The Philippine government has signed a loan agreement with the government of France worth P14 billion to support two major policy reforms of the Philippine government that aim to expand financial services to vulnerable sectors and increase private sector participation in infrastructure projects.
“The Philippine government is grateful to the Agence Francaise de Developpement (AFD) for co-financing with the Asian Development Bank (ADB) two programs supportive of President Duterte’s overriding goal of accelerating infrastructure development in order to spur high growth, attract investments, create jobs and achieve financial inclusion for all Filipinos,” Finance Secretary Carlos Dominguez said.
Dominguez said President Duterte has put his signature project “Build, Build, Build” back on the fast track amid the COVID-19 pandemic, given that infrastructure investments spell the highest multiplier effect on the economy, particularly the creation of jobs that will make up for the ones lost during this global health emergency.
“Such financial support from the country’s development partners like AFD for our priority programs is crucial at this time when the Philippine government is embarking on its resources-intensive, four-pillar strategy to suppress the coronavirus outbreak and provide relief to our most affected sectors while restarting the stalled economy to a quick recovery from the global economic slump induced by the lethal virus,” he said.
The €100 million policy-based loan for the first sub-program of the IFDP will help fund initiatives of the Philippine government to expand financial services across the country, especially among small entrepreneurs, farmers and fisherfolk, women and other vulnerable sectors.
The AFD loan for the Program will also help the government consolidate its institutional and regulatory environment, improve its financial infrastructure, and strengthen the capacities of financial service providers, supervisors and regulatory bodies in line with its goal of building an inclusive and resilient financial sector.
In addition, AFD will also finance a €1.5 million Technical Assistance (TA) program to strengthen the capacities of financial inclusion stakeholders (i.e. supervisor, operators, clients). The TA program, which will be carried out in partnership with the Bangko Sentral ng Pilipinas (BSP) and the Rural Bankers Association of the Philippines (RBAP), aims to help accelerate the digital transformation of the Philippines’ financial institutions, especially those serving rural communities.
The €150 million loan for the EPPIP aims to heighten private sector participation in infrastructure financing in line with the government’s goal of fast-tracking the implementation of its “Build, Build, Build” program to jumpstart the economy and create more jobs.
This policy-based loan will complement the government’s funding plan to secure financial resources for critical programs, such as the “Build, Build, Build,” as it grapples with market uncertainties and volatility, as well as increased social expenses and reduced fiscal resources amid the economic crisis triggered by the Covid-19 pandemic.