulted from the disposal of certain bonds in the fixed-income portfolio which comprises primarily Asian infrastructure-related bonds. The net loss for the year ended December 31, 2020 was mainly due to the disposal of certain bonds in the fixed-income portfolio which comprises primarily Asian infrastructure-related bonds.

Share of Gain or Loss on Investment in Associate

In April 2020, the Bank subscribed for a 30% economic interest in an entity incorporated in Singapore (the “Associate”), thereby giving the Bank significant influence over the financial and operating decisions of the Associate. Share of gain or loss on investment in associate reflects AIIB’s share in the gain or loss recognized by the Associate for the considered period.

Years Ended December 31, 2021 and 2020. AIIB’s share of loss on investment in associate decreased to US$0.2 million for the year ended December 31, 2021 from US$0.4 million for the year ended December 31, 2020, mainly as a result of higher operating income generated by the Associate.

Impairment Provision

AIIB uses an ECL model to estimate credit losses on financial assets, such as loan disbursements or bond investments, and on other instruments, such as undrawn loan commitments. AIIB recognizes an ECL allowance at each reporting date and recognizes an impairment provision (either an impairment loss or the reversal of an impairment loss) that reflects the change in the ECL allowance between such reporting date and the previous reporting date. Impairment provisions are driven in large part by changes in loan volumes, risk parameters related to macroeconomic outlook and changes in AIIB’s assessment of the credit risk of individual financings. See “Operations of AIIB–Quality of Loan Portfolio,” “Risk Management–Risk Types–Financing Credit Risk” and Notes B.3.3.5, B4.1 and D3 to the 2021 Audited Financial Statements for further discussion on the Bank’s credit quality analysis.

Years Ended December 31, 2021 and 2020. AIIB’s impairment provision was US$23.2 million for the year ended December 31, 2021, compared to US$93.4 million for the year ended December 31, 2020. The impairment provision recognized in the year ended December 31, 2021 was mainly due to (i) the assessment of a non-sovereign-backed loan as credit impaired and the transfer of such loan to Stage 3, (ii) the transfer of certain sovereign-backed loans to Stage 2 from Stage 1 and (iii) an increase in outstanding loan volumes. The impairment provision in 2021 was partially offset by an improvement in risk parameters related to macroeconomic outlook.

The impairment provision recognized in the year ended December 31, 2020 was mainly due to (i) the transfer of certain sovereign-backed loans and non-sovereign-backed loans to Stage 2 from Stage 1 (reflecting the worsening economic outlook at the onset of the COVID-19 pandemic) and (ii) the growth in outstanding loan volumes. See “Risk Management–Risk Types–Financing Credit Risk.”

General and Administrative Expenses

General and administrative expenses mainly consist of (i) staff costs, such as short-term employee benefits, including salaries, location premiums and medical and life insurance, and costs related to AIIB’s defined contribution (i.e., retirement) plans, (ii) professional service expenses, (iii) facilities and administration expenses, (iv) IT services, (v) issuance cost in respect of borrowings, (vi) travel expenses and (vii) other expenses.

Years Ended December 31, 2021 and 2020. AIIB’s general and administrative expenses increased to US$164.1 million for the year ended December 31, 2021 from US$162.8 million for the year ended December 31, 2020, mainly due to an increase in staff costs, IT services and other expenses. Staff costs increased to US$81.2 million for the year ended December 31, 2021 from US$77.2 million for the year ended December 31, 2020 and costs related to IT services increased to US$19.4 million for the year ended December 31, 2021 from US$18.1 million for the year ended December 31, 2020, mainly as the result of the continuing ramp-up of AIIB’s organizational activities. These increases were partially offset by (i) a decrease in the issuance cost of borrowings to US$7.0 million for the year ended December 31, 2021 from US$8.7 million for the year ended December 31, 2020, (ii) a decrease in travel expenses to US$1.8 million for the year ended December 31, 2021 from US$3.3 million for the year ended December 31, 2020, mainly as a result of reduced travel in light of the COVID-19 pandemic and (iii) a decrease in professional service expenses to US$28.3 million for year ended December 31, 2021 from US$29.7 million for the year ended December 31, 2020.

Net Foreign Exchange Gain or Loss

Net foreign exchange gain or loss reflects the change in value, due to movements in currency exchange rates, of financial instruments held by the Bank that are measured at amortized cost. For financial instruments held by the Bank measured at fair value through profit or loss, the change in value due to movements in currency exchange rates is reported as part of their overall change in fair value through profit or loss. See “–Income Statement–Net Gain on Financial Instruments Measured at Fair Value through Profit or Loss.”

Years Ended December 31, 2021 and 2020. AIIB had a net foreign exchange loss of US$70.1 million for the year ended December 31, 2021, compared to a net foreign exchange gain of US$36.9 million for the year ended December 31, 2020. The net foreign exchange loss for the year ended December 31, 2021 was mainly due to the depreciation of the Euro against the U.S. dollar and the impact such depreciation had on the U.S. dollar value of the Bank’s portfolio of Euro-denominated loans. Such net foreign exchange loss was largely offset, however, by fair value gains on derivatives held by the Bank to hedge those loans. The net foreign exchange gain for the year ended December 31, 2020 was mainly due to the appreciation of the Chinese yuan against the U.S. dollar and the impact such appreciation had on the U.S. dollar value of the Bank’s portfolio of Chinese yuan-denominated loans and deposits. This net foreign exchange gain was largely offset by foreign exchange losses on financial instruments held by the Bank measured at fair value through profit or loss, namely, certain borrowings in Chinese yuan and associated swaps (as recorded under the line item “Net Gain on Financial Instruments Measured at Fair Value through Profit or Loss”).

Operating Profit

Years Ended December 31, 2021 and 2020. Mainly for the reasons set forth above, AIIB’s operating profit decreased to US$50.1 million for the year ended December 31, 2021 from US$167.7 million for the year ended December 31, 2020.

Accretion of Paid-in Capital Receivables

Paid-in capital receivables represent amounts due from the Bank’s members in respect of paid-in capital. These amounts are initially recognized at fair value, which reflects the discounted present value of future paid-in capital inflows, and subsequently measured at amortized cost. The difference between amortized cost and fair value is accounted for as a reserve under members’ equity and is accreted through the income statement using the effective interest method.

Years Ended December 31, 2021 and 2020. AIIB’s accretion of paid-in capital receivables decreased to US$4.8 million for the year ended December 31, 2021 from US$7.6 million for the year ended December 31, 2020. This decrease was mainly due to lower balances in paid-in capital receivables as of January 1, 2021 compared to January 1, 2020.

Other Comprehensive Income

For financial liabilities, such as AIIB’s borrowings, that are designated at fair value through profit or loss, fair value changes attributable to changes in AIIB’s own credit risk are recognized in other comprehensive income (while other fair value changes are recognized under net gain or loss on financial instruments measured at fair value through profit or loss). Upon maturity of such financial liabilities, the recognition in other comprehensive income of fair value changes attributable to changes in AIIB’s own credit risk is reversed.

Years Ended December 31, 2021 and 2020. AIIB experienced an unrealized loss on borrowings arising from changes in AIIB’s own credit risk of US$37.9 million for the year ended December 31, 2021, compared to an unrealized loss of US$23.7 million for the year ended December 31, 2020. This change was mainly the result of the tightening of the Bank’s overall credit spread against the relevant benchmark discount curves, particularly the U.S. dollar, Pound sterling, Turkish lira, Russian ruble and Chinese yuan discount curves, and an increase in outstanding borrowings. The tightening of the Bank’s overall credit spread reflected improved conditions in certain financial markets in the year ended December 31, 2021, compared to the year ended December 31, 2020.

Total comprehensive income

Years Ended December 31, 2021 and 2020. Mainly for the reasons set forth above, AIIB’s total comprehensive income decreased to US$17.0 million for the year ended December 31, 2021 from US$151.6 million for the year ended December 31, 2020.

Balance Sheet

Assets

Total assets mainly consist of (i) loan investments at amortized cost, (ii) term deposits with initial maturities of more than three months, (iii) investments at fair value through profit or loss, (iv) bond investments at amortized cost, (v) cash and cash equivalents, (vi) cash collateral receivables, (vii) paid-in capital receivables and (viii) derivatives entered into to manage interest rate and currency risks.

Investments at fair value through profit and loss mainly consist of (i) the Bank’s investments in portfolios of high credit quality securities managed by external asset managers engaged by AIIB and measured at fair value through profit or loss, (ii) high credit quality certificates of deposit which are actively managed as part of the Bank’s treasury portfolio and (iii) bond investments of high credit quality measured at fair value through profit or loss. Bond investments at amortized cost consist of (i) a fixed-income portfolio of high credit quality securities with a hold-to-maturity strategy managed by an external asset manager engaged by AIIB and (ii) a fixed-income portfolio which comprises primarily Asian infrastructure-related bonds. Cash and cash equivalents consist of (i) term deposits with initial maturities of three months or less, (ii) demand deposits and (iii) money market funds. Cash collateral receivables reflect the collateral paid to swap counterparties.

Assets of the Bank include high-quality liquid assets, which are defined as cash or assets that can be converted into cash at little or no loss in value.

As of December 31, 2021 and 2020. As of December 31, 2021, AIIB’s total assets were US$40,238.1 million, compared to total assets of US$32,081.6 million as of December 31, 2020. This increase resulted mainly from (i) an increase of US$3,970.0 million in loan investments at amortized cost,

(ii) an increase of US$3,913.8 million in investments at fair value through profit or loss, (iii) an increase of US$2,026.1 million in bond investments at amortized cost and (iv) an increase of US$440.5 million in cash collateral receivables. The decrease in term deposits and cash and cash equivalents mainly reflects the Bank’s allocation of liquidity to bond investments and certificates of deposit measured at fair value and to a fixed-income portfolio of high credit quality securities with a hold-to-maturity strategy measured at amortized cost.

Liabilities

Total liabilities mainly consist of (i) borrowings, (ii) derivative liabilities and (iii) other liabilities, such as cash collateral payables, deferred interest, accrued expenses, staff costs payable and provisions.

As of December 31, 2021 and 2020. As of December 31, 2021, AIIB’s total liabilities were US$20,072.2 million, compared to total liabilities of US$11,937.8 million as of December 31, 2020. This increase resulted primarily from (i) an increase of US$7,762.7 million in borrowings (see under “–Income Statement–Interest Expense”) and (ii) an increase of US$525.9 million in derivative liabilities mainly associated with the increase in borrowings.

Members’ Equity

Members’ equity consists of (i) paid-in capital, (ii) reserves for accretion of paid-in capital receivables, (iii) reserves for unrealized loss on borrowings measured at fair value attributable to changes in the Bank’s own credit risk and (iv) retained earnings.

As of December 31, 2021 and 2020. As of December 31, 2021, AIIB’s total members’ equity was US$20,165.9 million, compared to total members’ equity of US$20,143.8 million as of December 31, 2020. This increase mainly resulted from an increase of US$50.1 million in retained earnings, partially offset by an increase of US$37.9 million in unrealized loss on borrowings measured at fair value attributable to changes in the Bank’s own credit risk.

Asset Quality

As of December 31, 2021, no AIIB assets were categorized as overdue or had been written off, except for (i) a non-sovereign-backed loan that was assessed as credit impaired with a carrying amount of US$31.5 million (net of the associated ECL allowance) and (ii) US$150.0 million of overdue contractual undiscounted paid-in capital receivables, which are not considered impaired.

Debt Record

AIIB has never defaulted on the payment of principal of, or premium or interest on, any debt obligation.

External Auditor Work Papers

There has been a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular under Chinese law. For example, in late 2012, the SEC commenced administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese affiliates of the “big four” accounting firms, including the affiliate of the Bank’s external auditor. Pursuant to the terms of an agreement between the accounting firms and the SEC, the Rule 102(e) proceedings initiated by the SEC were stayed and may now be deemed dismissed. The Rule 102(e) proceedings related to the failure of these firms to produce documents, including audit work papers, in response to the request of the SEC pursuant to Section 106 of the Sarbanes-Oxley Act of 2002, as the auditors located in China are not in a position lawfully to produce documents directly to the SEC because of restrictions under Chinese law, including specific directives issued by the Chinese Securities Regulatory Commission.

Also related to these restrictions, in July 2020, the President’s Working Group on Financial Markets (the “PWG”), in accordance with a memorandum issued by the U.S. President in June 2020, outlined recommendations to address the concern over the lack of access of the Public Company Accounting Oversight Board (the “PCAOB”) to audit work papers due to protections under national law.

In addition, in December 2020, the Holding Foreign Companies Accountable Act (the “HFCA Act”) was enacted. The HFCA Act implements certain of the recommendations that the PWG made in July 2020, but certain of the PWG’s recommendations were more stringent than the provisions of the HFCA Act. The HFCA Act requires the SEC to prohibit securities of certain issuers (“HFCA Act Covered Issuers”) required to file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from being listed on U.S. securities exchanges or traded “over-the-counter” if an issuer retains an accounting firm that cannot be inspected by the PCAOB for three consecutive years, beginning in 2021. The Bank is not required to file reports under Section 13 or 15(d) of the Exchange Act and, therefore, is not an HFCA Act Covered Issuer.

In March 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. In December 2021, the SEC adopted amendments, which became effective in January 2022, to finalize these interim final rules. Pursuant to the final rules, the SEC will identify as a “Commission-Identified Issuer” any HFCA Act Covered Issuer that has filed an annual report containing an audit report issued by a PCAOB-registered accounting firm that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction in which the accounting firm has a branch or office, and the SEC will impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for three consecutive years. The SEC made its first identifications of certain HFCA Act Covered Issuers as Commission-Identified Issuers in March 2022. Because the Bank is not an HFCA Act Covered Issuer, it cannot be identified as a Commission-Identified Issuer.

In November 2021, the SEC approved PCAOB Rule 6100, which provides a framework for determinations by the PCAOB as to whether it is unable to inspect or investigate completely PCAOB-registered accounting firms headquartered in or with an office located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. Pursuant to this rule, in December 2021, the PCAOB issued a report to notify the SEC of the PCAOB’s determinations that it is unable to inspect or investigate completely PCAOB-registered accounting firms headquartered in China and Hong Kong, China. The Bank’s external auditor, which is based in Hong Kong, China and is registered with the PCAOB, and the Chinese affiliate of the Bank’s external auditor, which is also registered with the PCAOB, were each identified by the PCAOB as subject to these determinations. The PCAOB’s determinations included all PCAOB-registered accounting firms headquartered in China and Hong Kong, China and were therefore not limited to the Bank’s external auditor and the Chinese affiliate of the Bank’s external auditor. In addition, although the PCAOB’s determinations addressed accounting firms headquartered in China and Hong Kong, China, the issues relating to a lack of access to audit work papers potentially affect all businesses based in China (or with substantial operations in China) with securities registered with the SEC as well as PCAOB-registered auditors based outside of China or Hong Kong, China, which are subject to similar restrictions under Chinese law in respect of audit work that is carried out in China that supports the audit opinions issued on financial statements of entities with substantial operations in China.

The U.S. Congress, the SEC, the PCAOB or other U.S. government bodies may propose or implement laws, rules or guidance in addition to those discussed above that could impact the Bank’s external auditor, the Chinese affiliate of the Bank’s external auditor or the Bank. For example, in June 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act and, in February 2022, the U.S. House of Representatives passed the America COMPETES Act of 2022. If either bill is enacted into law, it would amend the HFCA Act to reduce the number of consecutive non-inspection years required to trigger the listing and trading prohibitions under the HFCA Act from three years to two years.

The PCAOB’s inability to conduct inspections in China and Hong Kong, China prevents the PCAOB from fully evaluating audits and quality control procedures of the Bank’s external auditor and the Chinese affiliate of the Bank’s external auditor. As a result, investors in the Bank’s securities are deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of external auditors in China and Hong Kong, China makes it more difficult to evaluate the effectiveness of the audit procedures or quality control procedures of the Bank’s external auditor as compared to auditors outside of China and Hong Kong, China that are subject to PCAOB inspections, which could cause investors and potential investors in the Bank’s securities to lose confidence in the Bank’s audit procedures and financial information and the quality of its financial statements.

The Bank has engaged with the authorities of China, its host country, and received assurances from the Ministry of Finance of China that the authorities of China would not prevent the release of the Bank’s external auditor work papers pertaining to the Bank if the SEC were to request them during the course of an SEC investigation.

Related Party Transactions

The Bank generally considers parties to be related, including to the Bank, if the parties are under common control, or one party has the ability to control the other party or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely to the legal form.

The Bank’s related party transactions include the following as of December 31, 2021. For additional information with respect to AIIB’s related party transactions, see Note C20 to the 2021 Audited Financial Statements.

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In accordance with Article 5 of the Headquarters Agreement entered into between the government of China and the Bank on January 16, 2016, the government of China provides a permanent office building to the Bank, free of charge.

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Pursuant to a memorandum of understanding entered into between the municipality of Tianjin and the Bank in 2019, in accordance with Article 5 of the Headquarters Agreement, the municipality of Tianjin provides a back-up business office in Tianjin to the Bank, free of charge. In March 2021, the municipality handed over the back-up business office to the Bank.

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The Bank approved the following financings to non-sovereign borrowers that are ultimately controlled by state-owned enterprises of China: (i) a US$250.0 million non-sovereign-backed financing to Beijing Gas Group Company Limited and (ii) a US$46.7 million non-sovereign-backed financing to Zhanatas Wind-Power Station LLP (with an effective amount of US$34.3 million as of December 31, 2021). These financings were entered into in the ordinary course of business under normal commercial terms and at market rates.

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The Bank approved the following sovereign-backed financings to China: (i) a US$355.0 million equivalent sovereign-backed financing to strengthen China’s public health infrastructure in combating the outbreak of COVID-19, (ii) a US$500.0 million equivalent sovereign-backed financing to increase the availability of natural gas in order to reduce coal consumption and related emissions in the region of Beijing and (iii) a US$300.0 million equivalent sovereign-backed financing to improve cross-border connectivity around Shuolong port and expand economic and trade activities between China and Viet Nam.

