The Asian Development Bank’s (ADB) support to the Philippines is expected to reach record-high levels over the medium-term, making the country one of the bank’s largest borrowers.
The ADB said shares of lending for transportation as well as for agriculture are significantly increased to support the government’s programs, including the Build, Build, Build.
The ADB said its sovereign lending for the Philippines is expected to reach $9.1 billion between 2020 and 2022, as the government seeks to invest more in much-needed infrastructure and pro-poor projects that will merge rural areas into urban growth centers.
“We’d like to compare where we were under our previous country partnership strategies and where we are now. The total lending to the Philippines over that period of 2011 to 2018 was $6.4 billion, or an average of $800 million annually. Last year, we reached a record of close to $1.4 billion,” said Kelly Bird, ADB country director for the Philippines.
“Our lending progr1am for this year and the next three years has been scaled up significantly, we’ve programmed around $3 billion (every year), although we are targeting at least $2.5 billion annually. We have a program because what we include in our Country Operations Business Plan (COPB) is a list of programs and projects, and they remain indicative, because they go through the approval process. So realistically, we’re targeting $2.5 billion a year,” Bird said in a press conference at the ADB office in Mandaluyong yesterday.
Bird said last year, the Philippines jumped to being the fifth largest borrower, from the ninth spot in 2017.
“…this is ADB’s ‘big bang’ lending program. What I mean by ‘big bang’ is that there’s a significant increase in the resources we’re committing to the Philippines, from $800 million a year to at least $2.5 billion a year. And if we are able to achieve at least $2.5 billion a year, the Philippines would probably be among our top three borrowers,” Bird said.
If the lending would reach $2.5 billion this year, the Philippines would probably be the second biggest borrower of the bank, next to India, Bird said.
He said the program was also rebalanced to focus on the transport sector which will account for 60 percent of the pie this year until 2022, up from 7.7 percent share in the past seven years.
This is followed by public sector management with a share of 14 percent, significantly lower than the 53 percent share from 2011 to 2018, when it was the top sector; followed by the agriculture and natural resources sector, which saw a significant increase in share to 10 percent from 1.6 percent.
“We’ve rebalanced the lending pipeline, focusing mainly on infrastructure investments, but still health, education, the social sector, public financial management, they still remain important. The shares may have diminished, but the volumes are still quite significant,” Bird said.
“ADB does a lot of infrastructure investments. Infrastructure would still be the largest share of ADB lending across all our member countries. But this program is custom-made for the Philippines, it’s anchored on the government’s Build, Build, Build program. Without that program, we will not be able to scale up our lending to the government. So it’s custom made for the Philippines, reflecting the priorities of the government,” he added.
Bird said the increased lending program also signals ADB’s commitment to the Philippines’ efforts to sustain inclusive economic growth, create business and job opportunities in the regions, and widen the reach of the government’s education, health and social protection programs, especially as the multilateral agency’s host country.
Meanwhile, Bird said the ADB allocated a larger share in lending for the agriculture sector for two reasons.
“One is the agriculture sector has been a drag on economic growth for the last two to three years. It’s been less than one percent. (But) you still have a large segment of the population reliant on agriculture. And if you look at the reasons why it’s been a drag, one is the low competitiveness. There were previous policy restrictions that were a drag on agriculture,” Bird said.
“The government has now implemented some major reforms that will help set the agriculture sector on a par for improved competitiveness. And what we’re doing now is implementing some programs and projects that are going to support that. We now see agriculture as a priority and as you mentioned, we’ve ramped it up to our third largest sector,” he added.
Half of ADB’s 2019 assistance program will fund the first tranche of the Malolos-Clark Railway Project, one of the government’s big-ticket infrastructure projects under its Build, Build, Build program. It is also the largest ADB project financing to date, worth $2.75 billion in total.
Contracts for civil works for the project are expected to be awarded before the end of the year and construction work may begin in the second quarter of 2020.
ADB is also preparing additional financing this year for the Infrastructure Preparation and Innovation Facility to support detailed engineering designs and feasibility studies for the government’s priority projects under the Build, Build, Build program. This will ensure a steady flow of investments into much-needed infrastructure projects that are viable and innovative.
In 2020, transportation and infrastructure will still make up the majority of ADB’s financial support to the Philippines. This includes the South Commuter Railway Project that will connect Manila to Calamba and the EDSA Greenways Project, which will construct elevated walkways in four high density traffic locations along the main EDSA highway in Metro Manila.
The Integrated Flood Risk Management Sector Project is also being prepared for 2020 to finance up to six river basins across the country, and the Metro Manila Bridges Project will construct three bridges to help ease traffic conditions in the metropolis.
ADB’s 2020 program will also include financing for the Expanded Social Assistance Project, which will build on a decade of ADB assistance to the government’s conditional cash transfer program and support for the government’s agricultural competitiveness program.