Philippines acknowledges ADB support for programs on PPPs, financial inclusion

December 10, 2018

Finance Secretary Carlos Dominguez III and Asian Development Bank (ADB) president Takehiko Nakao exchanged documents Monday on two loans that aim to help the Philippine government sustain its 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 (EPPIP-2) and the Inclusive Finance Development Program (IFDP-1). Both programs have approved loans of $300 million.

The 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 (PPPs).

“Attaining financial inclusion and modernizing our infrastructure backbone are two main tasks the Duterte administration seeks 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," he said.

Nakao, in response, announced that the ADB is planning to extend loans of  up to $2.5 billion annually to the Philippines from 2019 to 2021 or a total of $7.4 billion over this three-year period to provide additional support for the government’s “Build, Build, Build” program.

This amount is more than double ADB’s annual assistance from 2011 to 2017.

“ADB is committed to supporting the Philippine government as it pursue more inclusive growth across the archipelago. Boosting the government’s effort to build up infrastructure and expand financial services in underserved areas of the country will help reduce income inequality in the country, which has persisted despite sustained strong economic growth in recent years,” Nakao said.

Dominguez said from March 2016 to April 2018, major reforms under the IFDP, which aims to increase financial inclusion for the poorest 40 percent of the Philippine adult population, have been completed.

Based on data cited by the ADB, only 34 percent of Filipino adults had a bank account, compared with 82 percent in Thailand and 49 percent in Indonesia as of  2017.

Also, a 2017 Financial Inclusion Survey by the Bangko Sentral ng Pilipinas (BSP) showed 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. DMS