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The Bank approved a US$75.0 million investment into the Asia Investment Limited Partnership Fund, a limited partnership fund organized under the laws of Hong Kong, China, and subscribed to a limited partnership interest therein in November 2019. The fund’s main investment objective is to acquire non-controlling equity stakes in mature companies in Asia or with significant operations in Asia in infrastructure or other productive sectors, including telecommunications, transportation and energy. Other limited partners in the fund are the government of China and entities related to the government of China, including two state-owned asset management companies and a regulatory authority of one of China’s special administrative regions. The Bank will not take part in the management of the fund. Any future investments in the fund would be assessed in accordance with the Bank’s general approval process for financings. See “Operations of AIIB–Financing Approval Process.”

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The Bank approved a US$54.0 million investment in Bayfront Infrastructure Management Pte. Ltd., an entity incorporated in Singapore, and subscribed to preferred shares in this entity. The terms of such shares provide the Bank with 30% voting power (i.e., significant influence) over the financial and operating decisions of this entity’s governing body. In June 2021, the Bank invested in US$60.0 million of infrastructure asset-backed securities issued by this entity.

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Other liabilities of US$29.7 million, which relate to the interest rate buy-down from the Special Fund Window. See “Operations of AIIB–AIIB Special Funds–AIIB Special Fund Window under the CRF.”

Recent Developments

AIIB Response to the Conflict in Ukraine

On March 3, 2022, in response to events taking place in Ukraine, the Bank announced it would place all activities relating to Russia and Belarus on hold and under review, including all Russia- and Belarus-related projects in the Bank’s rolling investment pipeline. AIIB’s exposure to Russia and to the Russian ruble (“RUB”), including through its financing activities, borrowings and governance and administration, is limited, consisting of the following:

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Financing activities. The Bank has one loan outstanding to a borrower in Russia, a RUB-denominated loan of RUB24 billion (approximately US$300 million as of the time of approval). The aggregate principal amount of this loan represents less than 1.5% of AIIB’s total loan portfolio as of December 31, 2021. This loan was approved in October 2020 and made to JSC Russian Railways (“RZD”), under the CRF, to support RZD against adverse effects of the COVID-19 pandemic. RZD is, as of February 2022, subject to U.S. and European Union sanctions that prohibit certain dealings in certain newly issued debt or equity of RZD. In the event the Bank were required to comply with these prohibitions related to RZD, they would be inapplicable to the Bank’s outstanding loan to RZD, which was fully disbursed as of December 2020. In addition, through certain of the Bank’s investments in funds that are classified as multi-country financings, the Bank also has a limited amount of additional direct or indirect exposure to Russia through securities held by the funds. This exposure totals less than US$25 million through (i) the Asia ESG Enhanced Credit Portfolio, which holds a portfolio of corporate bonds issued by infrastructure-related issuers and green bonds, the proceeds of which are directed to sustainable infrastructure and other productive sector projects in Asia; and (ii) the Asia Climate Bond Portfolio, which holds a fixed income portfolio for the purpose of addressing the underdevelopment of climate bond markets in AIIB members.

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Borrowings. AIIB has issued four bonds denominated in RUB under its Global Medium Term Note Programme. Three of these bonds remain outstanding, with an aggregate amount outstanding of RUB12.26 billion, which represents less than 1% of AIIB’s outstanding borrowings as of December 31, 2021. These bonds were hedged at the time of issuance to remove the associated interest rate and foreign exchange risk. The terms and conditions of these bonds allow for the Bank to make principal or interest payments in U.S. dollars in certain circumstances, including if the RUB is not used in the international banking community.

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Governance and administration. The Governor appointed by Russia to AIIB’s Board of Governors is currently a subject of sanctions imposed by the European Union. AIIB does not expect that these sanctions, or other sanctions that may be imposed on Governors or Directors of AIIB appointed by Russia, would be reasonably likely to affect the Bank’s operations. Neither AIIB’s Governors nor its Directors have signing authority over the Bank’s operations, and no individual Governor or Director has sole or majority decision making power with respect to the Bank. One member of AIIB’s senior management is a Russian national. This individual is not a subject of sanctions imposed by any jurisdiction.

AIIB does not have exposure to Belarus or the Belarussian ruble, other than with respect to the same governance matters and processes common to all non-regional members.

OPERATIONS OF AIIB

AIIB’s mandate is to (i) foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia by investing in infrastructure and other productive sectors and (ii) promote regional cooperation and partnership in addressing development challenges by working in close collaboration with other multilateral and bilateral development institutions. The Bank commenced operations on January 16, 2016 to help its members meet a substantial financing gap between the demand for infrastructure in Asia and available financial resources. The Bank aims to work with public and private sector partners to channel its own public resources, together with private and institutional funds, into sustainable infrastructure investment.

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Private Capital Mobilization: Supporting projects that directly or indirectly mobilize private financing into sectors within the Bank’s mandate.

Ordinary Resources and Special Fund Resources

Operations of the Bank consist of ordinary operations financed from ordinary resources (“Ordinary Resources”) and special operations financed from special fund resources (“Special Fund Resources”).

Ordinary Resources include (i) the authorized capital stock of the Bank, comprising paid-in and callable shares of its members, (ii) funds raised by the Bank through borrowing or other means, (iii) funds received in the repayment of loans and guarantees, as returns on equity investments or from other types of financing as may be determined by the Board of Governors, (iv) income derived from loans or guarantees made from the above-mentioned funds and (v) any other funds or income received from the Bank which are not Special Fund Resources.

Special Fund Resources are (i) funds accepted by the Bank for inclusion in any special fund (a “Special Fund”), (ii) funds received in respect of loans or guarantees and proceeds of any equity investments financed from the resources of a Special Fund, (iii) income derived from the investment of resources of a Special Fund and (iv) any other resources placed at the disposal of a Special Fund. Special Funds must serve the purpose and come within the functions of the Bank and may only be used under terms and conditions consistent with such. Ordinary Resources and Special Fund Resources may separately finance elements of the same project or program. The two types of resources, however,

must be held, used, committed, invested or otherwise disposed of entirely separately from each other. In no circumstances may Ordinary Resources be charged with, or used to discharge, losses or liabilities arising out of Special Fund Resources. The Bank must adopt special rules and regulations for the establishment, administration and use of each Special Fund.

As of December 31, 2021, the Bank has two Special Funds: the AIIB Project Preparation Special Fund and the AIIB Special Fund Window under the CRF (subsequently converted into the Special Fund Window for Less Developed Members). See “–AIIB Special Funds.”

Financial Instruments

To implement the Bank’s purpose, the Bank may provide or facilitate financing to any member, or any agency, instrumentality or political subdivision of a member, or any entity operating in the territory of a member, as well as to international or regional agencies or entities concerned with economic development of Asia. In limited circumstances, and subject to a Super Majority Vote (see “Governance and Administration–Board of Governors”), the Bank may also provide assistance to other recipients, provided such assistance (i) serves the purpose and comes within the functions of the Bank and is in the interest of the Bank’s membership and (ii) is of a type of assistance that the Bank is permitted to provide pursuant to Article 11(2) of the Articles of Agreement.

The Bank may offer a range of financial products, including loans, equity investments and guarantees of loans for economic development (either as primary or secondary obligor). The Bank may also deploy Special Fund Resources (see “–Ordinary Resources and Special Fund Resources”), technical assistance and other types of financing as may be determined by the Board of Governors.

For the Bank to agree to provide financing, the project in question must meet a variety of conditions, including the following:

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it must have clearly defined development objectives consistent with the Bank’s purpose that permit appropriate evaluation of the project’s impact;

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it must provide for specific productive activities necessary to meet these development objectives;

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alternative sources of finance, in particular private capital, must be unavailable for the project on terms and conditions that the Bank considers reasonable; and

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it must be in compliance with all applicable Bank policies.

Sovereign-backed Financing

Sovereign-backed financing refers to the following:

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a loan to, or guaranteed by, a member of AIIB; or

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a guarantee that:

(i) covers debt service defaults under a loan that are caused by a government’s failure to meet a specific obligation in relation to a project or by a borrower’s failure to make a payment under the loan; and

(ii) is accompanied by a counter-guarantee and indemnity provided by the AIIB member in whose territory the relevant project is located, in connection with such guarantee.

Sovereign-backed financings are subject to general terms and conditions that generally are uniform across all sovereign-backed borrowers.

For sovereign-backed loans, these terms and conditions include the following:

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all loans are denominated in U.S. dollars or in such other currency or currencies as the Bank may offer from time to time;

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pricing comprises the interest rate, front-end fee and commitment fee. For fixed-spread loans, the interest rate consists of a market-based reference rate and a fixed spread equal to a contractual lending spread, the Bank’s projected funding costs over the life of the loan and a market risk premium. For variable-spread loans, the interest rate consists of a market-based reference rate and a variable spread equal to a contractual lending spread and an actual funding cost margin. For both types of loans, depending on the maturity of the loan, a maturity premium may also be charged;

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all loans must have a weighted average maturity of no more than 20 years and a final maturity of no more than 35 years;

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each loan that is not made to a member of the Bank must be secured by a guarantee from the relevant member. The Bank generally does not require other credit enhancements, such as security arrangements, with respect to sovereign-backed loans; and

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all loans are governed by AIIB’s general terms and conditions that include, among other things, standard acceleration clauses that authorize the Bank, upon clearly defined events of default, to cancel the loan and/or declare payable all or part of amounts due under the loan. AIIB’s general terms and conditions for sovereign-backed loans do not include confidentiality clauses.

Sovereign-backed guarantees include the following terms and conditions:

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all guarantees are denominated in U.S. dollars or in such other currency or currencies as the Bank may offer from time to time;

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all guarantees must have a weighted average maturity of no more than 20 years and a final maturity of no more than 35 years (unless the Board of Directors determines otherwise);

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pricing consists of three fees: (i) a standby (i.e., commitment) fee, (ii) a guarantee fee equal to the contractual lending spread and, if applicable, a maturity premium and (iii) a front-end fee charged based on the maximum amount of the guarantee;

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the Bank may also charge a processing charge, as appropriate, to cover its internal and external processing costs; and

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the member in whose territory the project is located or for whose benefit the guarantee is made is required to indemnify the Bank for any payments the Bank makes under the guarantee and for all liabilities and expenses the Bank incurs in connection with the guarantee.

The Bank may make an advance (a “Preparation Advance”) to finance preparatory activities for a project to be supported by a sovereign-backed financing. A Preparation Advance is made only when there is a strong probability that the financing for which it is granted will be extended. Granting a Preparation Advance does not obligate the Bank to finance or otherwise support the project in question. The maximum aggregate principal amount of all approved Preparation Advances for any given project may not exceed the lesser of: (i) 10% of the total estimated amount of financing for the project or (ii) US$10.0 million equivalent. The President decides whether to approve each Preparation Advance.

Non-sovereign-backed Financing

Non-sovereign-backed financing means any financing to, or for the benefit of, a private enterprise or a sub-sovereign entity (such as a political or administrative sub-division of an AIIB member or a public sector entity) that is not backed by a guarantee or counter-guarantee and indemnity provided by a member to the Bank.

Non-sovereign-backed financings may take the form of loans, guarantees, credit lines to financial intermediaries, direct equity investments or indirect equity investments. The Bank may finance out of its own funds no more than 35% of the project’s value (including interest during construction). On an exceptional basis, if co-financing is unavailable, the Board of Directors may decide to approve a higher level of financing for the project.

Non-sovereign-backed financings are subject to terms and conditions that are set in accordance with market-based principles. Pricing is based on several factors, including (i) the intrinsic and macroeconomic risks of the project, (ii) the cost of funds to the Bank and (iii) the need to earn an appropriate return on the Bank’s capital, including on funds invested in direct and indirect equity of private entities.

The Bank may offer a range of options and features to meet the specific needs of the project.

Non-sovereign-backed Loans and Guarantees; Credit Lines to Financial Intermediaries

Non-sovereign-backed loans may be offered on a limited recourse basis, backed only by the existing and future cash flows and assets of the beneficiary of the project. The Bank may also extend non-sovereign-backed loans with the credit support of a third party; for example, the Bank may have recourse to designated assets or the balance sheet of the sponsor of the project or to a bank guarantee. Non-sovereign-backed loans are typically extended as senior loans and may require certain credit enhancements, such as guarantees or security arrangements, to the extent determined appropriate by the Bank. Security arrangements may include, among other things, charges over project assets, securities or cash deposits. Subject to appropriate pricing, the Bank may also extend loans that are subordinated to the prior payment of other debt of the beneficiary of the project or subordinated in repayment in the event of the beneficiary’s bankruptcy (or both). The Bank may provide non-sovereign-backed loans in the form of loan participations or loan syndications. In a loan participation, while remaining the lender of record for the full amount of the loan, the Bank transfers full commercial and business risk with respect to a part of the amount to other lenders, allowing them to partially finance the loan. In a loan syndication, the Bank joins a syndicate of commercial banks, whereby the Bank and other members of the syndicate undertake to lend specified portions of the total loan amount. The Bank may also offer non-sovereign-backed guarantees against default regardless of the cause or against default arising from specified events.

Non-sovereign-backed loans and guarantees are denominated in U.S. dollars or in such other currency or currencies as the Bank may offer from time to time. The Bank charges front-end fees, commitment fees (or standby fees in respect of guarantees) and fees for appraisal, prepayment, syndication or activities and services related to the financing (or guarantee fees in respect of guarantees), all typically at prevailing market rates. Unless the Board of Directors determines otherwise, the final maturity of a non-sovereign-backed loan must not exceed 18 years. Non-sovereign-backed loans are issued pursuant to market-standard documentation that includes, among other things, standard acceleration clauses that authorize the Bank, upon clearly defined events of default, to cancel the loan and/or declare payable all or part of amounts due under the loan and standard confidentiality clauses that are applicable to the Bank and the borrower.

The Bank may also extend credit lines to financial intermediaries for on-lending in respect of projects that otherwise meet the Bank’s eligibility requirements for direct financings. In these cases, the Bank’s recourse is typically to the balance sheet of the financial intermediary, but the Bank may also require an assignment, by way of security, of the sub-loans granted by the financial intermediary.

Equity Investments

The Bank may make direct equity investments in private- or public-sector companies. It may invest either in a new enterprise or an existing enterprise. The investment may take a variety of forms, including subscriptions to ordinary shares or preference shares (or a combination of both) or a loan convertible into equity.

The Bank’s investment may generally not exceed 30% of the company’s ownership holdings. In exceptional circumstances, the Board may decide to approve a higher, but not controlling, share or (if the Bank’s investment is in jeopardy) the Bank may take control of the company in order to safeguard its investment.

The Bank may also selectively make equity investments through financial intermediaries, such as equity funds, choosing those managed by professional managers with relevant track records and remuneration arrangements in line with market practices.

In both direct and indirect equity investments, the Bank seeks credible exit strategies.

Financing Portfolio

As of December 31, 2021, the Bank has approved 160 financings (including 137 loans, 17 investments in funds, two equity financings and four investments in fixed-income securities) with a total amount of US$32,002.3 million. This amount includes financings approved as of December 31, 2021 under the COVID-19 Crisis Recovery Facility. See “–AIIB Response to the COVID-19 Pandemic.” Of these financings, 150 were approved by the Board of Directors with a total approved amount of US$30,924.5 million, and 10 were approved by the President, pursuant to his delegated authority to approve certain financings, with a total approved amount of US$1,077.8 million. See “–Financing Approval Process–Non-sovereign-backed Financings– Approval and Preparation of Documentation.”

As of December 31, 2021, approved loans totaled US$28,888.3 million, of which US$10,287.7 million were committed amounts and US$12,421.8 million were disbursed amounts. Committed amounts are amounts the Bank has approved and committed to provide pursuant to legally binding documentation, but has not yet disbursed. For sovereign-backed loans, these amounts are further limited to financings for which all conditions precedent required for disbursement have been satisfied. Disbursed amounts represent the gross carrying amount of the loans (i.e., including the transaction costs and fees that are capitalized through the effective interest method). Of all approved loans as of December 31, 2021, 106 were sovereign-backed and 31 were non-sovereign-backed loans; 80 were co-financings and 57 were stand-alone financings.

As of December 31, 2021, approved investments in funds totaled US$1,835.0 million, of which the Bank has disbursed US$293.0 million. As of December 31, 2021, investments in funds had a total fair value of US$277.8 million.

As of December 31, 2021, approved equity financings totaled US$ 104.0 million, of which the Bank has disbursed US$84.1 million. As of December 31, 2021, equity financings were accounted for a total value of US$88.3 million.

As of December 31, 2021, approved investments in fixed-income securities totaled US$ 1,175.0 million, of which the Bank has disbursed US$860.0 million. As of December 31, 2021, one investment in fixed-income securities was account for at amortized cost and had a net carrying amount of US$496.9 million, and two investments in fixed-income securities had a fair value of US$335.3 million.

As of December 31, 2021, approved financings (including approved financings under the CRF) span a broad range of sectors, including energy, transport, urban development, water, finance, information, communication and technology (“ICT”), rural infrastructure and agriculture development, economic resilience (CRF), finance/liquidity (CRF), and public health (CRF) and, excluding multi-country financings (discussed below), would fund projects in the following members: Azerbaijan, Bangladesh, Cambodia, China, Cook Islands, Ecuador, Egypt, Fiji, Georgia, Hungary, India, Indonesia, Jordan, Kazakhstan, Kyrgyz Republic, Lao PDR, Maldives, Mongolia, Myanmar, Nepal, Oman, Pakistan, Philippines, Russia (as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operation–Recent Developments–AIIB Response to the Conflict in Ukraine,” all activities relating to Russia are currently on hold and under review), Rwanda, Singapore, Sri Lanka, Tajikistan, Turkey, Uzbekistan and Viet Nam. As of December 31, 2021, of the approved financings, 15 (13 investments in funds, and two investments in fixed-income securities) were classified as multi-country financings.

AIIB Response to the COVID-19 Pandemic

The COVID-19 pandemic has had and continues to have an adverse impact on the global economy and on the individual economies of AIIB members. AIIB members continue their efforts to contain the COVID-19 pandemic and to mitigate the risks of long-lasting, structural harm to their economies. Developing economies, especially those with weak health care infrastructure, vulnerable macroeconomic or financial sector fundamentals or a high dependence on tourism, commodities exports or remittances, required support from the international financial community to respond to and contain the COVID-19 pandemic.

