World Bank grants PH's $750M loan for environment, climate policy reforms

Multilateral lender World Bank has approved a new budgetary support loan for the Philippines to support the government’s policy reforms on environmental protection and climate resilience.

In a statement on Wednesday, the World Bank said its board of executive directors approved the $750 million Philippines First Sustainable Recovery Development Policy Loan (DPL).

The lender said the policy loan is aimed at supporting the ongoing reforms of the Philippines to attract private investment in renewable energy; enhance plastic waste management through reduction, recovery, and recycling; promote green transport, including the use of electric vehicles; and reduce climate-related fiscal risks from the agriculture sector.

"The Philippines has tremendous potential for renewable energy generation, especially in solar and wind. Government actions to encourage investments in this sector, such as promoting foreign direct investments and streamlining the permitting process, could unlock this potential," said Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines, and Thailand.

"Renewable energy can help the Philippines mitigate climate change and bring numerous benefits, including enhanced energy security, the creation of green jobs, and improved access to electricity. It is a crucial step towards a more sustainable and resilient future for the country,” added Diop.

The government has set a target of 50% share of renewable energy (RE) in the total power mix by 2040.

The World Bank said its financing program also supports the introduction of new insurance products suitable for vulnerable smallholder farmers and strengthens the coverage and operations of the Philippine Crop Insurance Corporation.

The lender added that the loan also supports the implementation of the Extended Producer Responsibility (EPR) Act, which mandates large enterprises to recover up to 80% of plastic packaging waste by 2028.

This, as the Philippines - along with China, Indonesia, Thailand, and Vietnam - accounts for 55% to 60% of the plastic waste that enters the ocean, according to the World Bank.

The bank said that approximately 1.7 million tons of post-consumer plastic waste are generated in the Philippines annually, with an estimated recycling rate of only 28% for recyclable plastic waste.

The remaining balance either leaks into the environment or is disposed of as part of the mixed waste stream, it said.

“This is a development policy loan which provides assistance to countries undertaking reforms to address development constraints. DPLs typically support policy and institutional changes needed to create an environment conducive to sustained and equitable growth as defined by borrower-countries’ own development agenda,” the World Bank said.

“This financing support addresses constraints such as, limited market competition in several key sectors as regulations create high barriers to market entry; underinvestment in infrastructure; and low foreign direct investment (FDI) resulting in part from regulatory restrictions,” it said.