The Philippines has put forward its priorities for partnership with the Asian Development Bank (ADB) during its recently concluded Annual Meeting, which focuses on digitalization, infrastructure development, human capital enhancement, as well as micro, small, and medium enterprises (MSMEs) growth.
The said key priorities were emphasized by the Department of Finance (DOF), represented by ADB Alternate Governor for the Philippines Undersecretary Joven Balbosa, during the 57th Annual Meeting of the Board of Governors from May 2 to 5, 2024 in Tbilisi, Georgia.
In its Philippine country statement, the DOF highlighted the ADB’s pivotal role in assisting the country’s digitalization and human capital development programs and urged the Bank to increase support for physical and digital infrastructure as well as capacity building for MSMEs.
The DOF has identified these key areas, which are to be endorsed by the ADB Board and integrated into its 2024-2029 Country Partnership Strategy (CPS) for the Philippines.
Furthermore, the DOF also called for increased support to fund the long-term sustainable development objectives of the Bank’s developing member countries (DMCs).
“We hope that the ADB will make further headway on improving and enhancing its organization and structure, operational approaches, and financial capacities to maximize the Bank’s potential in providing more grants and additional concessional financing resources to support developing countries in addressing the gaps and complex challenges in the global development landscape,” the DOF said in the statement.
In relation to this, the DOF expressed support for the approval of the ADB’s enhanced Capital Adequacy Framework (CAF) that will provide the Bank with an additional USD 100 billion in additional lending capacity for the next ten years.
However, the DOF emphasized that this increase in resources should be utilized by the Bank to maximize support for addressing current crises and future challenges.
The DOF likewise looks forward to the implementation of the USD 10 billion climate finance programmed by the ADB for the Philippines for the next five years, and encouraged the Bank to scale up the same support to other developing countries.
Meanwhile, the Philippines has pledged anew to the Asian Development Fund (ADF) to assist the world’s least developed nations during the ADF 14 Replenishment Meeting on May 2, 2024.
“This level of contribution maintains the relative position of the Philippines with respect to its previous contribution and the overall fund size, while also meeting the country’s austerity measures in line with the Philippines’ current fiscal consolidation strategy,” Undersecretary Balbosa said in his intervention.
The ADF is the ADB’s concessional lending mechanism that assists in promoting poverty reduction and improving the quality of life of the Bank’s most vulnerable developing member countries (DMCs) through grants and loans at very low interest rates.
It is funded through regular replenishments from direct voluntary contributions from members, allocations from net income from the ADB’s ordinary capital resources, and revenue from investments and other sources.
Beneficiaries include Afghanistan, Cambodia, Kiribati, Kyrgyz Republic, Maldives, Marshall Islands, Federated States of Micronesia, Nauru, Nepal, Samoa, Solomon Islands, Tajikistan, Tonga, Tuvalu, and Vanuatu.
Since the ADF’s establishment in 1974, five former beneficiaries have become ADF donors, including the Philippines, which graduated from receiving the assistance in 1999.
Finance Secretary Ralph G. Recto has emphasized that the move is meant to stand in solidarity with vulnerable nations worldwide in addressing global challenges as well as open up more opportunities for the Philippines as it ascents to upper middle-income status soon.
“As a past beneficiary ourselves, we understand that true and lasting change can only be achieved if we combine our efforts and work together. We expect this global assistance platform to open up more opportunities for the Philippines, such as in trade, the exchange of knowledge, dialogue on solutions to our development challenges, and of course increased financing to support our rise to upper middle-income status,” the Finance Chief said.
Meanwhile, in the Governors’ Plenary on May 4, 2024, the DOF urged the ADB to explore innovative ways to unlock additional resources for DMCs to drive sustainable growth and called on private sector partners to catalyze green investments.
The DOF also engaged with HSBC’s Chairman for Public Sector Banking Michael Ellam and Mizuho Bank’s Group Executive Officer and CEO for Asia-Pacific Koichi Zaiki in separate meetings to promote the Philippines’ first-ever sovereign wealth fund––the Maharlika Investment Fund (MIF) to encourage more private sector participation in the country’s Build Better More infrastructure program.
As of December 31, 2023, the ADB is the Philippines’ second-largest official development assistance (ODA) partner with a total ODA commitment of USD 11.40 billion.
Since the start of the Marcos, Jr. administration, a total of around USD 4.48 billion in ODA loan financing has been secured from the ADB for priority programs and projects for business and employment, agriculture, inclusive finance, domestic resource mobilization, and infrastructure development.
Some of the Bank’s big-ticket projects in the Philippines include the Malolos-Clark Railway Project (MCRP) and the South Commuter Railway Project (SCRP) as well as the Climate Change Action Program (CCAP), which is the first-ever dedicated climate change policy-based loan undertaken by the ADB.
The loans are complemented by strong grant and technical assistance programs for the conduct of studies, project preparation, project implementation, and capacity-building activities.