As part of a coordinated international response to counter the COVID-19 pandemic, AIIB has worked closely with other international financial institutions to create a network of support options, especially for the most vulnerable economies. Based on feedback from public and private sector partners, the Bank’s immediate assistance was and continues to be required in three key areas: (i) immediate health care sector needs (including support for emergency public health responses and for the long-term sustainable development of the health care sector), (ii) economic

resilience, mainly where clients require financing to supplement government measures supporting the social and economic response and recovery efforts (including infrastructure investments and investments in social and economic protection measures to prevent long-term damage to the productive capacity of the economy and to protect and restore productive capital) and (iii) investments in infrastructure and other productive sectors, mainly where clients might otherwise need to curtail long-term investments due to liquidity constraints.

The Bank has adopted a variety of measures to respond to the COVID-19 pandemic. In early April 2020, the Bank launched a US$5 billion CRF, which the Bank subsequently increased to US$5-10 billion, and then to US$13 billion due to high demand. The CRF, which is designed to adapt to emerging client needs, offers sovereign-backed and non-sovereign-backed financings for qualifying clients and projects within AIIB’s members. As of February 28, 2022, the Bank has approved 46 financings under the CRF, totaling US$11,552.0 million. In March 2022, the CRF was further increased to US$20 billion, and the scope of eligible CRF projects was re-focused to cover the following areas: (i) the co-financing of procurement, distribution and deployment of COVID-19 vaccines and therapeutics, (ii) the co-financing of policy-based financing for enhanced pandemic response, preparedness and recovery and (iii) the financing of essential COVID-19 emergency health care or urgent expenditure needs.

Representative examples of approved CRF financings that are intended to address the three key areas described above include the following: (i) a US$500 million sovereign-backed financing in India as part of a co-financing led by the World Bank, mainly to purchase emergency medical equipment, enhance disease detection capacities and strengthen the national health care system, (ii) a US$750 million financing, as part of an ADB-led co-financing, to support Indonesia’s COVID-19 Active Response and Expenditure Support Program, a program designed to help mitigate the severe health, social and economic impact of the COVID-19 pandemic and (iii) a US$100 million non-sovereign-backed financing, as part of a co-financing led by the International Finance Corporation (“IFC”), to Viet Nam Prosperity Joint Stock Commercial Bank (“VP Bank”) to expand VP Bank’s working capital and trade-related lending program to private sector enterprises in Viet Nam, including small and medium-sized enterprises impacted by the COVID-19 pandemic.

The table below sets out further information on the Bank’s approved CRF financings, as of February 28, 2022.


Table 1: Overview of Approved Financings under the CRF⁽¹⁾

Member	Project Name	AIIB Financing		Lead Co-financier (if any)
		(in US$ million)
Azerbaijan	Republic of Azerbaijan COVID-19 Active Response and Expenditure Support Program		100	ADB
Bangladesh	Bangladesh COVID-19 Active Response and Expenditure Support Program		250	ADB
Bangladesh	Bangladesh COVID-19 Emergency and Crisis Response Facility		300	Standalone
Bangladesh	Bangladesh COVID-19 Emergency Response and Pandemic Preparedness Project		100	World Bank
Bangladesh	Bangladesh Sustainable Economic Recovery Program (Subprogram 1)		250	ADB
Cambodia	National Restoration of Rural Productive Capacity Project		60	Standalone
China	Emergency Assistance to China Public Health Infrastructure Project		355	Standalone
China	FOSUN COVID-19 Vaccine Project		100	IFC
Cook Islands	COVID-19 Active Response and Economic Support Program		20	ADB
Ecuador	Corporación Financiera Nacional COVID-19 Credit Line Project		50	World Bank
Egypt	Inclusive Growth for Sustainable Recovery Development Policy Financing Program		360	World Bank
Fiji	Sustained Private Sector-Led Growth Reform Program		50	ADB
Georgia	Georgia Emergency COVID-19 Response Project		100	World Bank
Georgia	Economic Management and Competitiveness Program: COVID-19 Crisis Mitigation		50	World Bank
Georgia	TBC Bank COVID-19 Credit Line Project		100	Standalone
Hungary	Emergency Assistance for Healthcare Expenditures		216.1	Standalone
India	Creating a Coordinated and Responsive Indian Social Protection System		500	World Bank
India	India COVID-19 Active Response and Expenditure Support Program		750	ADB
India	India COVID-19 Emergency Response and Health Systems Preparedness Project		500	World Bank
India	India Responsive COVID-19 Vaccines for Recovery		500	ADB
Indonesia	Additional Financing for Emergency Response to COVID-19 Program		500	World Bank


Indonesia	COVID-19 Active Response and Expenditure Support Program	750	ADB
Indonesia	Emergency Response to COVID-19 Program	250	World Bank
Jordan	Inclusive Transparent and Climate Responsive Investments Program	250	World Bank
Kazakhstan	Kazakhstan COVID-19 Active Response and Expenditure Support Program	750	ADB
Kyrgyz Republic	Emergency Support for Private and Financial Sector Project	50	World Bank
Maldives	COVID-19 Emergency Response and Health Systems Preparedness Project	7.3	World Bank
Mongolia	Mongolia COVID-19 Rapid Response Program	100	ADB
Mongolia	COVID-19 Vaccine Delivery Project	21	ADB
Pakistan	COVID-19 Active Response and Expenditure Support Program	500	ADB
Pakistan	Resilient Institutions for Sustainable Economy	250	World Bank
Philippines	Additional Financing: PHI Second Health System Enhancement to Address and Limit COVID-19 under Asia-Pacific Vaccine Access Facility Project (HEAL2-AF)	250	ADB
Philippines	COVID-19 Active Response and Expenditure Support Program	750	ADB
Philippines	Second Health System Enhancement to Address and Limit COVID-19 (HEAL-2)	300	ADB
Russia	Russian Railways COVID-19 Emergency Response Project	300	Standalone
Rwanda	Digital Acceleration Project (Digital Investment for Recovery, Resilience and Connectivity)	100	World Bank
Rwanda	Private Sector Access to Finance for Post-COVID Recovery and Resilience	100	World Bank
Sri Lanka	Sri Lanka COVID-19 Emergency and Crisis Response Facility	180	Standalone
Turkey	Akbank COVID-19 Crisis Recovery Facility	100	Standalone
Turkey	COVID-19 Credit Line Project	500	Standalone
Turkey	COVID-19 Medical Emergency Response Project	82.6	EBRD⁽²⁾
Turkey	Eximbank COVID-19 Credit Line Project	250	Standalone
Turkey	İşbank COVID-19 Credit Line Project	100	Standalone
Uzbekistan	Healthcare Emergency Response Project	100	ADB
Uzbekistan	National Bank of Uzbekistan COVID-19 Credit Line Project	200	Standalone
Viet Nam	VP Bank COVID-19 Response Facility	100	IFC
Total		11,552.0

Notes:

(1) As of February 28, 2022.

(2) European Bank for Reconstruction and Development.

AIIB is reviewing further projects to address the effects of the COVID-19 pandemic in several of its members, in some cases in collaboration with other MDBs. As of February 28, 2022, the Bank has 11 proposed CRF financings in the rolling investment pipeline, totaling US$1,926.0 million. Representative examples of such projects under review include the following: (i) a US$500 million sovereign-backed financing, as part of a co-financing led by the ADB, to assist the government of Bangladesh in procuring vaccines eligible under ADB’s Asia Pacific Vaccine Access Facility, (ii) a US$100 million sovereign-backed financing, as part of a co-financing led by the World Bank, to support Côte d’Ivoire’s resilient response to the COVID-19 pandemic by strengthening public health readiness, including through the increased availability of COVID-19 vaccines and (iii) a US$50 million sovereign-backed financing, as part of a co-financing led by the ADB, to support the government of Cambodia in procuring vaccines against COVID-19 which are eligible under ADB’s Asia Pacific Vaccine Access Facility.

As a temporary facility put in place to address the COVID-19 pandemic in AIIB’s members, the CRF is currently open for the approval of qualifying projects until December 31, 2023. Disbursements of financings under the CRF are generally occurring more rapidly than disbursements of AIIB’s other financings.

Geographic Distribution of Loans

The following table sets forth AIIB’s loan portfolio classified by geographic distribution:


	As of December 31, 2021					As of December 31, 2020
	Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio			Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio
Committed Amounts
Central Asia		730.3		7	%		1,364.7		17	%
Eastern Asia		660.9		6	%		450.7		6	%
South-Eastern Asia		1,265.1		12	%		985.5		12	%
Southern Asia		5,664.7		55	%		3,492.7		44	%
Western Asia		1,383.7		13	%		1,402.1		18	%
Oceania		—		0	%		—		0	%
Other Regional		—		0	%		—		0	%
Non-Regional		583.0		6	%		310.6		4	%

Total Committed		10,287.7		100	%		8,006.3		100	%

Disbursed Amounts⁽²⁾
Central Asia		849.5		7	%		33.7		0	%
Eastern Asia		946.1		8	%		770.5		9	%
South-Eastern Asia		2,762.1		22	%		2,142.5		26	%
Southern Asia		4,407.5		35	%		3,070.4		37	%
Western Asia		2,867.7		23	%		1,883.0		22	%
Oceania		69.9		1	%		49.9		1	%
Other Regional		321.4		3	%		319.4		4	%
Non-Regional		197.6		2	%		128.6		2	%

Total Disbursed		12,421.8		100	%		8,397.9		100	%

Notes:

(1)	The amounts set forth in this table include both sovereign-backed and non-sovereign-backed loans.

(2)	Disbursed amounts represent the gross carrying amount of the loans.

Loans by Sector

AIIB classifies its financings by sector and subsector. AIIB has developed the methodology for classifying financings by sector and subsector based on AIIB’s current and upcoming business focus, which reflects AIIB’s mission of “Financing Infrastructure for Tomorrow” as well as sector and non-sector strategies. The classifications were also developed by reference to sector taxonomies developed by other MDBs. AIIB recognizes that the sectors and sub-sectors in its classification methodology may be cross-cutting. As a result, although the classification methodology has been developed to provide a consistent approach to classifying financings, AIIB may exercise discretion in determining how to classify certain financings, including projects that may relate to more than one sector or be in new business areas. AIIB periodically reviews its classification methodology to enable it to continue to reflect AIIB’s priorities.

AIIB classifies its financings into 11 sectors: energy, finance, ICT, transport, urban, water, economic resilience (CRF), public health (CRF), finance/liquidity (CRF), rural infrastructure and agricultural development and other.

Financings in the energy sector mainly relate to (i) energy generation; (ii) renewable energy generation, including solar, wind, hydropower, geothermal, biomass and waste, as well as hybrid forms that combine energy storage and/or multiple renewable energy generation technologies; (iii) electricity transmission and distribution; (iv) energy storage; (v) hydrogen production and transportation; (vi) gas processing, storage, transportation and distribution; (vii) district heating and cooling networks; and (viii) energy efficiency and demand-side management.

Financings in the finance sector mainly relate to (i) capital markets transactions; (ii) loans to financial institutions; and (iii) investment funds transactions.

Financings in the ICT sector mainly relate to digital infrastructure and technology that is applicable to infrastructure, and include projects to support (i) connectivity; (ii) data processing and storage; (iii) development of new software and applications; and (iv) interfaces between users, digital services and applications through terminals and devices.

Financings in the transport sector mainly relate to (i) road connectivity and safety; (ii) railway projects; (iii) port and other waterway infrastructure; (iv) aviation; (v) urban transportation; and (vi) other issues related to transport logistics.

Financings in the urban sector mainly relate to (i) urban re-development; (ii) affordable housing; (iii) projects for the improvement of urban public services, such as street lighting, park facilities and digital public service delivery portals; (iv) integrated waste management; (v) renovation and protection of cultural heritage; (vi) urban tourism; (vii) urban resilience in the form of systems or facilities that enable cities to maintain continuity during shocks and stress; and (viii) urban integrated development in the form of multisectoral urban or suburban development initiatives, such as industrial parks, special economic zones, commercial business districts, new district development and satellite cities.

Financings in the water sector mainly relate to (i) water supply, sanitation and wastewater treatment; (ii) irrigation and drainage; (iii) water resources management; and (iv) water disaster resilience.

The economic resilience, public health and finance/liquidity sectors include financings under the CRF. Economic resilience financings are designed to supplement government measures supporting the social and economic response and recovery efforts (including infrastructure investments and investments in social and economic protection measures to prevent long-term damage to the productive capacity of the economy and to protect and restore productive capital) in cases such as the COVID-19 pandemic. Financings in the public health sector are designed to address immediate health care sector needs (including support for emergency public health responses and for the long-term sustainable development of the health care sector). Financings in the finance liquidity sector mainly relate to (i) capital markets transactions; (ii) loans to financial institutions; and (iii) investment funds transactions.

Financings in the rural infrastructure and agricultural development sector mainly relate to land conservation and soil management and the support of rural market infrastructure.

Financings in other sectors mainly relate to projects to support other productive sectors, including (i) industry; (ii) non-urban tourism; (iii) agribusiness; and (iv) trade facilities.

The following table sets forth AIIB’s loan portfolio by sector, as classified by AIIB in accordance with the methodology described above:


	As of December 31, 2021					As of December 31, 2020
	Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio			Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio
Committed Amounts
Energy		2,522.4		25	%		1,882.4		24	%
Finance		152.3		1	%		262.4		3	%
ICT		119.1		1	%		9.6		0	%
Other		199.3		2	%		77.6		1	%
Transport		2,478.1		24	%		1,466.3		18	%
Urban		871.5		8	%		836.7		11	%
Water		2,111.9		21	%		1,881.7		24	%
Economic Resilience		491.9		5	%		813.9		10	%
Public Health		626.1		6	%		338.8		4	%
Finance/Liquidity		634.9		6	%		354.8		4	%
Rural Infrastructure and Agriculture Development		80.2		1	%		82.0		1	%

Total Committed		10,287.7		100	%		8,006.3		100	%

Disbursed Amounts⁽²⁾
Energy		2,096.8		17	%		1,764.3		21	%
Finance		850.8		7	%		390.7		5	%
ICT		232.5		2	%		190.7		2	%


	As of December 31, 2021					As of December 31, 2020
	Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio			Amount (in millions of US$)⁽¹⁾		As a percentage of total loan portfolio
Other		5.3		0	%		2.2		0	%
Transport		1,002.9		8	%		884.2		10	%
Urban		350.2		3	%		167.6		2	%
Water		210.2		2	%		69.6		1	%
Economic Resilience		4,882.0		39	%		3,450.0		41	%
Public Health		1,528.6		12	%		915.1		11	%
Finance/Liquidity		1,260.7		10	%		563.5		7	%
Rural Infrastructure and Agriculture Development		1.8		0	%		—		0	%

Total Disbursed		12,421.8		100	%		8,397.9		100	%

Notes:

(1)	The amounts set forth in this table include both sovereign and non-sovereign-backed loans.

(2)	Disbursed amounts represent the gross carrying amount of the loans.

Loan Maturity

As of December 31, 2021, based on the final repayment date of the loans, US$1,400.9 million of AIIB’s disbursed and committed loans is scheduled to mature through 2026, US$9,611.6 million is scheduled to mature in 2027-2037 and US$11,696.9 million is scheduled to mature from 2038 onwards.

Ten Largest Borrowers

The following table sets forth the aggregate principal amount of loans (including both committed and disbursed amounts) to AIIB’s 10 largest borrowers (including both sovereign-backed and non-sovereign-backed borrowers) as of December 31, 2021:


Borrower	Amount (in millions of US$)		As a percentage of total loan portfolio
Republic of India		5,092.6		22.42	%
People’s Republic of Bangladesh		2,277.6		10.03	%
Republic of Indonesia		1,691.6		7.45	%
Islamic Republic of Pakistan		1,489.1		6.56	%
Republic of the Philippines		1,257.1		5.54	%
People’s Republic of China		1,169.2		5.15	%
Ministry of Finance of Kazakhstan		747.2		3.29	%
Southern Gas Corridor Closed Joint Stock Company of Azerbaijan		599.8		2.64	%
Boru Hatları ile Petrol Taşıma A.Ş. (BOTAŞ) of Turkey		599.8		2.64	%
Republic of Uzbekistan		566.4		2.49	%

Proposed Financings

As of December 31, 2021, the Bank has 108 proposed financings in the rolling investment pipeline for 2022-2023. The rolling investment pipeline includes all proposed financings for the next 24 months (updated on a rolling basis) that have passed project screening review and have subsequently been approved for inclusion into the pipeline. See “–Financing Approval Process–Non-sovereign-backed Financings–Project Screening Review.”

As of December 31, 2021, the proposed financings span a broad range of sectors, including energy, economic resilience, finance/liquidity, public health, transport, urban, water, finance, ICT and other, and, excluding multi-country financings (discussed below), would fund projects in the following members: Azerbaijan, Bangladesh, Belarus (as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operation–Recent Developments–AIIB Response to the Conflict in Ukraine,” all activities relating to Belarus are currently on hold and under review), Brazil, Cambodia, China, Côte d’Ivoire, Egypt, Fiji, Georgia, India, Indonesia, Kazakhstan, Madagascar, Malaysia, Mongolia, Nepal, Oman, Pakistan, Philippines, Russia (as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operation–Recent Developments–AIIB Response to the Conflict in Ukraine,” all activities relating to Russia are currently on hold and under review), Saudi Arabia, Singapore, Sri Lanka, Tajikistan, Thailand, Turkey, Uzbekistan and Viet Nam. As of December 31, 2021, of the proposed financings, seven (four investments in funds, one loan and two investments in fixed-income securities) were classified as multi-country financings.

Financing Approval Process

The Bank’s financing process is guided by the Bank’s mandate, mission and thematic priorities of green infrastructure, connectivity and regional cooperation, technology-enabled Infrastructure and private capital mobilization. The Bank reviews financing proposals, seeking to achieve an appropriate balance among sectors, sovereign-backed and non-sovereign-backed financings and beneficiaries. The Bank’s Environmental and Social Framework is integral to the decision-making process on all projects. See “–Environmental and Social Framework.”

