THE Asian Development Bank (ADB) has approved a $400 million policy-based loan to support the government’s efforts to strengthen the Philippines’ domestic capital markets.
The ADB said in a statement yesterday the Support to Capital Market-Generated Infrastructure Financing Program, subprogram 1, aims to address key constraints that have limited the growth of domestic capital markets, especially government and corporate bond markets.
The multilateral agency said it also focuses on building a vibrant domestic institutional investor base that will become a sustainable source of long-tenor infrastructure finance.
By boosting infrastructure finance, the capital market development program will support higher public infrastructure spending for years to come, the ADB said.
“Resilient and vibrant capital markets are key to achieving economic development, growth, and poverty reduction as set out in the government’s long-term strategy AmBisyon Natin 2040,” Ahmed Saeed, ADB vice president, said.
“By developing domestic capital markets, funds are generated to support higher levels of long-term investments and sustainable quality job creation. The program approved today will support the Philippine government’s development goals, including its response to the COVID-19 (coronavirus disease 2019) pandemic,” he added.
The capital markets development program has supported various reforms in recent years, including the launch and implementation of the first government-led comprehensive domestic bond market development plan, the ADB said.
The multilateral agency said the Philippines also has modernized its government debt trading infrastructure and provided a reliable yield curve to support the pricing of private sector debt instruments.
This new loan brings ADB’s total lending to the Philippines to $2.1 billion so far this year. ADB approved a $1.5 billion loan for the COVID-19 Active Response and Expenditure Support Program on April 23 and $200 million in additional financing for the Social Protection Support Project on April 27.
