PHL, ADB ink loan deals totaling $680M

The Philippines and the Asian Development Bank (ADB) signed on Wednesday two loan agreements totaling $680 million to improve Mindanao’s roads and reform the country’s capital markets.

Finance Secretary Carlos Dominguez III, who sits as chairman of the ADB Board of Governors, and ADB president Takehiko Nakao signed the $380 million loan agreement on Improving Growth Corridors in Mindanao Road Sector Project, the Department of Finance (DOF) said in a statement.

They also led the exchange of documents on the $300 million Encouraging Investment Through Capital Market Reforms Program-Subprogram 2.

The first loan covers the construction of about 280 kilometers of roads and bridges in the Zamboanga Peninsula and Tawi-Tawi in Mindanao.

The second loan will help in accelerate investments in infrastructure by establishing a framework to diversify and broaden funding sources, particularly private sector financing.
 
“Modernization of our capital markets and infrastructure backbone are the two main tasks the Duterte administration seeks to accomplish over the next five years. These two loan packages fall squarely into the national priorities we have identified,” Dominguez said.
 
The loan to finance continuing capital market reforms is “vital to encouraging investments in the economy and broadening public participation in the capital market,” the Cabinet official noted.
 
The loan program for Mindanao will help develop southern Philippines and realize its growth potentials—key elements “in helping us achieve peace and prosperity in the region,” Dominguez said.
 
“Mindanao is an important component of ADB’s work in the Philippines,” said Nakao.

“This project, ADB’s first Mindanao-specific loan in 16 years, builds on our strong partnership with the government over the last five decades to develop the infrastructure and economy of the country’s second largest island. We are pleased to support the Philippines in its effort to improve the lives and livelihood of people in southwestern Mindanao through this road project,” he said.

Implementing capital market reforms is expected open new avenues for private investments in infrastructure.

“Although we have improved fiscal capacity to fund the infrastructure program through tax reforms, private investments will carry a major part of the load. By making our financial markets more efficient and more accessible to all citizens, by encouraging long-term savings and increased capital aggregation, we will ensure continuous financial flows towards modernizing our infrastructure backbone and our national logistics system,” Dominguez said.

According to the DOF, the Philippine government was able to secure the $300-million loan after implementing reforms committed under a previous subprogram, which included launching the National Registry of Scripless Securities, the Government Securities Repurchase Agreement Program, and the enhanced Government Securities Eligible Dealers Program.

Also part of the reforms, were the Personal Equity and Retirement Account and the issuance of a Code of Corporate Governance for publicly listed companies.
 
The $380-million approved in 2017 requires a counterpart fund of $123 million.
 
Construction and improvements of roads and bridges under this program will incorporate innovations in structural design, such as climate-change adaptation.
 
The program aims to strengthen the institutional capacity of the Department of Public Works and Highways to operate and manage more efficiently the transport in Mindanao and nationwide. — Ted Cordero/VDS, GMA News