Non-sovereign-backed Financings

The approval process for non-sovereign-backed financings is described below. This approval process may be simplified in certain limited circumstances, including in respect of straightforward low- or medium-risk financings that are deemed well prepared prior to concept review or follow-on or repeat financings.

Project Screening Review

The Bank receives financing ideas and proposals from a variety of entities, including project sponsors, commercial banks, government entities and development partners. Each proposed financing undergoes preliminary project review screening to determine if it aligns strategically with the Bank’s purposes and priorities. At this stage, the Bank performs an initial integrity check on the sponsor(s) and beneficiary. If the proposed financing passes initial screening, it is included in the Bank’s rolling investment pipeline. See “–Proposed Financings.”

Assessment Prior to Concept Review

At this stage, further information is gathered about key aspects of the proposed financing in order to form a judgment on whether the proposed financing broadly meets the Bank’s operating principles and warrants dedicating significant resources to its preparation. Additional integrity and compliance checks, as well as initial environmental and social due diligence, are carried out prior to concept review.

Concept Review

A concept review is held before significant resources are spent on preparation of the financing. The purposes of the concept review are to (i) confirm that the proposed financing broadly fits within the purposes, policies, strategies and priorities of the Bank, (ii) assess whether the project merits the Bank’s investment of time and resources, (iii) assess and authorize the initial resource requirements for the proposed financing, (iv) discuss possible modifications to the proposed financing to enhance its contribution to the Bank’s objectives and (v) agree on the key issues to be addressed and the approach to resolving them.

For the concept review, a concept review project document is prepared and submitted to the Investment Committee. This concept review project document includes, among other things, the following information: (i) a summary of key financing terms, (ii) a description of the underlying project, including use of proceeds of the proposed financing, (iii) brief information on the beneficiary and sponsors, including the results of the initial integrity check, (iv) a rationale for the Bank’s involvement in the proposed financing, (v) a risk assessment of the proposed financing (including an indicative risk rating, economic capital and risk-weighted return on capital of the proposed financing), (vi) an assessment of necessary funding or hedging arrangements or of any other funding issues, (vii) a preliminary analysis on the potential environmental and social impact of the proposed financing, (viii) a summary of key project issues and (ix) a timetable for next steps. At this stage, the Bank assesses the extent to which the financing involves an international waterway, a disputed area or a de facto government (as such terms are used in the Bank’s Operational Policy on International Relations).

Comprehensive Due Diligence Assessment

If the proposal passes concept review, the Bank’s team in charge of the proposed financing conducts a comprehensive assessment that is designed to inform the Bank of the following: (i) the technical and financial aspects of the proposed financing, (ii) the creditworthiness of the beneficiary and the sponsors, (iii) the environmental and social risks and potential impact of the proposed financing, (iv) any issues in connection with procurement, legal and reputational concerns and (v) other relevant characteristics of the proposed financing. As part of this assessment, the

Bank carries out a detailed financial and risk analysis of the proposed financing, as well as continues its integrity due diligence. Integrity due diligence includes gathering information with respect to the beneficiary and the sponsors, such as their corporate governance structure, beneficial ownership, financial transparency and strength, compliance and integrity, including in relation to tax matters, and any sanctions concerns.

After sufficient due diligence has been completed, the Bank begins work on a term sheet (or other document serving the same purpose as a term sheet), which later forms the basis for drafting the financing agreements.

Interim Review

In case of significant new developments or complex issues, the Investment Committee may require an interim review before preparation of the financing may advance further.

Final Review

The purposes of final review are for the Investment Committee to (i) assess, based on the final review project document, whether to recommend approval of the proposed financing and on what conditions, and (ii) authorize documentation of the deal (if approval is recommended). The final review project document contains, among other things, a discussion of new issues arising after the last review and changes to business terms and the financial model and negotiated term sheet.

Approval and Preparation of Documentation

If the proposed financing passes the final review, it undergoes a policy assurance review by the Bank’s Policy and Strategy department. Typically, no later than one working day after passing final review, a project summary information document is prepared and (subject to certain limited exceptions) disclosed. At the same time, and prior to approval, the Bank seeks to confirm that there are no objections from the member in whose jurisdiction the underlying project is to be carried out.

At this stage, an approval document is prepared and, upon the President’s recommendation, submitted to the Board of Directors for approval of the proposed financing (subject to the President’s delegated authority to approve certain projects, as discussed hereafter). Effective January 1, 2019, the Board of Directors has delegated authority to the President of the Bank, in his capacity as head of Bank management, to approve certain financings. This delegation is subject to limits based on the precedent-setting nature of the financing, the existence of significant strategy or policy issues and established risk tolerance. Any single Director may also require review by the Board of Directors of the financing. The Board of Directors undertakes periodic review of the President’s use of his delegated authority.

Following such approval, the legal documentation for the financing is prepared, negotiated and signed. Effectiveness of the financing is subject to the satisfaction of all conditions precedent.

Project Implementation and Monitoring

Project implementation and monitoring begins after signing of the legal documentation. The beneficiary is responsible for implementing the underlying project in a timely manner. If needed, the beneficiary may recruit consultants to provide specialized professional services in areas such as detailed design, procurement and capacity development.

The Bank’s team in charge of the financing remains fully engaged during the implementation of the underlying project both through site visits and continuous dialogue with the beneficiary on a variety of issues, including any environmental and social concerns. As part of the monitoring process, the Bank evaluates not only implementation of the underlying project, but also any event that would change the risk profile of such project and the beneficiary’s compliance with the covenants included in the financing agreements.

Project Completion and Evaluation

In addition to periodic reporting to the Board of Directors on material issues encountered during the implementation of the underlying project, the Bank prepares a completion report no later than six months after the full discharge of the beneficiary’s financial obligations to the Bank in connection with the financing. The report assesses the results of the underlying project and the Bank’s financing. Upon approval by the Investment Committee, the report is submitted to the Board of Directors for information.

Sovereign-backed Financings

The approval process for sovereign-backed financings is broadly similar to that for non-sovereign-backed financings. However, since these financings are made to, or guaranteed by, a Bank member, financing proposals are normally received from the Bank member or development partners. The Bank’s due diligence focuses on the impact of the proposed financing on the member’s fiscal sustainability, as well as on the environmental, social, fiduciary (procurement, financial management and disbursement) and other implementation aspects of the proposed financing. In addition, the Investment Committee’s final review (referred to as the “appraisal review” in the context of sovereign-backed financings) includes a determination of whether to authorize negotiations of the sovereign-backed financing documentation, which must be substantially complete before the approval of the financing is solicited (in contrast to non-sovereign-backed financings, where negotiations do not need to be completed in order to seek approval of the financing). For sovereign-backed financings, the project summary information document is typically prepared and disclosed promptly after concept review, with an update disclosed prior to consideration at appraisal review. The full project document is also disclosed (following approval of the financing), as well as the Bank’s project implementation monitoring reports for the financing.

Investment Committee

The Investment Committee is the principal forum where matters related to ordinary operations are considered. The Investment Committee is accountable to the President. Pursuant to the terms of reference of the Investment Committee, the members of the Investment Committee are:

•

the Vice President, Investment Operations (Region 2);

•

the Vice President, Investment Operations (Region 1);

•

the Vice President, Policy and Strategy;

•

the Chief Financial Officer;

•

the Chief Risk Officer; and

•

the General Counsel.

See “Governance and Administration—Senior Management” for the names, nationalities and other biographical information of the members of senior management that serve in these positions as of February 28, 2022.

Environmental and Social Framework

The Bank has established the Environmental and Social Framework, which is intended, among other things, to accomplish the following: (i) to ensure the environmental and social soundness and sustainability of projects financed (in whole or in part) by the Bank, (ii) to address environmental and social risks and impacts in Bank-financed projects, (iii) to provide a robust structure for managing operational and reputational risks of the Bank and its shareholders in relation to the environmental and social risks and impacts of Bank-financed projects, (iv) to provide a mechanism for addressing environmental and social risks and impacts in project identification, preparation and implementation and (v) to facilitate cooperation on environmental and social matters with development partners. Under the Bank’s Environmental and Social Framework, the Bank has established an Environmental and Social Policy and three associated Environmental and Social Standards, which set forth mandatory environmental and social requirements for each project financed (in whole or in part) by the Bank. In addition, the Bank has developed an environmental and social exclusion list, which sets forth activities and other items that the Bank will not knowingly finance. In furtherance of item (iv) noted above, the Bank has established a Project-affected People’s Mechanism (the “PPM”), which provides an opportunity for an independent and impartial review of submissions from people affected by the Bank’s financings who believe they have been, or are likely to be, adversely affected by the failure on the part of the Bank to implement its Environmental and Social Policy in situations where their concerns cannot be addressed satisfactorily through project-level grievance redress mechanisms or Bank management processes.

Economic Sanctions

The United Nations Security Council (the “UNSC”), the European Union and individual countries, including the United States and the United Kingdom, may impose economic sanctions and trade embargoes targeting certain countries, territories, entities and individuals. Such economic sanctions and embargo laws and regulations vary in their application with regard to countries, entities and individuals, and the scope of activities that are subjected to sanctions. These sanctions and embargo laws and regulations may be strengthened, relaxed or otherwise modified over time. Certain countries and territories (including Crimea, the DNR and LNR regions, Cuba, Iran, North Korea and Syria), entities and individuals are targeted by sanctions and embargoes imposed by the United States, and certain countries (currently Cuba, North Korea, Iran and Syria) have been identified as state sponsors of terrorism by the U.S. Department of State.

In the case of sanctions maintained by the United States, the President of the United States generally has broad discretion to impose or remove sanctions, including pursuant to his authority under the International Emergency Economic Powers Act and the Trading with the Enemy Act. In addition, the United States may implement sanctions adopted by the UNSC in order to meet requirements imposed on member states of the United Nations. Other sanctions programs, such as certain measures related to Cuba, Iran and Russia, are specifically mandated under U.S. statutes.

U.S. sanctions may be classified as “primary” sanctions or “secondary” sanctions. Primary sanctions make certain conduct by U.S. persons and persons subject to U.S. jurisdiction, and certain activities taking place in the United States, unlawful. Secondary sanctions generally target non-U.S. persons for conduct that occurs outside of the United States, subjecting those persons to sanction by the United States if they engage in specified conduct.

The Bank complies with applicable UNSC sanctions imposed under Chapter VII of the UN Charter and is mindful of and gives due regard to the restrictions contained in the various economic sanctions programs and embargo laws administered by the United States, the United Kingdom, the European Union and other jurisdictions that limit the ability of persons from doing business or trading with targeted countries, territories, entities and individuals. Although the Bank is not a U.S. person and does not operate in or from the United States, the Bank transacts in the ordinary course with various commercial counterparties that are required to comply with U.S. sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury. For example, such counterparties may serve as a correspondent bank for the Bank, or as another intermediary that is involved in funds flows in respect of the Bank’s loan, investment or funding operations. Furthermore, U.S. persons who are required to comply with U.S. sanctions may be employees of the Bank, or may serve as advisors or service providers to the Bank. U.S. persons also may be purchasers of securities issued by the Bank. In addition, secondary sanctions maintained by the United States may result in sanctions against the Bank if the Bank engages in targeted conduct, including facilitation of transactions and activities involving persons targeted by sanctions, including certain Iran- or Russia-related persons.

The Bank seeks to avoid violations of sanctions and seeks to avoid engaging in sanctionable conduct, as violations or engagement in sanctionable conduct may restrict the Bank’s ability to access the U.S. capital markets, including the Bank’s ability to offer and sell securities in the United States, and may have a negative impact on the Bank’s business, operations or assets. The Bank screens transactions by consulting relevant sanctions lists of sanctioning authorities for sanctioned individuals, entities and other targets. Iran is a member of the Bank, and the Bank’s contacts with Iran have concerned the same governance matters and processes common to all regional members, and no other particular contacts are currently contemplated. The Bank has not financed any projects in Iran, nor are any such projects in the rolling investment pipeline. Certain provisions of U.S. law (a) prohibit U.S. persons and persons subject to U.S. jurisdiction from investing in or facilitating an investment in Iran or in any entity owned or controlled by the government of Iran and (b) require imposition of secondary sanctions on any person who is determined to have knowingly purchased, subscribed to, or facilitated the issuance of sovereign debt of the government of Iran or debt of any entity owned or controlled by the government of Iran. Iran’s shares represent less than two percent of the Bank’s overall capital, and Iran’s voting power is also under two percent. The Bank does not believe that Iran’s membership in the Bank constitutes control of the Bank by Iran such that any general-purpose security issued by the Bank, including securities offered by a prospectus contained in a registration statement filed under the U.S. Securities Act of 1933, would constitute an investment in sovereign debt of Iran or an entity owned or controlled

by the government of Iran for purposes of these provisions. Russia and Belarus are also members of the Bank. On March 3, 2022, in response to events taking place in Ukraine, the Bank announced it would place all activities relating to Russia and Belarus on hold and under review, including all Russia- and Belarus-related projects in the Bank’s rolling investment pipeline. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Recent Developments–AIIB Response to the Conflict in Ukraine” for further information about AIIB’s exposure to Russia, Belarus and their respective currencies.

It is possible that new, or changes to existing, sanctions-related legislation or agreements may impact the Bank’s business. Moreover, although the Bank believes that it is in compliance with all applicable sanctions and embargo laws and regulations, and intends to maintain such compliance, the scope of certain laws may be unclear, may be subject to changing interpretations or may be strengthened or otherwise amended. Any violation of sanctions or engagement in sanctionable conduct could result in fines, sanctions or other penalties, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in securities issued by the Bank. The Bank cannot predict the impact that the imposition of secondary sanctions would have on the trading market for such securities or whether such sanctions would make it more difficult to sell and trade such securities in certain jurisdictions, including in the U.S. market.

AIIB Special Funds

In accordance with Article 17(1) of the Articles of Agreement, the Bank has established the AIIB Project Preparation Special Fund (the “Project Preparation Special Fund”) and the AIIB Special Fund Window under the CRF (the “Special Fund Window”).

AIIB Project Preparation Special Fund

Established in June 2016, the Project Preparation Special Fund provides grants to support and facilitate through technical assistance the preparation of projects to be financed by AIIB in eligible members. Technical assistance eligible for financing includes, among others, consultancy services, equipment necessary for the preparation or delivery of such services or for the implementation of the recommendations made under such consultancy services, and related training.

Projects eligible for support are those (i) which are being considered for financing by AIIB and (ii) which are for the benefit of (a) one or more members of the Bank that, at the time the decision to extend the grant is made by the Bank, are eligible to receive financing from the International Development Association (the “IDA”) and (b) other members of the Bank with substantial development needs and capacity constraints; provided, however, that the cumulative amount of all grants extended to all projects for the benefit of such other members may not exceed, at any time, 30% of the aggregate amount of all contributions made to the Project Preparation Special Fund.

Any member of the Bank, any of its political or administrative sub-divisions, or any entity under the control of such member or such sub-divisions or any other country, entity or person approved by the President may become a contributor to the Project Preparation Special Fund by entering into a contribution agreement with the Bank (“Contributors”). Special Fund Resources for the Project Preparation Special Fund consist of (i) amounts accepted from Contributors, (ii) any income derived from investment of the resources of the Project Preparation Special Fund and (iii) any funds reimbursed to the Project Preparation Special Fund. The Bank is under no obligation to provide financial support to the Project Preparation Special Fund. The Bank, acting as administrator of the Project Preparation Special Fund, receives administration fees and cost recovery fees. See “–Ordinary Resources and Special Fund Resources” for further information about Special Fund Resources and related requirements.

As of December 31, 2021, committed contributions to the Project Preparation Special Fund totaled US$128 million, consisting of US$50 million from each of China and the United Kingdom, US$18 million from the Republic of Korea and US$10 million from Hong Kong, China; all such commitments have been paid as of December 31, 2021.

As of December 31, 2021, the Bank has approved 15 grants under the Project Preparation Special Fund, representing funds of approximately US$33.6 million, of which US$1.4 million has been cancelled. Grants under the Project Preparation Special Fund were provided to the following members: Bangladesh, Cambodia, Lao PDR, Nepal, Pakistan, Sri Lanka, Tajikistan and Uzbekistan.

AIIB Special Fund Window under the CRF

Established in May 2020, the Special Fund Window provides grants to buy down interest due under eligible loans extended under the CRF.

Loans eligible for Special Fund Window support are limited to sovereign-backed loans under the CRF (other than policy-based loans), which are extended to, or guaranteed by, members of the Bank that, at the time the decision to approve the loan is made, are eligible to receive financing from the IDA and qualify as IDA-only.

Special Fund Resources for the Special Fund Window consist of (i) any amounts transferred by the Bank from the Project Preparation Special Fund, (ii) any amounts received by the Bank for inclusion in the Special Fund Window from any member of the Bank, any of its political or administrative sub-divisions, or any entity under the control of the member of such sub-divisions or any other country, entity or person approved by the President, (iii) any income derived from investment of the resources of the Special Fund Window and (iv) any funds reimbursed to the Special Fund Window. The Bank is under no obligation to provide financial support to the Special Fund Window. The Bank, acting as administrator of the Special Fund Window, receives administration fees. See “–Ordinary Resources and Special Fund Resources” for further information about Special Fund Resources and related requirements.

As of December 31, 2021, Special Fund Resources for the Special Fund Window totaled US$30 million, consisting of an initial US$30 million transfer from the Project Preparation Special Fund.

As of December 31, 2021, four interest rate buy-downs for eligible sovereign-backed loans extended under the CRF have been approved under the Special Fund Window for a total of US$29.7 million. Such interest rate buy-downs were provided to the following members: Bangladesh, Cambodia, Kyrgyz Republic and Maldives.

In March 2022, the Board of Directors approved the conversion of the Special Fund Window into the Special Fund Window for Less Developed Members.

The Multilateral Cooperation Center for Development Finance

Established in 2020, the Multilateral Cooperation Center for Development Finance (“MCDF”) is a multilateral financial mechanism designed to promote high-quality infrastructure and connectivity investments in developing countries through the provision of grants to international financial institutions which have become implementing partners of the MCDF Finance Facility.

