THE Philippine government and the multilateral lender World Bank on Thursday signed a $400-million loan deal to improve the country’s competitiveness and fiscal sustainability, at the same time enhancing its resilience to natural disasters and the impact of climate change.
The loan accord was signed by Finance secretary Carlos Dominguez III, on behalf of the Philippine government, and World Bank acting Country Director Achim Fock.
The agreement covers the development policy loan on implementing the Promoting Competitiveness and Enhancing Resilience to Natural Disasters Sub-Program.
This is a component of a three-part loan package from the World Bank with a total amount of $1.2 billion, the Department of Finance said in a statement.
“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.
With the three-tranche loan, the Philippines’ loan portfolio with the World Bank will increase to $1.5 billion to $2 billion annually starting next year. The country’s loan portfolio is about three times more than the multilateral institution’s average annual lending commitment of $600 million to the country for the past 10 years.
The World Bank is committed to continuing its support to the Philippine development agenda, Fock said.
The Philippine government was able to access World Bank support 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 from its previous 124th ranking in Ease of Doing Business Report of the Bank,” Dominguez noted.
The Ease of Doing Business and Efficient Government Services Act, the Rice Tariffication Law, the Philippine Identification System Act, the National Payment Systems Act, and the Comprehensive Tax Reform Program 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 for the Philippines, according to the Finance chief.
Fock 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,” Fock said.
The $400-million loan from the World Bank aims to further improve the Philippines’ financial mechanisms available for disaster response, and aid the country in formulating public asset management policies, thereby 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 on Dec. 17, matures in 19 years, and carries a 10-year grace period, the DOF said.
Approvals and disbursements under the loan will be based on the country’s accomplishment of policy actions agreed upon with the World Bank. (GMA News)
