The FINANCIAL — Asian Development Bank (ADB) President Takehiko Nakao today met with Philippine Finance Secretary Cesar V. Purisima to discuss ADB’s deepening partnership with and increased funding for the Philippines. ADB stands ready to boost its sovereign lending from the present $1.8 billion over the 3 years 2015 to 2017, to about $3 billion (or 66% higher) between 2016 and 2018 using ADB’s expanded lending capacity.
“ADB will continue to support infrastructure needs; programs to strengthen senior high school education, job creation for youth, and social protection; deeper capital markets; improved access to finance; and development in southern Philippines including Mindanao,” Mr. Nakao said. “We are pleased to see the recent progress made by the government in its public-private partnership (PPP) program and will continue to support its implementation.” One of the recent examples of PPP projects, assisted by an ADB private-sector loan of $75 million, is the Mactan-Cebu International Passenger Terminal Project, for which construction commenced in June, according to ADB.
Meanwhile, Mr. Purisima thanked ADB for its continued partnership with the Philippines saying, “Our country has more than proven its mettle throughout the past 5 years writing a comeback story of growth and better governance. Deepening support from ADB in sustaining these reforms is critical—we need quality education and infrastructure to fuel further inclusive growth.”
“The Philippines welcomes the hand extended in partnership with an unequivocal vow to press on. Filipinos have seen what we can achieve with good governance and are ready to dream of bigger things.”
On 14 May this year, ADB’s Office of PPP, together with its co-advisor the Development Bank of the Philippines, was appointed as Transaction Advisor for the North-South Railway Project South Line (Manila to Legaspi with extensions to Batangas and Matnog). The pre-qualification process has been initiated by the authorities. Mr. Nakao mentioned that once implemented, the project will help transform the railway sector in the Philippines to offer efficient and affordable services, which would enhance connectivity and boost economic productivity.
Mr. Purisima, on the other hand, noted that the Philippines’ PPP Center has recently been upheld as a global model cited by the Asia-Pacific Infrastructure Partnership due to its strong track record and clear structure. “We will continue innovating on the infrastructure financing front, knowing full well that our future growth rests on our ability to create mobility and connectivity networks to support our 100-million strong population.”
The Philippines has in recent years maintained consistent growth, with the economy expanding 6.1% in 2014. ADB is forecasting this to be followed by 6.4% and 6.3% growth in 2015 and 2016, respectively. ADB has highlighted the need to improve the investment climate, increase public and private investment, and generate more and better jobs. The unemployment rate fell to 6.6% in January 2015, the lowest in 10 years, yet addressing youth unemployment remains a key challenge. Mr. Nakao emphasized that the country should utilize the potential of its young and educated population, increasing opportunities in such areas as business process outsourcing, tourism, and agri-business.
In his discussion, Mr. Nakao shared ADB’s phased approach to deepen capital markets and nonbank finance, with two ADB programs planned in the next 3 years. A capital market reform program in 2017 will help boost access to nonbank finance through bond market development, promotion of long-term savings, and improving Treasury operations. A financial inclusion project the following year will increase the number of poor and near-poor participating in the financial system, boosting their access to housing finance, small and medium enterprise credit, and microfinance credit.
Taking into consideration the government’s thrust under the Cebu Action Plan, Mr. Purisima encouraged ADB to join the Philippines in its regional advocacy in the area of financial integration. The Philippines is championing the liberalization trade and cross border investments across APEC economies (supply-chain financing for MSMEs), and creating an enabling environment to integrate low-income households and MSMEs into the financial mainstream and enable them to be part of the regional and global supply chain. “Only when we have woven the most vulnerable households and enterprises at the margins of the country into the fabric of our economy can we attain shared prosperity under a stronger economy,” Purisima noted.
ADB also aims to deepen its partnership with the government on disaster risk financing, especially at the local government level. This would be a follow-on from ADB’s support in areas affected by 2013’s Typhoon Haiyan, known locally as Yolanda. ADB committed $900 million assistance for rehabilitation and reconstruction using community-driven development approaches, of which about $650 million has already been disbursed.
For his part, Mr. Purisima thanked ADB for its support in Typhoon Yolanda affected areas, and urged the Bank to support the government’s disaster risk and financing strategy by developing instruments considering the three levels of financing: national, local government, and household.
Mr. Nakao reiterated ADB’s commitment to supporting the government in its effort to bring lasting peace and development to Mindanao and the Bangsamoro areas. ADB has worked with the local authorities in the preparation of the Bangsamoro Development Plan and on various projects to develop road infrastructure and a transport master plan. ADB plans to follow this up with an Adult Literacy and Livelihood grant program for the region.
ADB is also working with the National Economic Development Authority to prepare technical studies as part of a long-term strategic development vision of the country. The studies will identify scenarios of what the Philippines might look like in 2040 and options to realize Filipinos’ aspirations for their bright future.