Since June 2020, AIIB serves as the administrator of the MCDF, providing administrative and financial services, including the hosting of the MCDF Secretariat. As of December 31, 2021, fees associated with the administration of MCDF amounted to US$1.4 million. AIIB is also an implementing partner of the MCDF Finance Facility.

The Global Infrastructure Facility

Established in 2014, the Global Infrastructure Facility (“GIF”) is a global collaboration platform that was designed to address the shortage of high quality, bankable infrastructure projects through the provision of end-to-end transaction advisory services and support to governments and MDBs.

Since June 2021, AIIB serves as technical partner for GIF-supported projects. Resources received from GIF will be administrated via a separate special fund. As of December 31, 2021, no projects have been implemented deploying GIF resources.

Quality of Loan Portfolio

When a borrower fails to make payment on any principal, interest or other charge due to the Bank, the Bank may suspend disbursements on loans to that borrower. With respect to sovereign-backed loans, the Bank would cease approving new loans to the borrower once any loans are overdue by more than 30 days and suspend all disbursements to, or guaranteed by, the member concerned once any loans are overdue by more than 60 days.

As required by IFRS 9, AIIB uses the ECL model to estimate credit loss on financial assets, such as loan disbursements, and on other instruments, such as undrawn loan commitments. AIIB recognizes a provision to the extent the ECL of a financial instrument exceeds its gross carrying amount. See “Risk Management–Risk Types–Financing Credit Risk” and Notes B.3.3.5, B4.1 and D3 to the 2021 Audited Financial Statements for further discussion on the Bank’s credit quality analysis.

As of December 31, 2021, no AIIB assets were categorized as overdue or have been written off, except for (i) a non-sovereign-backed loan that was assessed as credit impaired with a carrying amount of US$31.5 million (net of the associated ECL allowance) and (ii) US$150.0 million of overdue contractual undiscounted paid-in capital receivables, which are not considered impaired.

As of December 31, 2021, total ECL increased to US$187.3 million from US$164.1 million as of December 31, 2020. The increase between December 31, 2020 and December 31, 2021 was mainly attributable to the increase in the Bank’s loan portfolio as well as downgrades in the internal ratings of certain borrowers.

The following table shows AIIB’s total gross carrying amount of loan disbursements and exposure of loan commitments for both sovereign-backed and non-sovereign-backed loans with their respective ECL allowance balances:


	As of December 31,
	2021					2020

	(in thousands of US$)
	Loans and loan commitments		ECL			Loans and loan commitments		ECL
Sovereign-backed loans		20,339,927		(113,779	)		14,899,105		(112,563	)
Non-sovereign-backed loans		2,369,517		(68,996	)		1,505,129		(47,726	)

Total		22,709,444		(182,775	)		16,404,234		(160,289	)

RISK MANAGEMENT

AIIB has established a Financial and Risk Management Framework, which includes an outline of the Bank’s approach to risk and forms the guiding reference framework for all policies and guidelines related to risks.

Risk Philosophy

The Bank’s risk philosophy is the foundational pillar of the Bank’s approach to risk management. According to the risk philosophy, the Bank’s risk management function aims to accomplish the following three objectives:

•

enable the Bank to fulfill its mandate to promote infrastructure and other productive sectors;

•

ensure the stability and financial continuity of the Bank through efficient capital allocation and utilization, and comprehensively manage risks and reputational consequences; and

•

foster a strong risk culture by embedding risk accountability in the Bank.

Risk Appetite Statement

The Bank’s Risk Appetite Statement (the “RAS”), inter alia, articulates the maximum aggregate level and types of risk that the Bank is willing to assume, within its Risk Capacity (as defined below), to achieve its strategic objectives and business plan (the “Risk Appetite”).

The maximum level of risk that the Bank can assume given its current level of resources before breaching constraints is determined by (i) available capital and liquidity needs, (ii) the operational environment (e.g., technical infrastructure, risk management capabilities and expertise) and (iii) Bank obligations (the “Risk Capacity”). The Bank allocates its Risk Capacity between core and non-core risks: core risks are those directly linked to the Bank’s investment operations mandate and non-core risks are those arising from activities, including treasury operations and other operational activities, supporting the Bank’s investment operations mandate.

The RAS classifies each risk type according to one of three appetite levels – low, medium or high:

•

Low appetite reflects risk events that have the potential to substantially damage the Bank, jeopardizing its ability to fulfill its mission.

•

Medium appetite reflects risk events that, while significant, are not a threat in isolation to the Bank. These risks are typically incurred as part of the Bank’s business, but not in the pursuit of the Bank’s strategic goals.

•

High appetite reflects risk events that are accepted, but closely managed, by the Bank. These risks are typically incurred in pursuit of the Bank’s strategic goals.

The Bank has established a variety of key performance indicators (“KPIs”) and key risk indicators (“KRIs”), which are monitored regularly. The Risk Management Department also performs stress tests of the Bank’s draft business plan to ensure compliance with the RAS. The Risk Committee informs the Board of Directors of the impact of the final business plan on the RAS and proposes remedial actions in the event the business plan causes the RAS to be breached. The RAS is submitted to the Board of Directors for its approval both on an annual basis and in the event there is any material change to the RAS.

Risk Management Architecture

The risk management architecture comprises the Bank’s policies, processes, organizational structure and control and assurance system that, collectively, are designed to help the Bank identify, measure, monitor and control risks. The risk management architecture enables the implementation of AIIB’s risk philosophy and ensures accountability regarding risk management. The Board of Directors approves key risk policies and monitors core risk metrics and risk limits. The Audit and Risk Committee reviews risk-related policies and the RAS. The President recommends key risk policies for approval by the Board of Directors. The Risk Committee, which is chaired by the Chief Risk Officer and whose members include the Chief Financial Officer, the Vice President, Policy and Strategy,

the Vice Presidents, Investment Operations and the General Counsel, exercises oversight on behalf of the President of the key risks of the Bank. The Risk Management Department, which is headed by the Chief Risk Officer, has overall responsibility for managing risks, including implementing risk management strategies, policies and procedures.

Key responsibilities of the Bank’s Risk Management Department are the following:

•

Risk Management and Oversight: Overall development and oversight of the Bank’s risk framework and policy, and direct governance of AIIB’s Risk Committee;

•

Guardian of Risk Appetite: Articulation of the Bank’s overall Risk Appetite and appropriate risk limits, and the embedding of the Risk Appetite into the Bank’s processes and culture;

•

Risk Identification and Assessment: Identification of all material risks, definition of key risk metrics and indicators and development of methodologies, indicators and models to measure risks;

•

Risk Monitoring and Reporting: Regular monitoring of AIIB’s risks and the development and maintenance of a concise upward risk reporting system;

•

Strategic Decision Making: Align overall business and operational plans with appropriate risk management and ensure that strategic planning reflects the Bank’s Risk Appetite;

•

Risk Optimization: Risk optimization and active risk management by shaping the risk profile within the Bank’s Risk Appetite limits, strategic capital allocation through risk-adjusted capital and development of risk-adjusted performance management; and

•

External Communication: Facilitate the consistent and proportionate disclosure of all risks to external parties, including interaction with rating agencies.

Three Lines of Defense

AIIB’s risk management activities are organized in line with the Three Lines of Defense Principle:

•

The first line of defense consists of the Bank’s business units where risks are taken, including investment operations and other client-facing functions, and is designed to ensure that AIIB effectively identifies, assesses, manages and reports risk;

•

The second line of defense is the Bank’s risk management and compliance functions. The risk management function is primarily responsible for overseeing the Bank’s risk-taking activities, undertaking risk assessments and reporting on risk-related work carried out by the first line of defense. The compliance function monitors compliance with laws, corporate governance rules and internal policies; and

•

The third line of defense is the Bank’s internal audit function, which is responsible, in part, for reviewing and providing assurance regarding the effectiveness of the Bank’s risk management activities and governance.

Capital Adequacy

The Bank’s capital supports its operations and acts as a cushion to absorb unexpected losses and/or a deterioration in the value of the Bank’s assets. AIIB manages capital adequacy risk in accordance with several limits, including the following. First, as required by Article 12(1) of the Articles of Agreement, the Bank’s total exposure from its investment operations must be less than the Bank’s total unimpaired subscribed capital, reserves and retained earnings. This limit may be increased up to 250% of the Bank’s unimpaired subscribed capital, reserves and retained earnings with the approval of the Board of Governors. Second, the Bank’s available capital (i.e., paid-in capital, plus reserves and accumulated retained earnings) must be greater than its economic capital (“ECap”) (a risk-sensitive measure used to determine the Bank’s capital requirements), based on an actual and a three-year projected balance sheet composition, both on a base case and on a stressed scenario basis. AIIB calculates ECap on financing credit risk,

equity investment risk, market risk, counterparty credit risk and operational risk. The stress testing of the Bank’s available capital serves several purposes, including to set a buffer over ECap that protects the Bank’s credit ratings in the event of a severe and protracted crisis scenario.

Risk Types

AIIB has developed both qualitative and quantitative methodologies for identifying, measuring and managing risks. Material risks that the Bank currently faces or expects to face in the future are listed below.

Financing Credit Risk

Credit risk is the risk that a borrower or other counterparty fails to discharge an obligation, thereby causing a loss on the part of the Bank. The Bank is exposed to credit risk in its financing activities.

Sovereign credit risk relates to whether the sovereign borrower or guarantor: (i) has the capacity and willingness to service external debt obligations in general and Bank debt in particular, (ii) has an existing debt burden that is sustainable and (iii) honors the preferred creditor status of the Bank and other MDBs. Bank evaluation of sovereign credit risk is based on quantitative and qualitative risk measurements, including internal rating models and a variety of external sources. The Bank performs its own sovereign credit analysis and assigns its own internal credit ratings, comprising 16 grades. Grades 1-4 are considered investment grade. As of December 31, 2021, the rating of sovereign-backed loans ranged from 1 to 11. The Bank also sets certain exposure limits in respect of sovereign borrowings. As an MDB, the Bank does not participate in country debt rescheduling or debt reduction exercises of sovereign-backed loans or guarantees.

Non-sovereign credit risk relates to the creditworthiness of a private borrower (including a publicly owned company that does not have the benefit of an explicit sovereign guarantee) and the ability and willingness of such private borrower to repay its debt obligations. The Bank deploys a variety of tools to manage this risk, including assigning its own internal credit rating for the borrower (taking into account specific project, sector, macroeconomic and country credit risks) and possibly requiring a full or partial sovereign guarantee. For non-sovereign projects, risk ratings are normally capped by the sovereign credit rating, except where the Bank has recourse to a guarantor from outside the country that has a better rating than the local sovereign credit rating. As of December 31, 2021, the rating of non-sovereign loans ranged from 1 to 11a (on the Bank’s 16-grade internal credit ratings scale). The Bank also imposes certain exposure limits in respect of non-sovereign loans.

The Bank has adopted an ECL three-stage model for assessing credit risk: Stage 1 for those financial instruments that have not experienced a significant increase in credit risk (“SICR”) since initial recognition; Stage 2 for those financial instruments that have experienced a SICR since initial recognition; and Stage 3 for those financial instruments deemed credit-impaired. To determine whether SICR has occurred, the Bank examines quantitative, qualitative and backstop criteria. Quantitative criteria include a two-grade downgrade for investment grade loans or a one-grade downgrade for non-investment grade loans pursuant to the Bank’s internal credit rating system. Qualitative criteria include (i) adverse changes in business, financial or economic conditions, (ii) expected breach of contract that may lead to covenant waivers or amendments, (iii) transfer to watchlist/monitoring or (iv) change in payment behavior. As a backstop, SICR is deemed to have occurred if the payment under a financial instrument is past due by 30 or more days. To determine whether an asset is credit-impaired, the Bank assesses whether one or more events has occurred that will have a detrimental impact on the estimated cash flows of such asset. Evidence of credit impairment includes: (i) a significant financial difficulty of the borrower, (ii) a breach of contract, such as a default or past due event and (iii) an increasing likelihood that the borrower will enter bankruptcy or other financial reorganization.

The Bank measures ECL on both a 12-month and contractual lifetime basis. 12-month ECL is calculated in the following manner: Point-in-time probability of default * loss given default * exposure at default. Exposure at default is the loan balance at the period end, plus projected net disbursement in the next year. Lifetime ECL is the summation of the net present value of the ECL for each year. ECL calculations are performed for three different scenarios: baseline, good and bad. In respect of each loan, the Bank defines default to mean one or more of the following: (i) payment default (180 days past due for sovereign loans or 90 days past due for non-sovereign loans, with similar rules applying to investments in fixed-income securities), (ii) breach of specific covenants that trigger a default clause, (iii) default under a guarantee or collateral or other support agreement, (iv) failure to pay a final judgment or court order and (v) bankruptcy, liquidation or the appointment of a receiver.

The Bank writes off the gross carrying amount of a financial asset when it has no reasonable expectations of recovering the contractual cash flows on such asset in its entirety or a portion thereof. See “Operations of AIIB–Quality of Loan Portfolio” and Notes B.3.3.5, B4.1 and D3 to the 2021 Audited Financial Statements for further information on ECL calculations and balances.

The table below sets forth the Bank’s loans and commitments, classified by geographic distribution and ECL staging:


Region	As of December 31, 2021								As of December 31, 2020
	Stage 1		Stage 2		Stage 3		Total		Stage 1		Stage 2		Total

	(in thousands of US$)
Sovereign-backed loans
Total Regional		17,946,837		1,792,176		—		19,739,013		13,030,287		1,569,127		14,599,414
Total Non-Regional		600,914		—		—		600,914		299,691		—		299,691

Total sovereign-backed loans		18,547,751		1,792,176		—		20,339,927		13,329,978		1,569,127		14,899,105

Non-sovereign-backed loans
Total Regional		1,797,972		316,388		75,525		2,189,885		1,037,398		328,189		1,365,587
Total Non-Regional		179,632		—		—		179,632		113,430		26,112		139,542

Total non-sovereign-backed loans		1,977,604		316,388		75,525		2,369,517		1,150,828		354,301		1,505,129

Total		20,525,355		2,108,564		75,525		22,709,444		14,480,806		1,923,428		16,404,234

The Bank’s maximum exposure to credit risk from financial instruments other than undrawn loan commitments, before taking into account any collateral held or other credit enhancements, is the carrying amount of such instruments (as reflected on the Bank’s balance sheet). The maximum exposure to credit risk from undrawn loan commitments was US$10,287.7 million as of December 31, 2021 and US$8,006.3 million as of December 31, 2020.

The table below sets forth the Bank’s credit enhancements for loans and commitments:


	As of December 31, 2021		As of December 31, 2020

	(in thousands of US$)
Guaranteed by sovereign members		3,537,411		2,711,526
Guaranteed by non-sovereign entities		530,087		457,263
Unguaranteed⁽¹⁾		18,641,946		13,235,445

Total		22,709,444		16,404,234

Note:

(1)	The unguaranteed loan investments mainly represent sovereign loans and loan commitments granted to members.

Equity Investment Risk

Equity investment risk is the risk of losing money from investments in equities. The Bank may deploy a variety of measures to manage this risk. For example, if the equity is listed, the investment risk can be marked-to-market, subject to liquidity discounts. For unlisted equities, the investment risk is measured by reference to fair value, with the aid of valuation models and external benchmarks. Risk limits on equity investments are designed both to capture the maximum loss to which the Bank is exposed and to ensure that AIIB’s equity investments are well diversified and not concentrated.

The Bank treats its fund investments, such as limited partnership funds and other fund investments, in the same way as equity investments when they have the following features: (i) the investments entitle the Bank to distributions according to pre-determined arrangements during their lives and upon liquidation and (ii) the investments do not promise a particular return to the holders. As of December 31, 2021, the fair value of investments in limited partnership funds and other fund investments amounted to US$277.8 million and the fair value of investments in trust amounted to US$54.4 million, respectively.

Liquidity Risk

Liquidity risk is the risk that the Bank will not be able to meet efficiently both expected and unexpected current and future cash flows and collateral needs without affecting either daily operations or the financial condition of the Bank. AIIB manages liquidity risk in a variety of ways, including the setting of risk limits, the monitoring of liquidity risk ratios and early warning indicators, diversification, the deployment of liquidity buffers and the implementation of a liquidity contingency plan. Under Bank policy, the Bank maintains liquidity at levels at least equal to (i) 40% of net cash flow requirements for the next three years and (ii) 100% of net cash flow requirements for the next year under extreme stress conditions. The Bank also maintains a stock of high-quality liquid assets to meet potential liquidity requirements for a 30-day stress scenario and periodically conducts stress tests to ensure that it can meet its payment obligations.

The table below sets out the contractual maturities of the Bank’s material financial liabilities as of December 31, 2021:


	Less than 1 month			1-3 months			3-12 months			1-5 years			Over 5 years			Total

	(in thousands of US$)
Financial liabilities
Borrowings		(17,943	)		(15,513	)		(396,789	)		(18,914,429	)		(40,073	)		(19,384,747	)
Other liabilities⁽¹⁾		(165,760	)		—			—			—			—			(165,760	)

Note:

(1)	Other liabilities represent collateral held in relation to interest rate swaps that becomes repayable dependent on daily movements in interest rates.

Market Risk

Market risk is the risk of losing money due to the overall performance of the financial markets for all marketable instruments in the Bank’s treasury and investment operations portfolio. The Bank is potentially exposed to two material market risks: currency and interest rate risk. The Bank employs a variety of methods to assess and mitigate market risks, such as monitoring the change in economic value of equity, the change in net interest income, the interest rate repricing gap, duration and value-at-risk indicators, as well as the setting of limits. Currency risk is managed through funding debt-funded assets in the same currency (on an after-hedging basis). The Bank manages refinancing risk by applying “pass-through pricing” for sovereign-backed financings and risk premia for non-sovereign-backed financings.

