ADB OKs fresh $500-M loan for PHL

The Asian Development Bank has approved another $500-million loan for the Philippines, the fifth loan extended by the multilateral lender to the Philippines so far this year.

In a statement on Thursday, the ADB said the new policy-based loan will allow the government to have “quick access to emergency financing in the event of disasters triggered by natural hazards or public health emergencies that result in a declaration of a state of calamity.”

The latest $500-million loan approved by the ADB is its fifth budgetary support financing extended to the Philippines this year.

In April, the ADB extended a $1.5-billion loan for COVID-19 Response and Expenditure Support Program and another $200 million for Social Protection Support Project.

In June, the Manila-based lender extended $400 million for Support Capital Market Generated Infrastructure Financing, Subprogram 1 and $500 million for Expanded Social Assistance Program.

“The Philippines has been hit by several major disasters in recent years, including Typhoon Haiyan (Yolanda) in 2013, the Taal Volcano eruption in January 2020, and the ongoing coronavirus disease (COVID-19) pandemic,” ADB vice-president Ahmed Saeed said.

“This new contingent disaster financing instrument will help the government manage fiscal risks posed by those shocks and lessen the economic and social impacts on people’s livelihoods and the country’s economy,” he added.

Also, the ADB noted that the Philippines is located in the Pacific Ring of Fire, making the country among the most disaster-prone in the world with active volcanoes, frequent earthquakes, and an average of 20 typhoons a year causing floods and landslides.

Nearly three-fourths of the country’s population are vulnerable to multiple natural hazards, and such disasters worsen poverty in typhoon-prone provinces along the country’s eastern seaboard, it said.

The lender said disasters cost the Philippines 0.7% to 1.0% of gross domestic product every year, including about P43.5 billion or $890 million caused by earthquakes and around P133 billion or $2.7 billion from typhoons.

“The Disaster Resilience Improvement Program will support government policy reforms aimed at ensuring the government can quickly address the needs of vulnerable segments of the population following disasters. It will also strengthen the Philippines’ overall response to disasters and pandemics,” ADB Financial Sector specialist for Southeast Asia Benita Ainabe said.

Moreover, the ADB said the latest budgetary support for disaster resilience program is supporting pending legislation in Congress to merge the functions of the National Disaster Risk Reduction and Management Council and the Office of Civil Defense under a new Department of Disaster Resilience to speed up the government’s disaster response and substantially reduce coordination and bureaucratic inefficiencies.

The program supports reforms to make climate change adaptation and disaster risk reduction an integral part of comprehensive development plans of local government units, according to the ADB.

Likewise, it will support a pilot disaster insurance scheme, the first of its kind in Southeast Asia, in several cities across the country to bolster their fiscal resilience, it said.

The $500-million loan-funded program also aims to provide a predictable, timely source of financing for post-disaster response.

It will also help local governments improve medium-term pandemic preparedness and introduce reforms beyond the government’s immediate COVID-19 response needs, according to the ADB.

“ADB has provided significant post-disaster support to the Philippines since the 1980s, especially after Typhoon Haiyan (Yolanda),” it said.

“ADB’s rehabilitation and reconstruction assistance for damaged public assets in the country is valued at around $1.8 billion in inflation-adjusted terms. It has also provided at least $1.8 billion in loans and grants to assist the government in its urgent COVID-19 response,” it added. —LBG, GMA News