MANILA, Philippines – The Philippine government on Thursday signed a $400-million loan deal with multilateral lender World Bank to further boost the country’s competitiveness and fiscal sustainability while enhancing its resilience to natural disasters and the impact of climate change.
The loan accord, which covers the development policy loan on implementing the Promoting Competitiveness and Enhancing Resilience to Natural Disasters Sub-Program 1, was signed by Finance Secretary Carlos Dominguez III, on behalf of the Philippine government, and World Bank acting country director Achim Fock.
The Department of Finance (DOF) said in a statement that the program is a component of a three-part loan package with a total amount of $1.2 billion from the World Bank.
“This financing support very clearly helps drive our general effort to build a resilient and competitive society over the medium term. We thank the World Bank for its confidence in our determination to push forward reforms that will create a strong and inclusive economy for our people,” Dominguez said after the signing ceremony held at the DOF Office in Manila.
The finance chief added that with the three-tranche loan, the Philippines’ loan portfolio with the World Bank is expected to annually increase to between $1.5 billion and $2 billion starting next year.
This is about thrice times more than the multilateral institution’s average annual lending commitment of US$600 million to the country for the past 10 years.
Dominguez said the government was able to access such support from the World Bank as a result of the Duterte administration’s sustained policy efforts to improve the country’s global competitiveness, as shown by the Philippines dramatic leap to 95th to its previous 124th ranking in the Ease of Doing Business (EODB) Report of the Bank.
“The EODB and Efficient Government Services Act, the Rice Tariffication Law (RTL), the Philippine Identification System Act, the National Payment Systems Act, and the Comprehensive Tax Reform Program (CTRP), as well as the government’s initiatives to improve the economy’s financial resilience against natural disasters, are also among the factors that led the World Bank to increase its support to the Philippines,” he added.
Fock said the World Bank is committed to continuing its support to the Philippines’ development agenda.
He also noted that the Philippines’ rapid growth has driven down poverty rates, from 26 percent in 2006 to 16.6 percent in 2018.
“These tangible gains reflect the country’s continuing efforts to improve the lives of Filipino families, based on sound policies and a shared objective of accelerating poverty reduction,” he said.
The DOF said the loan deal aims to further improve the Philippines’ financial mechanisms available for disaster response, aid the country in formulating public asset management policies, and enhancing regulation for the insurance market against natural disasters.
It will also support the government in ensuring food security, streamlining government procedures to simplify the ease of doing business, and increasing access to economic opportunities through the roll-out of the national ID and electronic payment systems.
The Philippines is among the countries most vulnerable to the disastrous impact of erratic weather patterns brought about by climate change.
The loan package, which was approved by the World Bank last Dec. 17, has a maturity period of 19 years, inclusive of a 10-year grace period, according to the finance department.
The approvals and disbursements under the loan will be based on the Philippines’ accomplishment of policy actions agreed upon by the two parties.
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