Multilateral lender Asian Development Bank said Monday it will extend loans of up to $2.5 billion annually to the Philippines, or a total of $7.4 billion from 2019 to 2021, to support the government’s ‘Build, Build, Build’ infrastructure program.
ADB president Takehiko Nakao said the amount was more than double the bank’s annual assistance from 2011 to 2017.
“ADB is committed to supporting the Philippine government as it pursues more inclusive growth across the archipelago,” Nakao said.
He said boosting the government’s effort to build up infrastructure and expand financial services in underserved areas of the country would help reduce income inequality, which had persisted despite sustained strong economic growth in recent years.
Finance Secretary Carlos Dominguez III and Nakao exchanged documents Monday on two loans that aim to help the government sustain efforts on expanding financial services to small entrepreneurs and increasing private sector participation in the government ’s infrastructure modernization program.
These loan documents cover Subprogram 2 of the Expanding Private Participation in Infrastructure Program and the Inclusive Finance Development Program. Both programs have approved loans of $300 million each.
IFDP-1 aims to continue developing a resilient and inclusive financial sector in the Philippines by expanding financial services to small businesses, farmers, workers, women, and other vulnerable sectors.
Meanwhile, EPPIP-2 aims to help fund the government’s external financing requirements and build on the accomplishments in tapping private sector expertise and financing for the ‘Build, Build, Build’ program via public-private partnerships.
Dominguez said attaining financial inclusion and modernizing the infrastructure backbone were two main tasks the Duterte administration aimed to accomplish over the next four years.
“These two loan packages fall squarely into the national priorities we have identified. They will surely help us in achieving rapid, investments-led economic expansion,” Dominguez said after the ceremonial exchange of the documents.
Dominguez thanked “the ADB for the confidence in our ability to implement these programs and the dedication we have in pushing our economy to be at par with our most competitive neighbors. We look forward to more areas of cooperation in the coming years as the Philippines emerges to meet the challenges of development.”
Dominguez said that from March 2016 to April 2018, major reforms under the IFDP, which aimed to increase financial inclusion for the poorest 40 percent of the Philippine adult population, were completed.
He said these included the submission of draft legislation on the development of the national identification system, which is now a law and in the process of implementation; introduction of a framework to promote agriculture value chain finance; adoption of the National Retail Payments System; submission of legislation on the establishment of a modern secured transaction system, which has also been enacted into law with the passage of the Personal Property Security Act; and approval of an innovative pilot project for a rural bank to migrate its physical core banking system to a cloud-based system.
Under the IFDP, Dominguez said the government would continue and upgrade these reforms by allocating enough funds for the national ID system; implementing an enhanced economic and financial learning program and initiatives to increase the share of digital payments; and issuing regulations to promote and enable the use of cloud-based core banking technology.
Data cited by the ADB showed only 34 percent of Filipino adults had a bank account, compared with 82 percent in Thailand and 49 percent in Indonesia as of 2017. A 2017 Financial Inclusion Survey conducted by the Bangko Sentral ng Pilipinas showed that only 14 percent of Filipino adults borrowed from a formal financial institution.
“We have a lot of work to do in improving the access of unbanked Filipinos to financial services and products that would encourage them to save and make investments,” Dominguez said.