The majority of the Bank’s loans are subject to floating interest rates, i.e., 6-month LIBOR for U.S. dollars, 6-month EURIBOR for Euros and 3-month SHIBOR for Chinese yuan. The most significant are LIBOR-based loans, which is AIIB’s main sovereign lending product. AIIB also issues bonds in various currencies, and until June 2021 typically swapped their proceeds into U.S. dollar LIBOR liabilities, and may fund local currency loans through cross-currency swaps from U.S. dollars into the local currency. AIIB is in the process of transitioning to alternative benchmark rates.

Counterparty Credit Risk

Counterparty credit risk is the risk that a treasury counterparty to a transaction defaults before the final settlement of such transaction’s cash flows.

The Bank manages counterparty credit risk through a variety of ways, including the following: (i) assigning a credit rating for each counterparty, which must be at or above a defined minimum for it to be considered an eligible counterparty, (ii) assigning a credit limit to each eligible counterparty before consummating any transaction with it, (iii) monitoring AIIB’s exposure to each counterparty and (iv) monitoring each counterparty’s credit quality, and using collateral agreements and limits adjustments to mitigate against deterioration in such credit quality.

As of December 31, 2021, the Bank was exposed to counterparty credit risk on its treasury portfolio, which mainly consisted of term deposits, money market funds, bond investments and investments in portfolios of high credit quality securities managed by external asset managers. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Balance Sheet–Assets.” The Bank is also exposed to counterparty credit risk on its derivatives transactions, which is managed through the use of credit support annexes that require the exchange of cash collateral (subject to minimum threshold amounts) and the posting of initial margin by the counterparty should its credit rating fall below a certain threshold.

Asset Liability Risk

Asset liability risks arise from the mismatch of assets and liabilities in terms of currency, interest rates or maturities. Asset liability risk is managed through a variety of tools, including balance sheet projections and the setting of risk limits.

The Bank offers loans in U.S. dollars and in other currencies, provided it has the means to adequately operate in such other currencies and manage associated risks (including through the use of currency swaps or other hedging mechanisms).

Debt-funded financial assets, such as loans, that create market exposures are funded on a back-to-back basis, managed through the use of financial derivatives or otherwise passed through to the borrower. Debt-funded financial assets may be funded with liabilities of a shorter maturity or with mismatched timing of cash flows, subject to defined debt redemption limits that impose a ceiling on the amount of liabilities that may mature during any period. Such refinancing risk may also be mitigated by charging risk spreads and maturity premiums. See “–Market Risk.”

Any financial derivative entered into by the Bank will be subject to limits and reporting requirements.

Model Risk

Model risk is the risk of adverse consequences arising from decisions based on incorrect or misused model outputs and reports. The Bank has established processes to ensure that the Bank’s models have been adequately validated, capture material risks and are conceptually sound and suitably controlled.

Operational Risk

Operational risk is the risk of loss, or detriment, resulting from inadequate or failed processes or systems, through human error or from the occurrence of external events. The Bank’s definition of operational risk is consistent with the Basel Committee Banking Industry Standards, but has been extended to include reputational risk. Effective management and mitigation of operational risk relies on a system of internal controls aimed at identifying various risks and establishing acceptable risk parameters and monitoring procedures.

Compliance Risk

Compliance risk is the risk of legal or regulatory sanctions, material financial loss or reputational loss that AIIB may suffer as a result of its failure to comply with laws, regulations, internal rules and standards. The Bank deploys a variety of measures to mitigate this risk.

Integrity Risk; Environmental and Social Risk

Integrity risk is the risk that the Bank or its clients will engage in activities that may have an adverse reputational impact on the Bank, whether due to the nature of those activities or due to the background and behavior of the entities with whom the Bank conducts those activities.

Environmental and social risk is the risk of breaching any applicable environmental and social rules and commitments, including those described in the Bank’s Environmental and Social Framework.

The Bank deploys a variety of measures to mitigate these risks, including impact assessments, ongoing interaction with counterparties, clients and other stakeholders and regular reporting and monitoring.

GOVERNANCE AND ADMINISTRATION

Pursuant to the Articles of Agreement, the Bank is administered and managed by the Board of Governors, the Board of Directors, a President, one or more Vice-Presidents and other officers and staff.

Board of Governors

All of the powers of the Bank are vested in the Board of Governors, consisting of one Governor and one Alternate Governor appointed by each member. While the Articles of Agreement do not specify criteria for the appointment of a Governor by the member, the composition of the Board of Governors includes officials of ministerial (or equivalent) rank. Alternate Governors may only vote in the absence of their principal. A Chairman is elected at each annual meeting and such person holds the office until the election of the next Chairman.

The Board of Governors may delegate to the Board of Directors any or all its powers, except the power to (i) admit new members and determine the conditions of their admission, (ii) increase or decrease the authorized capital stock of the Bank, (iii) suspend members, (iv) decide appeals from interpretations or applications of the Articles of Agreement given by the Board of Directors, (v) elect the Directors of the Bank and determine expenses to be paid for Directors and Alternate Directors, as well as their remuneration, if any, (vi) elect, suspend or remove the President and determine his/her remuneration, (vii) approve the general balance sheet and statement of profit and loss of the Bank, (viii) determine the reserves and the allocation and distribution of net profits of the Bank, (ix) amend the Articles of Agreement, (x) decide to terminate the operations of the Bank and to distribute its assets and (xi) exercise such other powers as expressly assigned to the Board of Governors in the Articles of Agreement. The Board of Governors retains full power to exercise its authority over any delegated matter.

All matters before the Board of Governors are decided by a majority of the votes cast, other than matters that are designated as a Super Majority Vote or Special Majority Vote pursuant to the Articles of Agreement. A Super Majority Vote requires an affirmative vote of two-thirds of the total number of Governors, representing not less than three-fourths of the total voting power of AIIB’s members. Matters requiring a Super Majority Vote include, among others, matters relating to (i) suspension of membership, (ii) termination of the Bank’s operations, (iii) distribution of assets, (iv) amendments to the Articles of Agreement, (v) increases in authorized capital, (vi) changing the subscription base so that regional members comprise less than 75% of total subscribed stock, (vii) increases to the subscription amount of a member, (viii) assistance to recipients beyond those authorized in the Articles of Agreement, (ix) allocation and distribution of net income otherwise than as provided by the Articles of Agreement, (x) electing, suspending or removing the President of the Bank and (xi) increasing or decreasing the size of the Board of Directors. A Special Majority Vote requires an affirmative vote of a majority of the total number of Governors, representing not less than a majority of the total voting power of AIIB’s members. A Special Majority Vote is required for certain matters, including, among others, those relating to (i) the issue of shares other than at par value, (ii) establishing subsidiary entities and (iii) admitting members of IBRD or ADB under different terms than provided for in the Articles of Agreement. As noted above under “Asian Infrastructure Investment Bank–Membership, Capital Structure and Reserves–Capital Structure,” voting rights acquired by a member in respect of paid-in and associated callable shares for which payments are due but have not been received are suspended until full payment is received by the Bank.

As of February 28, 2022, the Board of Governors was composed of the following members and alternates:


Member	Governor and Current Position with Member	Alternate and Current Position with Member
Afghanistan	Mohammad Khalid Payenda, Acting Minister of Finance	Nazir Kabiri, Deputy Minister for Policy

Algeria	Abderrahamane Raouya, Minister of Finance	Ali Bouharaoua, Acting Director General of External Economic and Financial Relations

Argentina	Gustavo Beliz, Secretary of Strategic Affairs	Leandro Gorgal, Undersecretary of International Financial Relations for Development, Secretariat of Strategic Affairs


Member	Governor and Current Position with Member	Alternate and Current Position with Member
Australia	Josh Frydenberg, Treasurer	Michael Sukkar, Assistant Treasurer

Austria	Magnus Brunner, Federal Minister of Finance	Christoph Pesau, Senior Representative for Asia

Azerbaijan	Mikayil Jabbarov, Minister of Economy	Samir Sharifov, Minister of Finance

Bahrain	Shaikh Salman Khalifa Salman Alkhalifa, Minister of Finance	Yusuf Abdulla Humood, Financial Advisor

Bangladesh	A. H. M. Mustafa Kamal, Finance Minister	Fatima Yasmin, Secretary for Economic Relations Division

Belarus	Nikolai Snopkov, First Deputy Prime Minister	Yury Seliverstau, Minister of Finance

Belgium	Vincent Van Peteghem, Finance Minister	Ronald De Swert, Counsellor General

Benin	Romuald Wadagni, Minister of Economy and Finance	Arsène Mahougnon Dansou, General Manager, Debt Management Agency

Brazil	Roberto Fendt Junior, Deputy Minister for Foreign Trade and International Affairs of the Ministry of Economy	Erivaldo Alfredo Gomes, Secretary for International Economic Affairs of the Ministry of Economy

Brunei Darussalam	Amin Liew Abdullah, Minister of The Prime Minister’s Office and Minister of Finance and Economy II	Abdul Manaf Metussin, Deputy Minister of Finance and Economy

Cambodia	Aun Pornmoniroth, Deputy Prime Minister and Minister of Economy and Finance	Vongsey Vissoth, Secretary of the State Ministry of Economy and Finance

Canada	Chrystia Freeland, Deputy Prime Minister and Minister of Finance	John Hannaford, Deputy Minister for International Trade

Chile	Rodrigo Cerda, Minister of Finance	Alejandro Weber, Undersecretary of Finance

China	Liu Kun, Finance Minister	Zou Jiayi, Vice Minister of Finance

Cook Islands	Mark Brown, Deputy Prime Minister and Minister of Finance	Garth Henderson, Financial Secretary of Ministry of Finance and Economic Management

Côte d’Ivoire	Adama Coulibaly, Minister of Economy and Finance	Nialé Kaba, Minister of Planning and Development

Croatia	Zdravko Marić, Deputy Prime Minister and Minister of Finance	Stipe Župan, State Secretary of the Ministry of Finance

Cyprus	Kyriakos Kakouris, Economic Director, Ministry of Finance	Costas Constantinides

Denmark	Flemming Møller Mortensen, Minister for Development Cooperation	Lotte Machon, Director of Development Policy

Ecuador	Simón Cueva, Minister of Economy and Finance	Bernardo Orellana, Vice Minister of Finance

Egypt	Mohamed Maait, Minister of Finance	Rania Al-Mashat, Minister of International Cooperation

Ethiopia	Ahmed Shide, Minister of Finance	Semereta Sewasew Aweke, State Minister of Finance for Economic Cooperation

Fiji	Aiyaz Sayed-Khaiyum, Attorney-General and Minister for Economy	Shiri Gounder, Acting Permanent Secretary for Economy


Member	Governor and Current Position with Member	Alternate and Current Position with Member
Finland	Annika Saarikko, Minister of Finance	Leena Mörttinen, Permanent Under-Secretary

France	Bruno Le Maire, Minister for Economy and Finance	Emmanuel Moulin, Director General of the Treasury

Georgia	Lasha Khutsishvili, Minister of Finance	Natela Turnava, Minister of Economy and Sustainable Development

Germany	Christian Lindner, Federal Minister of Finance	Carsten Pillath, State Secretary of the Federal Ministry of Finance

Ghana	Ken Ofori-Atta, Minister for Finance	Charles AbuBoahen, Deputy Minister for Finance

Greece	Christos Staikouras, Minister of Finance	Achilleas Tzimas, Head of EU Affairs and International Relations Directorate of the Ministry of Finance

Guinea	Mamadi Camara, Minister of Economy and Finance	Lounceny Nabe, Governor of Central Bank

Hong Kong, China	Paul MP Chan, Financial Secretary	Christopher Hui, Secretary for Financial Services and the Treasury

Hungary	Mihály Varga, Deputy Prime Minister for Economic Policy, Minister of Finance	Gabor Gion, Minister of State for Financial Affairs of the Ministry of Finance

Iceland	Bjarni Benediktsson, Minister of Finance and Economic Affairs	Guðmundur Árnason, Permanent Secretary, Ministry of Finance and Economic Affairs

India	Nirmala Sitharaman, Minister of Finance	Ajay Seth, Secretary (EA) of the government of the Republic of India

Indonesia	Sri Mulyani Indrawati, Minister of Finance	Suharso Monoarfa, Minister of National Development Planning

Iran	Seyed Ehsan Khandoozi, Minister of Economic Affairs and Finance	Ali Fekri, Vice Minister of Economic Affairs and Finance and President of the Organization for Investment, Economic and Technical Assistance

Ireland	Paschal Donohoe T.D., Minister of Finance	John Hogan, Secretary General of the Department of Finance

Israel	Avigdor Lieberman, Minister of Finance	Shira Greenberg, Chief Economist and Director of State Revenue, Research and International Affairs

Italy	Daniele Franco, Minister of Economy and Finance	Francesca Utili, Head of International Financial Relations

Jordan	Nasser Shraideh, Minister of Planning and International Cooperation	Marwan Al-Refai, Secretary General of the Ministry of Planning and International Cooperation

Kazakhstan	Aset Irgaliyev, Minister of National Economy	Amaniyaz Kasimovich Yerzhanov, Vice-minister of Investments and Development

Korea, Republic of	Nam-ki Hong, Deputy Prime Minister and Minister for Economy and Finance	Juyeol Lee, Governor of the Bank of Korea

Kyrgyz Republic	Baketaev Almaz Kushbekovich, Minister of Finance	Ruslan Tatikov, Deputy Minister of Economy and Finance

Lao PDR	Bounchom Ubonpaseuth, Minister of Finance	Bounleua Sinxayvoravong, Deputy Minister of Finance


Member	Governor and Current Position with Member	Alternate and Current Position with Member
Liberia	Samuel D. Tweah, Jr., Minister of Finance and Development Planning	Augustus J. Flomo, Deputy Minister for Economic Management at Ministry of Finance and Development Planning

Luxembourg	Yuriko Backes, Minister of Finance	Arsène Jacoby, Director of the Multilateral Affairs, Development and Compliance Department, Ministry of Finance

Madagascar	Rabarinirinarison Rindra Hasimbelo, Minister of Economics and Finances	Rajaofetra Andry Nirina, Director General of Treasury

Malaysia	Tengku Datuk Seri Utama Zafrul bin Tengku Abdul Aziz, Minister of Finance	Dato’ Asri Hamidon, Secretary General of Treasury

Maldives	Ibrahim Ameer, Minister of Finance	Mohamed Aslam, Minister of National Planning and Infrastructure

Malta	Edward Scicluna, Governor of the Central Bank of Malta	Clyde Caruana, Minister for Finance and Employment

Mongolia	Javkhlan Bold, Minister of Finance	Nyamaa Buyantogtokh, State Secretary Ministry of Finance

Myanmar	Soe Win, Union Minister for Planning and Finance	Maung Maung Win, Deputy Minister for Planning and Finance

Nepal	Janardan Sharma “Prabhakar”, Finance Minister	Madhu Kumar Marasini, Secretary

Netherlands	Sigrid Kaag, Finance Minister	Christiaan Rebergen, Treasurer General

New Zealand	Grant Robertson, Minister of Finance	Caralee McLiesh, Secretary and Chief Executive of the New Zealand Treasury

Norway	Bjørg Sandkjær, State Secretary, Ministry of Foreign Affairs	Bjørn Brede Hansen, Director of Section for Multilateral Development Banks, Ministry of Foreign Affairs

Oman	Abdulsalam Al Murshidi, President of the Oman Investment Authority	(vacant, pending appointment)

Pakistan	Omar Ayub Khan, Federal Minister for Economic Affairs	Mian Asad Hayaud Din, Secretary, Economic Affairs Division

Peru	(vacant, pending appointment)	(vacant, pending appointment)

Philippines	Carlos G. Dominguez, Department of Finance Secretary	Mark Dennis Y.C. Joven, Undersecretary, Department of Finance

Poland	Tadeusz Kościński, Minister of Finance	Marta Gajęcka Member of the Management Board of the National Bank of Poland

Portugal	João Leão, Minister of State and Finance	Eurico Brilhante Dias, Secretary of State of Internationalization

Qatar	Ali bin Ahmed Al-Kuwari, Minister of Commerce and Industry and Acting Minister of Finance	Khalaf Ahmed Al Mannai, Undersecretary of the Ministry of Finance

Romania	Alin Chitu, State Secretary, Ministry of Finance	Boni Florinela Cucu, General Director, Ministry of Public Finance

Russia	Maksim Reshetnikov, Minister of Economic Development	Timur Maksimov, Deputy Minister of Finance

Rwanda	Uzziel Ndagijimana, Minister of Finance and Economic Planning	Richard Tusabe, Minister of State in charge of National Treasury


Member	Governor and Current Position with Member	Alternate and Current Position with Member
Samoa	Mulipola Anarosa Ale Molioo, Minister of Finance	Leasiosiofa’ Asisina Galumalemana M. Oscar Malielegaoi, Chief Executive Officer, Ministry of Finance

Saudi Arabia	Mohammed Aljadaan, Minister of Finance	Khalid Sulaiman Alkhudairy, Vice-Chairman and Managing Director of Saudi Fund for Development

Serbia	Siniša Mali, Minister of Finance	Peda Sovilj, Adviser of the Prime Minister for Infrastructure

Singapore	Lawrence Wong, Minister for Finance	Tan Ching Yee, Permanent Secretary (Finance), Ministry of Finance

Spain	Nadia Calviño, Minister of Economy and Business	Gonzalo García Andrés, Secretary of State for Economy and Business

Sri Lanka	Basil Rajapaska, Minister of Finance	S.R. Attygalle, Secretary to the Treasury

Sudan	Gibril Ibrahim Mohamed, Minister of Finance & Economic Planning	Mohmed Elfatih Zeinelabdin Mohamed, Governor of the Central Bank of Sudan

Sweden	Mikael Damberg, Minister for Finance	Elin Eliasson, State Secretary to the Minister for Finance

Switzerland	Guy Parmelin, Federal Councillor, Federal Department of Economic Affairs, Education and Research	Ignazio Cassis, Federal Councillor, Head of Federal Department of Foreign Affairs

Tajikistan	Qodirzoda Sadi Sanginmurod, Chairman of the State Committee on Investments and State Property Management	Ismoilzoda Khurshed Ismoil, Head of Department of Strategic Planning and Reforms of the Executive office of the President

Thailand	Arkhom Termpittayapaisith, Minister of Finance	Krisada Chinavicharana, Permanent Secretary of Finance

Timor-Leste	Rui Augusto Gomes, Minister of Finance	Sara Lobo Brites, Vice Minister of Finance

Tonga	Tevita Lavemaau, Minister for Finance	Balwyn Fa’otusia, Chief Executive Officer for Ministry of Finance

Turkey	Nureddin Nebati, Minister of Treasury and Finance	Murat Zaman, Deputy Minister of Treasury and Finance

United Arab Emirates	Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology	Mohammed Saif Al Suwaidi, Director General of Abu Dhabi Fund for Development

United Kingdom	Rishi Sunak, Chancellor of the Exchequer	Lindsey Whyte, Director-General International Finance, Her Majesty’s Treasury

Uruguay	Azucena Arbeleche, Minister of Economic Affairs and Finance	Alejandro Irastorza, Undersecretary, Ministry of Economic Affairs and Finance

Uzbekistan	Sardor Uktamovich Umurzakov, Deputy Prime Minister and Minister of Investments and Foreign Trade	Shukhrat Vafaev, Deputy Minister of Investments and Foreign Trade

Vanuatu	Johnny Koanapo Nies Rasou, Minister of Finance and Economic Management	Letlet August, Director General, Ministry of Finance and Economic Affairs

Viet Nam	Nguyen Thi Hong, Governor of the State Bank of Viet Nam	Pham Thanh Ha, Deputy Governor of the State Bank of Viet Nam

Board of Directors

The Board of Directors is responsible for the direction of the Bank’s general operations through the exercise of powers delegated to it by the Board of Governors, in addition to those expressly assigned to it by the Articles of Agreement. Matters before the Board of Directors are decided by a majority vote, except as otherwise provided in the Articles of Agreement.

