The Philippines has sealed a US$400-million loan accord with the World Bank representing the first tranche of a three-part financing package that aims to further boost the country’s competitiveness and fiscal sustainability while enhancing its resilience to natural disasters and the impact of climate change.
Finance Secretary Carlos Dominguez III, on behalf of the Philippine government, and acting Country Director Achim Fock, representing the World Bank, signed the agreement for the development policy loan on implementing the Promoting Competitiveness and Enhancing Resilience to Natural Disasters Sub-Program 1.
This is a component of a three-part loan package from the World Bank with a total amount of US$1.2 billion.
“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,” Secretary Dominguez said after the signing ceremony held Thursday (Dec. 19) at the Department of Finance (DOF) Office in Manila.
Mr. Fock said the World Bank is committed to continuing its support to the Philippines’ development agenda.
“My colleagues and I look forward to the continued success of the country’s programs for poverty reduction and inclusive growth. We like to thank the Department of Finance and Secretary Dominguez for his excellent leadership in this important endeavor,” Mr. Fock said.
Secretary Dominguez said that with this three-tranche loan, the Philippines expects its loan portfolio with the World Bank to increase to between US$1.5 billion and US$2 billion annually starting next year, which 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.
He 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 Report (EODB) of the Bank.
The Ease of Doing Business (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, Secretary Dominguez said.
Mr. Fock, meanwhile, noted that the 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,” Mr. Fock said.
The loan from the World Bank formalized today aims to further improve the Philippines’ financial mechanisms available for disaster response, and aid the country in formulating public asset management policies; and enhancing regulation for the insurance market against natural disasters.
It will likewise 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.
The approvals and disbursements under the loan will be based on the Philippines’ accomplishment of policy actions agreed upon by the two parties.
Besides the DOF as both the executing and implementing agency, the other agencies involved in the program’s implementation are the Anti-Red Tape Authority (ARTA), Bangko Sentral ng Pilipinas (BSP), Departments of Agriculture (DA) and of Budget and Management (DBM), Bureau of the Treasury (BTr), Philippine Statistics Authority (PSA) and the Insurance Commission (IC).
Secretary Dominguez said the expected increase in the Philippines’ World Bank loan portfolio will allow the government “to maximize the Bank’s financing support as a donor institution, and its expertise and experience as a knowledge bank in various areas, including strengthening governance, human capital development, disaster preparedness, and addressing fragility and conflict.”
He also welcomed the World Bank’s recently approved Country Partnership Framework for the Philippines for the period 2020-2023, which will prioritize investments in human capital (health, education, nutrition), competitiveness and job creation, peace-building, climate and disaster resilience, governance, and digital transformation.
Secretary Dominguez also acknowledged the extensive consultations done by the institution to ensure that this strategic framework is consistent with the Duterte administration’s development plan and long-term vision as embodied in Ambisyon Natin 2040, which aims to eliminate extreme poverty by 2040 and provide a safe and comfortable life for every Filipino.
“We earnestly hope that our relationship with the Bank will be even more robust in the years to come as we continue building the future our people deserve,” said Secretary Dominguez.
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