The Asian Development Bank said Wednesday its board of directors approved a $300-million loan to support the Philippine government’s effort to expand financial services across the country.
It said the loan was expected to benefit entrepreneurs, small businesses, farmers, workers, and individuals, including women and vulnerable households. It would support the policy-based Inclusive Finance Development Program which aimed to help the Philippines develop a resilient and inclusive financial sector.
The project will help the government strengthen the country’s institutional and policy environment for expanding financial services, invest in support networks and infrastructure such as the national retail payment system and the new national identification system and improve the abilities of financial institutions, including rural banks, to offer financial products, particularly through the application of new technologies.
The bank said more people were expected to open bank accounts, save more at financial institutions and have access to a wider range of other financial products and services.
“The program reflects the strong commitment of the government and ADB to expand financial inclusion in the Philippines and address the challenge of high inequality, which has persisted despite rising and sustained economic growth,” said ADB senior financial sector specialist Kelly Hattel.
“The program builds on important actions taken by the government to strengthen the policy framework for financial inclusion and the infrastructure that supports the delivery of these services. We believe this program has all the right ingredients to achieve positive gains in financial inclusion and to improve the lives of Filipinos from Tawi-Tawi to Batanes,” Hattel said.
Public and private sector entities that provide financial services will benefit from the program, Hattel said. Businesses, including micro, small and medium-sized enterprises, and individuals would also benefit as they would have better access to a wider range of appropriate financial services and stronger protection against economic shocks.
The Philippine economy grew 6.7 percent in 2017, the fastest among members of the Association of Southeast Asian Nations. But the country ranks among the highest in income inequality, with a Gini coefficient of 0.44 in 2015, compared with 0.38 in Thailand.
Only 34 percent of Filipino adults had a bank account in 2017, compared with 82 percent in Thailand and 49 percent in Indonesia. Only 12 percent of Filipino adults borrowed from a formal financial institution in 2017 and 35 percent of cities and municipalities had no banking offices.