In addition to any powers delegated by the Board of Governors, the Board of Directors shall (i) prepare the work of the Board of Governors, (ii) establish policies of the Bank and, with a majority representing not less than three-fourths of the total voting power of the members, take decisions on major operational and financial policies and on delegation of authority to the President under Bank policies, (iii) take decisions concerning operations of the Bank and, with a majority representing not less than three-fourths of the total voting power of the members, decide on the delegation of such authority to the President, (iv) supervise the management and operation of the Bank and establish an oversight mechanism for that purpose, (v) approve the strategy, annual plan and budget of the Bank, (vi) appoint committees and (vii) submit the annual audited accounts for approval of the Board of Governors.

The Board of Directors consists of 12 members who are not members of the Board of Governors. Nine are elected by the Governors representing regional members, and three are elected by the Governors representing non-regional members. Each Director is elected by the Governors of a constituency, which is a group of members with a minimum aggregate voting power. At the most recent election in June 2020, the minimum aggregate voting power was 5% for constituencies electing regional Directors and 8% for constituencies electing non-regional Directors. Although the Bank has no mandated single-member constituencies and constituencies may be formed through agreements among members themselves, at the June 2020 election of Directors, each of Russia, India and China had the voting power to elect one of the 12 members of the Board of Directors. Each Director appoints an Alternate Director (or two Alternate Directors in respect of those Directors casting votes for five or more members) who may participate in the meetings, but who only has the full power to act when the Director is not present. The Directors, who serve the Bank on a non-resident basis, hold office for two-year terms and may be re-elected. They also must be nationals of member jurisdictions and persons of high competence in economic and financial matters. The Articles of Agreement further specify that the nomination and voting by Governors for Directors and the appointment of Alternate Directors by Directors shall respect the principle that each founding member shall have the privilege to designate the Director or an Alternate Director in its constituency permanently or on a rotating basis.

The Board of Directors was composed of the following members as of March 31, 2022:


Name	Alternates	Constituency Members⁽¹⁾
Abdulaziz M. Alrasheed (Saudi Arabia)	Adel Al Hosani (United Arab Emirates) Mohammed Abdullah Al Hashimi (Qatar)	Bahrain Jordan Oman Qatar Saudi Arabia United Arab Emirates

Mehmet Alper Batur (Turkey)	Muhammad Aslam Chaudhary (Pakistan) Nurussa’adah Muharram (Brunei Darussalam)	Azerbaijan Brunei Darussalam Georgia Kyrgyz Republic Pakistan Turkey

Md. Shahriar Kader Siddiky (Bangladesh)	Sukmeena Bhasavanich (Thailand) Mark Dennis Joven (Philippines)	Bangladesh Malaysia Maldives Nepal Philippines Thailand


Name	Alternates	Constituency Members⁽¹⁾
Pavel Snisorenko (Russia)	Nurlan Shokbarbayev (Kazakhstan) Kourosh Taherfar (Iran)	Belarus Iran Kazakhstan Russia Tajikistan

Zhijun Cheng (China)	Bin Han (China)	China Hong Kong, China

Ahmed Kouchouk (Egypt)	Martin Tabi (Canada) Abebe Tadesse (Ethiopia)	Algeria Argentina Benin Brazil Canada Chile Côte d’Ivoire Egypt Ethiopia Ghana Guinea Liberia Madagascar Rwanda Uruguay

Khuong Thanh Ha (Viet Nam)	Rachel Thompson (Australia)	Australia Cook Islands New Zealand Singapore Viet Nam

Jacek Dominik (Poland)	Mark Collins (United Kingdom) Jesper Von Carnap-Nielsen (Denmark)	Denmark Hungary Iceland Norway Poland Romania Sweden Switzerland United Kingdom

Ana Sobrino (Spain)	Camillo von Müller (Germany) Enrique Galán (Portugal)	Austria Belgium Cyprus Finland France Germany Greece Ireland Italy Luxembourg Malta Netherlands Portugal Spain

Rajat Kumar Mishra (India)	Manisha Sinha (India)	Afghanistan India


Name	Alternates	Constituency Members⁽¹⁾
Wempi Saputra (Indonesia)	Madara De Silva (Sri Lanka) Pen Thirong (Cambodia)	Cambodia Indonesia Lao PDR Myanmar Sri Lanka Timor-Leste

Kyunghee Kim (Republic of Korea)	Idesh Batkhuu (Mongolia) Yehonatan Reznick (Israel)	Fiji Israel Korea, Republic of Mongolia Samoa Tonga Uzbekistan Vanuatu

Note:

(1)	As of March 31, 2022, Croatia, Ecuador, Peru, Serbia and Sudan have not yet assigned their respective votes.

Biographical information for each Director is included below.

Mr. Abdulaziz M. Alrasheed – Director

Mr. Alrasheed has been a member of the Board of Directors since March 2019. He currently holds the position of Assistant Minister for International Financial Affairs and Macro-Fiscal Policy at the Ministry of Finance of Saudi Arabia. Mr. Alrasheed has important public sector experience, having held various positions with the national administration of Saudi Arabia. Previously, Mr. Alrasheed served as Deputy Minister for Economic Affairs (2017-2018), as Assistant Deputy Minister for Economic Policies (2016-2017) and as an economist in several government agencies in Saudi Arabia.

Mr. Mehmet Alpur Batur – Director

Mr. Batur has been a member of the Board of Directors since January 2022. He currently holds the position of Deputy Director General for Foreign Economic Relations at the Ministry of Treasury and Finance of Turkey and has been in this role since August 2017. Prior to his current position, he served as Head of Department and Deputy Director General for Financial Sector Relations and Exchange from 2012 to 2017. Mr. Batur has significant public sector experience, having served at the Financial Stability Committee and Economy Coordination Board of Turkey, at the Board of the Credit Guarantee Fund of Turkey and at the Organization for Economic Co-operation and Development (“OECD”) Committee on Financial Markets.

Mr. Zhijun Cheng – Director

Mr. Cheng has been a member of the Board of Directors since March 2021. He currently holds the position of Deputy Director General of the Department of International Economic and Financial Cooperation, Ministry of Finance of China, and has been in this role since December 2020. In 2021, he was appointed Alternate Governor for China at the International Fund for Agricultural Development (“IFAD”) and Director for China at both AIIB and the New Development Bank (“NDB”). Prior to his current position, he served as Executive Director for China at the ADB and Deputy Director General of the Department of International Economic and Financial Cooperation at the Ministry of Finance of China from 2014 to 2017. In 2016, he also served as temporary Alternate Director for China at AIIB and Alternate Director for China at the NDB.

Mr. Jacek Dominik – Director

Mr. Dominik has been a member of the Board of Directors since July 2020. He currently holds the position of General Counsellor in the Ministry of Finance of Poland. He serves also as a member of the Auditing Board of the Council of Europe Development Bank (“CEB”) and a member of the Audit Board of the European Investment Fund. Since 1998, Mr. Dominik has held various positions within the Ministry of Finance of Poland, including Undersecretary of State from 2006 to 2014. At that time, he also served as a member of the Board of Directors of the European Investment Bank, a member of the Administrative Council of the CEB and as Alternate Governor of the EBRD.

Ms. Khuong Thanh Ha – Director

Ms. Ha has been a member of the Board of Directors since July 2019. She currently serves as the Deputy Director General of the Department for International Cooperation at the State Bank of Viet Nam. In such capacity, Ms. Ha oversees matters relating to international financial institutions and bilateral relationships between the State Bank of Viet Nam and central banks of other jurisdictions. Prior to her current position, Ms. Ha has been extensively involved in various areas related to the international relations of the State Bank of Viet Nam, including with the International Monetary Fund (the “IMF”), the World Bank, central banks, monetary authorities and foreign supervisory agencies. Ms. Ha joined the State Bank of Viet Nam in 1997.

Ms. Kyunghee Kim – Director

Ms. Kim has been a member of the Board of Directors since March 2022. She currently holds the position of Director General of the Development Finance Bureau at the Ministry of Economy and Finance of the Republic of Korea. Ms. Kim has significant public sector experience, having held various positions at the Ministry of Economy and Finance of the Republic of Korea. Her recent positions were Director General at the Budget Office and Director General at the Treasury Bureau. She also has experience in taxation, having served as Director at the Korea Tax and Customs Office.

Mr. Ahmed Kouchouk – Director

Mr. Kouchouk has been a member of the Board of Directors since July 2021. He currently serves as Vice Minister of Finance for Fiscal Policies and Institutional Reform in Egypt. In such capacity, Mr. Kouchouk oversees matters relating to Egypt’s macroeconomic policies and reforms. He also serves as a member of the Board of Directors of the Arab African International Bank, the National Training Academy of Egypt and the national airline of Egypt. Prior to his current position, he served as a member of the Board of Directors of the Central Bank of Egypt (2016-2018), as Senior Economist at the World Bank (2013-2016), as Economic Advisor to the Minister of Finance of Egypt and Director of the Macro Fiscal Unit (2012-2013), and as Executive Manager of the Macro Fiscal Policy Unit at the Ministry of Finance (2010-2012 and 2007-2008) of Egypt.

Mr. Rajat Kumar Mishra – Director

Mr. Mishra has been a member of the Board of Directors since July 2021. He currently holds the position of Additional Secretary in the Department of Economic Affairs in the Ministry of Finance, Government of India. In addition, he currently serves as a member of the Board of Directors of NDB, as Alternate Governor for India at the Asian Development Fund and as India’s Principal Representative in the South Asia Regional Training and Technical Assistance Center. Mr. Mishra has many years of experience with the national administration of India, having held various positions at the Ministry of Finance of India and the Government of Rajasthan, working in the areas of labor reform, skills development, urban development and taxation.

Mr. Wempi Saputra – Director

Mr. Saputra has been a member of the Board of Directors since November 2021. He currently serves as the Assistant Minister for Macro Economy and International Finance of the Ministry of Finance, Government of Indonesia. Mr. Saputra has significant public sector experience, having held various positions at the Ministry of Finance of Indonesia. His recent positions were Director of the Center for Policy Analysis and Harmonization and Chief of Staff of the Minister of Finance (2017).

Mr. Md. Shahriar Kader Siddiky – Director

Mr. Siddiky has been a member of the Board of Directors since July 2020, having previously served as Alternate Director for a month (June 2019). Mr. Siddiky is a career Bangladesh senior civil servant, having held a number of senior positions in the Ministry of Public Administration and Economic Relations Division, Ministry of Finance of Bangladesh. He also served in the Bangladesh Embassy in Kuwait. Since July 2018, he has been serving

as Joint Secretary in the Economic Relations Division, Ministry of Finance of Bangladesh, where he successfully negotiated the allocation of economic resources for Bangladesh on various important projects and technical assistance programs. Since April 2019, Mr. Siddiky is heading the Asia wing of the Economic Relations Division, Ministry of Finance of Bangladesh and looking after the economic affairs of Bangladesh for the Asia region including China, India and the Republic of Korea.

Mr. Pavel Snisorenko – Director

Mr. Snisorenko has been a member of the Board of Directors since July 2021. He currently serves as the Head of the Department for International Financial Relations at the Ministry of Finance of the Russian Federation. He serves also as a member of the Board of Directors of the International Investment Bank, as Deputy Director of the Board of Directors of NDB, and as Chair of the Expert Council at the Eurasian Fund for Stabilization and Development. Prior to his current position, Mr. Snisorenko served as Director of the Department for Analytical Support of Foreign Economic Activity at the Ministry of Economic Development of the Russian Federation (2019-2020). Mr. Snisorenko has also served at the Executive Boards of the World Bank and the IMF (2013-2019) and has held various positions at the Central Bank of Russia (2005-2013).

Ms. Ana Sobrino – Director

Ms. Sobrino has been a member of the Board of Directors since July 2021, having previously served as advisor for her constituency. Ms. Sobrino currently holds the position of Assistant Deputy Director in the Deputy Directorate for Multilateral Financial Institutions in the Ministry of Economic Affairs and Digital Transformation of Spain. Prior to her current position, Ms. Sobrino served in the Deputy Directorate for Trade Policy of the European Union in the Ministry of Industry, Trade and Tourism of Spain.

Board Committees

Audit and Risk Committee

The role of the Audit and Risk Committee is to (i) review the Bank’s financial statements and accounting, auditing and financial reporting practices, procedures and issues, (ii) review the selection procedures for and the qualification and performance of the external auditors and review the reports from the external auditors and ensure appropriate action be taken in respect of major improvement areas identified, (iii) review the scope of work and internal audit plan and the effectiveness of the internal audit function, (iv) review the effectiveness of internal control systems, (v) review the Bank’s financial and risk-related policies, including the Bank’s Financial and Risk Management Framework and RAS and (vi) receive reports on violations of the Bank’s Policy on Prohibited Practices from the Managing Director of the Bank’s Complaints-resolution, Evaluation and Integrity Unit.

The Audit and Risk Committee is composed of at least three and up to four Directors and two external members (appointed by the President in consultation with the Board of Directors). The current members of this committee are Mehmet Alpur Batur (vice chair), Zhijun Cheng, Ai Peng Cheng (external member), Ahmed Kouchouk, Elisabeth Stheeman (external member) and Khuong Thanh Ha (chair).

Budget and Human Resources Committee

The role of the Budget and Human Resources Committee (the “BHR Committee”) is to (i) review the proposed annual administrative budget, taking into account the Bank’s annual business plan, and review the quarterly budget execution update and report thereon to the Board of Directors, (ii) review and assess the implementation of staffing strategies, compensation and benefits policies and related issues periodically and make recommendations to the Board of Directors as appropriate, (iii) review the human resources update report semi-annually, (iv) undertake the functions required of it pursuant to the Code of Conduct for Board Officials (the “Code of Conduct”), including considering matters relating to the implementation, interpretation and application of the Code of Conduct and requests for guidance concerning conflicts of interest, annual financial disclosures or other ethical aspects of conduct, as well as allegations of misconduct under the Code of Conduct, (v) receive summaries of any administrative review decision issued under Staff Rule 8.01 (relating to staff employment administrative review procedures), (vi) consider any other aspects of the annual administrative budget and the Bank’s human resources as the Board of Directors may request and report thereon to the Board of Directors and (vii) receive briefings on significant actions proposed by the President under the Bank’s Policy on Compensation and Benefits, prior to implementation of the proposed actions.

The BHR Committee is composed of at least four and up to six Directors. The current members of this committee are Abdulaziz M. Alrasheed, Zhijun Cheng, Jacek Dominik (chair), Ana Sobrino, Khuong Thanh Ha and Md. Shahriar Kader Siddiky.

Policy and Strategy Committee

The role of the Policy and Strategy Committee (the “P&S Committee”) is to (i) review the Bank’s operational policies (other than financial and risk-related policies), including but not limited to environmental, social and procurement policies, and report thereon to the Board of Directors, (ii) advise on the development of the Bank’s strategies and report thereon to the Board of Directors, (iii) review the proposed annual business plan, taking into account the annual administrative budget, and report thereon to the Board of Directors, (iv) undertake any other activities consistent with its terms of reference as the Board of Directors may request and report thereon to the Board of Directors and (v) receive updates on the findings of project evaluations, and requests filed by project-affected people under the PPM, as part of the Bank’s oversight mechanism.

The P&S Committee is composed of at least four and up to six Directors. The current members of this committee are Jacek Dominik, Rajat Kumar Mishra, Wempi Saputra, Ana Sobrino (vice chair) and Pavel Snisorenko (chair).

Senior Management

The President, who serves as the legal representative of the Bank, is elected by a Super Majority Vote. The President must be a national of a regional member jurisdiction and may not be a Governor, a Director or an alternate for either. The term of office of the President is five years with the possibility of one additional term. The term of the current President, Mr. Jin Liqun, his second term, is currently scheduled to expire in 2026. The President is the Chairman of the Board of Directors, but has no vote other than a tie-breaking vote. The President may also participate in the meeting of the Board of Governors, but has no vote. The President is supported by a team of senior management. The team currently includes five Vice Presidents who are responsible for Policy and Strategy, Investment Operations, Administration and the Corporate Secretariat. Vice Presidents are appointed by the Board of Directors upon the recommendation of the President. Senior management also includes the Chief Financial Officer, the Chief Risk Officer, the Chief Economist and the General Counsel.

