MANILA, Philippines - The Asian Development Bank (ADB) will extend another $350 million loan to the Philippines, bringing its total loan assistance to $850 million for relief and reconstruction efforts related to damage caused by Typhoon Yolanda, its top executive said.
The ADB had earlier committed a $500-million emergency assistance loan (EAL) for the reconstruction and recovery phase.
Speaking before the Trilateral Commission Manila Regional meeting Thursday, ADB president Takehiko Nakao said the Philippine government requested for an additional $350 million for the reconstruction and rebuilding phase in the Yolanda ravaged areas in the Visayas.
“The regional headquarters of the ADB decided to give a supplemental $350 million for the Philippines, as requested by the (Philippine) government,†Nakao said.
The total amount will be disbursed after the Philippine government presented to donor agencies the entire rehabilitation, recovery and reconstruction plan, also known as the Yolanda Recovery and rehabilitation Plan (YRRP).
The YRRP covers five priority areas with specified broad interventions and designated agency responsibilities: shelter and reconstruction of houses; power restoration; livelihood and employment; resettlement and psycho-social care; and environmental protection.
Earlier, the ADB released to the Philippine government a $3-million grant from the Asia Pacific Disaster Response Fund. It was followed by a $20-million special grant from the Japan Fund for Poverty Reduction.
The combined $850-million loan will be used to cover up the estimated two-percent deficit in gross domestic product (GDP) due to the economic losses from the typhoon.
The ADB estimated that the Philippine government would need additional financing of around P153 billion, equivalent to the deficit that will rise above the targets for 2013 and 2014.
The multi-billion-peso in public spending is expected to revitalize the regional economies in the Visayas.
The typhoon damage is estimated to shave off 0.3 to 0.8 percentage point in the fourth quarter growth, equivalent to $900 million to $2.5 billion of GDP. The ADB likewise estimates that the drop in growth rate for 2014 may be as high as one percentage point.
Further simulations indicate that the number of poor people below the poverty line could increase by 1.5 million due the typhoon damage.
The ADB simulations point to economic and social costs, which in turn created pressure on fiscal policy.
It forced the Philippine government to reallocate budget spending to finance emergency relief efforts. The relief efforts are expected to continue until March 2014. The national government has also allocated spending for rehabilitation of infrastructure, basic services, schools and institutions, and reconstruction of infrastructure and housing to start in December 2013 or early 2014.
Government has also started transferring state personnel to the affected areas to assist local governments. Additional funding will also be needed to scale up social assistance programs to assist displaced persons and the newly unemployed.
Overall, the additional public spending is estimated at P153 billion, of which P14 billion has been added to the 2013 budget and P139 billion will be added to the 2014 budget.
The expected decline in gross regional domestic product in the affected regions will result in foregone tax revenue, which ADB estimates could be as much as P8 billion, or roughly P2.3 billion in 2013 and P5.7 billion in 2014.