ADB OKs $300-M loan to support PH’s financial inclusion efforts

The Asian Development Bank (ADB) on Thursday announced the approval of a $300-million policy-based loan to support the Philippine government’s financial inclusion efforts.

In a statement, the ADB said the policy loan Inclusive Finance Development Program, Subprogram 3, is supporting reforms to expand financial inclusion in the Philippines by improving the country’s financial infrastructure, including widening the digital financing ecosystem.

The loan program is aimed at aiding the government in “creating a stronger institutional and policy environment to help expand Filipinos’ access to financial services, particularly the vulnerable segment of the population, and to promote economic growth,'' the ADB said.

It will also support efforts to increase the capacity of financial service providers, such as rural banks and non-bank financial institutions, to offer quality products and services accessible through various delivery channels.

“Through this loan, ADB is expanding its partnership with the Philippines to ensure all Filipinos will have access to financial products and services, including via digital platforms, to help improve their lives and livelihoods,” said ADB senior financial sector specialist Kelly Hattel. 

“Considering the significant impact of climate change on the vulnerable segments of the population, the reform actions supported by the loan will ensure government assistance can reach people faster during crises and emergencies; help raise the climate resilience of farmers and micro, small, and medium-scale businesses through expanded insurance; and promote improved financial stability,” she added. 

Citing the 2021 Global Findex Database, the ADB said the number of Filipino adults holding an account with a financial institution or mobile money provider has risen from 34% of the population in 2017 to 51% 2021. 

The bank added that the COVID-19 pandemic lockdowns nearly doubled the number of financial institutions or mobile money accounts for the bottom 40% of the population by income, from 18% in 2017 to 34% in 2021.

The ADB said the Philippine government is targeting raising the number of Filipinos holding an account with financial institutions or mobile money providers to 70% by 2024, aided by streamlined requirements with the Philippine Identification System (PhilSys). 

As of September 1, 2023, nearly 88% of the population had registered under PhilSys after launching the program in 2020, according to the lender.

The bank said the new loan builds on ADB assistance provided under Inclusive Finance Development Program Subprogram 1 and Subprogram 2 delivered in October 2018 and August 2020, respectively. 

The ADB added that reforms pursued under the latest loan will complement its other programs in the Philippines, such as the Competitive and Inclusive Agriculture Development Program Subprogram 2 approved in January 2023. —VBL, GMA Integrated News