The approval of the Asian Development Bank’s (ADB) $300-million loan for the Inclusive Finance Development Program, Subprogram 2 will help the government reach its financial inclusion targets, the country’s finance chief said.
Carlos Dominguez, Department of Finance secretary, told reporters in a Viber message over the weekend the ADB program will support the country’s efforts to digitalize the banking and payments system.
“COVID-19 (coronavirus disease 2019) has underscored how important digital systems and contactless transactions are for economic resilience,” Dominguez said.
“Filipino families will be less vulnerable to onerous lending practices, and government subsidies can reach beneficiaries faster and more efficiently,” he also said.
The ADB said last Friday it has approved the $300 million policy-based loan to support the Philippine government’s efforts to boost inclusive growth by implementing reforms to expand Filipinos’ access to financial services, especially in unserved and underserved areas across the country.
“Even with this loan, our debt position will remain strong and sustainable. More importantly, returns of this public investment will accrue to millions of working Filipino families and small businesses who are currently excluded from the financial system,” Dominguez said.
“It will also boost our efforts to build our economy back better. We welcome this development and thank the ADB for being a dependable partner in these challenging times,” he added.
Dominguez said the ADB facility will support the accelerated rollout of the National Identification System, which will enable more Filipinos to open bank accounts and speed up the delivery of social assistance programs.
The loan will also support the strengthening of agriculture value chains, financial literacy in basic education, digital payments, and Islamic banking, he added.
The ADB said reforms supported by the loan are being implemented by the Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Philippine Guarantee Corp., Philippine Statistics Authority, Department of Justice and the Insurance Commission.
These reforms, which focus on the poorest 40 percent of the population and rural residents, aim to more than double the number of Filipinos holding an account at a formal financial institution by 2023, the multilateral agency said in its statement.
“Through this loan, ADB is partnering with the Philippines to implement innovative initiatives around digital finance to significantly improve poor Filipinos’ access to financial services and products as a way to lift their incomes and wellbeing,” Kelly Hattel, ADB senior financial sector specialist for Southeast Asia, said.