ADB OKs $300-M loan to support financial inclusion reforms in Philippines
MANILA, Philippines — The Asian Development Bank announced Friday it approved a $300-million loan for the Philippines to boost the government's push to transform the country into a cash-lite economy.
In a statement, the Manila-based multilateral lender said the credit is under the "Inclusive Finance Development Program, Subprogram 2" that seeks to support reforms to help the government reach targets linked to the central bank's National Strategy for Financial Inclusion.
The loan is payable in 15 years and inclusive of a three-year grace period. The annual interest rate for the credit will be "determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility," the bank said.
“The Philippine government’s anti-poverty strategy aims to equip Filipinos in the bottom 40% of the income strata with education, skills, and livelihood assistance so they can break away from a vicious cycle of intergenerational poverty," ADB Vice President Ahmed Saeed said.
"Ensuring all Filipinos are part of the financial system is important to this approach,” Saeed added.
The Philippines ranked among the lowest in Southeast Asia on almost all financial inclusion indicators in the 2017 Global Findex Survey, which found that 34% of Filipino adults have an account at a formal financial institution like banks compared with 49% in Indonesia, 82% in Thailand, and 85% in Malaysia.
The reforms supported by the ADB loan focus on the poorest 40% of the population and rural residents and aim to more than double the number of banked Filipinos by 2023. For this year alone, the Bangko Sentral ng Pilipinas targets to bring 30% of transactions to electronic channels, up from a miniscule of 1% in 2017.
“Through this loan, ADB is partnering with the Philippines to implement innovative initiatives around digital finance to significantly improve poor Filipinos’ access to financial services and products as a way to lift their incomes and wellbeing,” ADB Senior Financial Sector Specialist for Southeast Asia Kelly Hattel said.
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