The President has the authority to establish management committees. Such committees perform a variety of functions, and currently include the following: (i) the Executive Committee, (ii) the Investment Committee, (iii) the Special Fund Committee, (iv) the Human Resources Review Committee, (v) the Risk Committee, (vi) the Corporate Procurement Committee, (vii) the Asset and Liability Management Committee, (viii) the Project Screening Committee and (ix) the Strategic Information Technology Committee.

The President, officers and staff of the Bank, in the discharge of their offices, are responsible solely to the Bank and may not recognize any other authority. The members are obligated to respect the international character of this obligation. Moreover, the Bank, its President, officers and staff may not interfere in the political affairs of any members nor be influenced in their decisions by the political character of any member. Senior management is currently composed of the following individuals:


Name		Title
Mr. Jin Liqun		President
Dr. Ludger Schuknecht		Vice President and Corporate Secretary
Mr. Konstantin Limitovskiy		Vice President, Investment Operations (Region 2)
Dr. Urjit Patel		Vice President, Investment Operations (Region 1)
Sir Danny Alexander		Vice President, Policy and Strategy
Mr. Luky Eko Wuryanto		Vice President and Chief Administration Officer
Mr. Andrew Cross		Chief Financial Officer
Dr. Martin Kimmig		Chief Risk Officer
Dr. Erik Berglof		Chief Economist
Mr. Alberto Ninio		General Counsel

Biographical information for each member of senior management is included below.

Mr. Jin Liqun – President

Mr. Jin Liqun is the inaugural President and Chairman of the Board of Directors. On July 28, 2020, he was elected to serve a second term of five years, beginning on January 16, 2021. Before being elected as the Bank’s first president, Mr. Jin served as Secretary-General of the Multilateral Interim Secretariat tasked with establishing the Bank. Mr. Jin has significant experience across the private and public sectors, as well as with MDBs. He served as Chairman of China International Capital Corporation Limited, China’s first joint-venture investment bank, as Chairman of the Supervisory Board of China Investment Corporation and as Chairman of the International Forum of Sovereign Wealth Funds. Mr. Jin previously served as Vice President, and then Ranking Vice President, of ADB and as Alternate Executive Director for China at the World Bank and at the Global Environment Facility. He spent nearly two decades at the Chinese Ministry of Finance, reaching the rank of Vice Minister. Mr. Jin is a national of China.

Dr. Ludger Schuknecht – Vice President and Corporate Secretary

Dr. Ludger Schuknecht is responsible for the Bank’s relations with its members, the Board of Governors, the Board of Directors and other aspects of governance, including the admission of new members. Prior to this, among other roles, Dr. Schuknecht was Deputy Secretary-General at the OECD and Chief Economist and Director General at the Federal Ministry of Finance of Germany. He has extensive experience working with international financial institutions, including the IMF and the World Trade Organization. Dr. Schuknecht is a national of Germany.

Mr. Konstantin Limitovskiy – Vice President, Investment Operations (Region 2)

Mr. Konstantin Limitovskiy is Vice President, Investment Operations; he oversees both sovereign and non-sovereign investments in East and Central Asia, Middle East and North Africa and Americas. Prior to this, he was Senior Advisor to the President and led the Client Relations and Programming function. He joined AIIB in 2018 from the Eurasian Development Bank, where he was Deputy Chairman responsible for operations in infrastructure. Prior to that, among other roles, Mr. Limitovskiy managed international project and structured finance at VTB Group, Gazprombank and Alfa Bank in Russia and led activities in infrastructure finance at the Black Sea Trade and Development Bank, an MDB headquartered in Greece. Mr. Limitovskiy is a national of the Russian Federation.

Dr. Urjit Patel – Vice President, Investment Operations (Region 1)

Dr. Urjit Patel joined AIIB as Vice President, Investment Operations in February 2022. He is in charge of overseeing all sovereign and non-sovereign lending in South Asia and South East Asia and is responsible for the end-to-end management of the Bank’s project pipeline in these regions, from identification to implementation. Before joining AIIB, Dr. Patel served as the Governor and Deputy Governor of the Reserve Bank of India after an extensive career in the infrastructure and energy sectors. Dr. Patel is a national of India.

Sir Danny Alexander – Vice President, Policy and Strategy

Sir Danny Alexander drives the strategic direction for the Bank, including its sectoral and country priorities, its investment strategy and programming, its economic analysis and research and its operating budget. He oversees the Bank’s environmental and social policies, other operational policies and their implementation. He previously served as the Bank’s Vice President and Corporate Secretary since joining AIIB in February 2016. As Chief Secretary to the Treasury, Sir Danny was one of the leaders of the United Kingdom coalition government between 2010 and 2015. He was knighted in 2015 and is a national of the United Kingdom.

Mr. Luky Eko Wuryanto – Vice President and Chief Administration Officer

Mr. Luky Eko Wuryanto is responsible for overseeing human resources, information technology and facilities and administration services. Prior to this role, he served in senior positions in the Indonesian government for more than 20 years, most recently as the Deputy Coordinating Minister for Infrastructure Acceleration and Regional Development, Coordinating Ministry for Economic Affairs. Mr. Wuryanto is a national of Indonesia.

Mr. Andrew Cross – Chief Financial Officer

Mr. Andrew Cross leads AIIB’s controller and treasury functions, and the development of new financial products and services. He joined the Bank in May 2019 as the Assistant Chief Financial Officer, in which role he supported the Chief Financial Officer in ensuring sustainable financial strength and steady growth in financial resources, as well as safeguarding excellent credit ratings in support of the Bank’s overall mission. Prior to joining the Bank, Mr. Cross served at the IFC for a number of years, first as Principal Financial Officer and then as Deputy Treasurer, providing leadership and oversight for IFC treasury hub operations in London and Singapore. Before that, he was an investment banker at Merrill Lynch International, working in a variety of countries. Mr. Cross is a national of New Zealand.

Dr. Martin Kimmig – Chief Risk Officer

Dr. Martin Kimmig heads AIIB’s risk management. His main responsibilities are to ensure the stability and financial continuity of the Bank. He oversees capital allocation and utilization, manages financial and non-financial risks, including reputational consequences, as well as fosters a strong risk culture throughout the Bank. He further oversees the Bank’s compliance and integrity function, assuring know-your-customer, anti-money laundering, financial crime and sanctions compliance. He joined AIIB from The Rock Creek Group, where he served as Managing Director covering emerging market equities. Previously, he spent 24 years at the World Bank Group, primarily at IFC, where he held leadership positions in both investment operations and risk management. Dr. Kimmig is a national of Germany.

Dr. Erik Berglof – Chief Economist

Dr. Erik Berglof sets the strategy for AIIB’s Economics Department and leads the planning, implementation and supervision of its work plan in support of the Bank’s mandate. Prior to joining AIIB in September 2020, he was Director of the Institute of Global Affairs at the London School of Economics, and Chief Economist of the EBRD (2006 – 2015), where he was part of creating and co-leading the Vienna Initiative, a European crisis response team credited with mitigating the impact of the 2008 Global Financial Crisis. He has extensive experience in transition economics and institutional transformation through private sector development. Dr. Berglof is a national of Sweden.

Mr. Alberto Ninio – General Counsel

Mr. Alberto Ninio is responsible for the legal aspects of the Bank’s work. Prior to his appointment as General Counsel of the Bank in January 2021, he was Director General of the Operational Services Department of the Bank and led the operational support teams in the areas of environment, social, procurement and financial management. Prior to joining AIIB in March 2020, Mr. Ninio served in a variety of senior roles both at the World Bank, where he left as its Deputy General Counsel for Operations, and, more recently, at Vale S.A., a major multinational mining and logistics corporation based in Brazil, where he served as its Global Sustainability Director. He has over 30 years of experience in the international development, environmental law and corporate responsibility fields. Mr. Ninio is a national of Brazil.

International Advisory Panel

The International Advisory Panel (the “IAP”) provides management with support on the Bank’s strategies and policies as well as on general operational issues. Members of the IAP, who are appointed to two-year terms, bring

years of experience and a wide range of professional expertise in both the public and private sectors. The IAP meets in tandem with the annual meeting of the Board of Governors or as requested by the President. The IAP is currently composed of the following members:


Name		Biographical information
Prof. Iwan Aziz		Adjunct Professor, Cornell University
Mr. Andrey Bugrov		Member of the Board and Senior Vice President for Sustainable Development, MMC Norilsk Nickel; Former Principal Resident Representative of Russia and Executive Director at the World Bank
Mr. Jose Isidro N. Camacho		Former Secretary of Finance and former Secretary of Energy of the Philippines
Prof. Ha-Joon Chang		Professor, University of Cambridge
Dr. Omobola Johnson		Senior Partner, TLcom Capital LLP; Former Minister of Communication Technology of Nigeria
Mr. Takatoshi Kato		Former Deputy Managing Director, IMF; former Executive Director for Japan, ADB
Dr. Mari Kiviniemi		Managing Director of the Finnish Commerce Federation; Former Prime Minister of Finland
Mr. CY Leung		Vice Chairman of the National Committee of the Chinese People’s Political Consultative Conference; Former Chief Executive of Hong Kong, China
Mr. Scott Morris		Senior Fellow at the Center for Global Development; former Deputy Assistant Secretary, U.S. Treasury Department
Lord Nicholas Stern		Professor at the London School of Economics; former Chief Economist, World Bank
Dame Meg Taylor		Secretary General to the Pacific Islands Forum; former Vice President, IFC
Prof. Ngaire Woods		Inaugural Dean of the Blavatnik School of Government and Professor of Global Economic Governance

Employees

As of December 31, 2021, the Bank’s total professional staff was 359, representing 51 nationalities (69% regional and 31% non-regional).

SELECTED DEMOGRAPHIC AND ECONOMIC DATA

Certain of the following information has been extracted from publicly available sources. The Bank has not independently verified this information.

The following table presents selected demographic and economic data for members of the Bank that, as of February 28, 2022, have more than 3% voting power or in which the Bank has approved financings (excluding multi-country financings):


	Population (in millions)⁽¹⁾						GDP (US$ in millions)⁽¹⁾						GDP per capita (US$)⁽¹⁾						Total reserves (excluding gold) (US$ in millions)⁽¹⁾⁽²⁾						Total external debt (US$ in millions)⁽¹⁾⁽³⁾						Consumer price index growth (annual% change)⁽¹⁾
	2020			2019			2020			2019			2020			2019			2020			2019			2020			2019			2020			2019
Australia		25.7			25.4			1,327,836.2			1,391,952.5			51,692.8			54,875.3			39,152.0			55,603.6			N/A	⁽⁵⁾		N/A	⁽⁵⁾		0.8			1.6
Azerbaijan		10.1			10.0			42,607.2			48,174.2			4,221.4			4,805.8			7,633.6			7,042.9			15,811.9			15,840.4			2.8			2.6
Bangladesh		164.7			163.0			323,057.0			302,571.3			1,961.6			1,855.7			42,322.4			32,012.9			67,749.0			57,094.2			5.7			5.6
Cambodia		16.7			16.5			25,808.6			27,089.4			1,543.7			1,643.1			18,563.8			17,033.0			17,562.1			15,329.4			2.9			1.9
China		1,410.9			1,407.7			14,722,730.7			14,279,937.5			10,434.8			10,143.8			3,238,782.4			3,127,493.9			2,349,388.6			2,114,162.9			2.4			2.9
Cook Islands		0.02	⁽⁴⁾		0.02	⁽⁴⁾		283.5	⁽⁴⁾		379.1	⁽⁴⁾		15,840.0	⁽⁴⁾		18,767.2	⁽⁴⁾		N/A	⁽⁵⁾		N/A	⁽⁵⁾		N/A	⁽⁵⁾		N/A	⁽⁵⁾		1.0	⁽⁴⁾		0.4	⁽⁴⁾
Ecuador		17.6			17.4			98,808.0			108,108.0			5,600.4			6,222.5			5,235.9			1,866.3			56,190.5			51,883.5			-0.3			0.3
Egypt		102.3			100.4			365,252.7			303,080.9			3,569.2			3,019.1			34,094.9			40,685.4			131,579.7			115,079.6			5.0			9.2
Fiji		0.9			0.9			4,533.9			5,496.3			5,057.6			6,175.9			N/A	⁽⁵⁾		1,041.8			1,518.0			1,344.1			-2.6			1.8
France		67.4			67.2			2,630,317.7			2,728,870.2			39,030.4			40,578.6			76,114.1			69,725.1			N/A	⁽⁵⁾		N/A	⁽⁵⁾		0.5			1.1
Georgia		3.7			3.7			15,846.5			17,477.3			4,266.7			4,698.0			3,913.3			3,505.8			20,089.0			18,757.0			5.2			4.9
Germany		83.2			83.1			3,846,413.9			3,888,326.8			46,208.4			46,794.9			63,969.3			59,184.5			N/A	⁽⁵⁾		N/A	⁽⁵⁾		0.5			1.4
Hungary		9.7			9.8			155,808.4			163,526.5			15,980.7			16,735.7			39,433.7			30,288.2			N/A	⁽⁵⁾		N/A	⁽⁵⁾		3.3			3.3
India		1,380.0			1,366.4			2,660,245.2			2,870,504.1			1,927.7			2,100.8			549,086.9			432,378.4			564,179.0			560,870.6			6.6			3.7
Indonesia		273.5			270.6			1,058,423.8			1,119,091.3			3,869.6			4,135.2			131,139.0			125,339.4			417,531.7			402,106.4			1.9			3.0
Jordan		10.2			10.1			43,697.7			44,502.9			4,282.8			4,405.5			N/A	⁽⁵⁾		N/A	⁽⁵⁾		38,016.1			33,481.6			0.3			0.8
Kazakhstan		18.8			18.5			171,082.4			181,667.2			9,122.2			9,812.6			12,056.1			10,082.2			162,974.4			158,958.0			6.7			5.2
Korea		51.8			51.7			1,637,895.8			1,651,422.9			31,631.5			31,936.8			437,112.6			403,704.7			N/A	⁽⁵⁾		N/A	⁽⁵⁾		0.5			0.4
Kyrgyz Republic		6.6			6.5			7,736.0			8,871.0			1,173.6			1,374.0			1,791.8			1,723.6			8,697.1			8,448.3			6.3			1.1
Lao PDR		7.3			7.2			19,132.6			18,897.3			2,629.7			2,635.8			1,392.6			1,067.8			17,164.1			16,701.1			5.1			3.3
Maldives		0.5			0.5			3,742.8			5,607.8			6,924.1			10,561.6			984.9			753.5			3,351.7			2,679.2			-1.4			0.2
Mongolia		3.3			3.2			13,313.0			14,206.4			4,061.0			4,404.8			4,049.3			3,239.3			33,236.2			31,649.9			3.7			7.3
Myanmar		54.4			54.0			79,852.0			68,697.8			1,467.6			1,271.1			7,228.1			5,468.3			13,348.1			11,119.6			3.8	⁽⁴⁾		8.8
Nepal		29.1			28.6			33,657.2			34,186.2			1,155.1			1,195.0			11,076.7			8,398.2			7,904.9			6,513.5			5.1			5.6
Oman		5.1			5.0			73,971.4			88,060.9			14,485.4			17,700.7			15,006.1			16,660.8			N/A	⁽⁵⁾		N/A	⁽⁵⁾		-0.9			0.1


	Population (in millions)⁽¹⁾				GDP (US$ in millions)⁽¹⁾				GDP per capita (US$)⁽¹⁾				Total reserves (excluding gold) (US$ in millions)⁽¹⁾⁽²⁾					Total external debt (US$ in millions)⁽¹⁾⁽³⁾						Consumer price index growth (annual% change)⁽¹⁾
	2020		2019		2020		2019		2020		2019		2020			2019		2020			2019			2020			2019
Pakistan		220.9		216.6		262,610.0		279,056.6		1,188.9		1,288.6		14,591.7			13,421.2		116,505.5			107,900.8			9.7			10.6
Philippines		109.6		108.1		361,489.3		376,823.3		3,298.8		3,485.3		98,512.1			79,823.7		98,479.8			83,617.3			2.6			2.5
Russia		144.1		144.4		1,483,497.8		1,687,448.5		10,126.7		11,497.6		457,017.6			443,970.0		475,518.2			484,240.5			3.4			4.5
Rwanda		13.0		12.6		10,334.0		10,356.0		797.9		820.1		1,806.1			1,464.9		8,193.4			6,514.9			9.9			3.3
Singapore		5.7		5.7		339,998.5		374,386.3		59,797.8		65,640.7		362,088.2			279,239.6		N/A	⁽⁵⁾		N/A	⁽⁵⁾		-0.2			0.6
Sri Lanka		21.9		21.8		80,676.7		83,990.9		3,680.7		3,852.3		5,256.7			6,689.8		56,342.0			56,117.9			6.2			3.5
Tajikistan		9.5		9.3		8,194.2		8,300.8		859.1		890.5		N/A	⁽⁵⁾		519.6		6,797.8			6,642.2			9.4	⁽⁴⁾		8.0	⁽⁴⁾
Turkey		84.3		83.4		719,954.8		761,004.4		8,536.4		9,121.5		49,958.3			78,532.3		435,889.4			440,773.0			12.3			15.2
Uzbekistan		34.2		33.6		59,930.0		59,907.7		1,750.7		1,784.0		14,687.3			12,842.9		32,174.4			22,406.6			12.9	⁽⁴⁾		14.5	⁽⁴⁾
Viet Nam		97.3		96.5		271,158.4		261,921.2		2,785.7		2,715.3		94,833.6			78,334.8		125,045.3			117,337.2			3.2			2.8

Notes:

(1)	Except as otherwise noted, this information is extracted from the World Bank’s World Development Indicators (the “WDI”), as last accessed on March 31, 2022.

(2)	The WDI defines total reserves (excluding gold) as special drawing rights, reserves of IMF members held by the IMF and holdings of foreign exchange under the control of monetary authorities.

(3)	The WDI defines total external debt as debt owed to nonresidents repayable in currency, goods or services.

(4)	This information is extracted from the Asian Development Bank: Key Indicators Online (the “KIDB”), as last accessed on March 31, 2022.

(5)	Indicates that the relevant figure is not available in the WDI or KIDB, as last accessed on March 31, 2022.

Asian Infrastructure Investment Bank 18-KAnnual report (foreign governments)