"It is up to the government to discuss the finer details of the loans but it should show its commitment to timely reforms."
The Asian Development Bank and World Bank are offering multi-billion-dollar loans to help the Philippines recover from the pandemic and boost the country’s infrastructure network. These are critical funding programs that could significantly reduce the poverty level, if perfectly executed.
The designs of the foreign loans are noble for a developing country like the Philippines. They are not different from other forms of assistance earlier offered by the two multilateral lenders. But the Philippines badly needs the loans with cheap interest rates and longer repayment period following the fallout from the COVID-19 pandemic that rendered millions of Filipinos jobless.
ADB’s proposal to scale up its lending support to over $9 billion from 2021 to 2023 is essentially developmental in nature.
At least two-thirds of the loans are going to infrastructure, health and employment recovery to help the government revitalize the economy amid the coronavirus pandemic.
In ADB’s words, the loans will support government programs and policies designed to repair damage to the business sector and labor market, accelerate economic recovery and expand access to public health services. “We have designed our new Country Operations Business Plan to help the Philippines overcome the socio-economic impact of the pandemic. We are focusing on infrastructure projects that have large employment multipliers and support long-term economic growth through improved connectivity,” says the ADB.
Infrastructure projects quickly create jobs and and spur consumption in the economy. Over 52 percent of ADB’s loans aim to support transportation projects such as railways, roads and bridges. About 12 percent of ADB’s financing will help the government expand the public health system through the implementation of the Universal Health Care Act.
The World Bank, meanwhile, approved two loans amounting to $900 million to support the Philippines’ recovery from the COVID-19 pandemic, boost competitiveness and resilience against shocks and natural disasters.
The government and the two banks will shortly thresh out the details of these loans, which will expectedly call for some social and economic reforms. It is up to the government to discuss the finer details of the loans but it should show its commitment to timely reforms.