Philippines secures fresh World Bank loan for financial sector upgrade

MANILA, Philippines — The Philippines on Friday secured a $400-million (P19.5 billion) loan from the World Bank to fund projects that would strengthen the country’s financial sector in the face of coronavirus fallout.

The fresh funding — known as “Philippines First Financial Sector Reform Development Policy Financing” — is the first of two programs of World Bank supporting three reform areas in the sector, the Washington-based lender said in a statement. The new lending is a development policy loan (DPL), which provides quick-disbursing assistance to countries undertaking reforms.

The programs’ objectives, the Bank said, include “strengthening financial sector stability, integrity and resilience; expanding financial inclusion for individuals and firms; and promoting disaster risk finance.”

“The health crisis, the economic impact of containment measures, and the global slowdown have increased the urgency for reforms, not only to ensure financial sector stability or financial inclusion, but also to support economic recovery,” Ndiame Diop, World Bank country director, said.

Specifically, the $400 million loan would go to measures addressing legal, regulatory and supervisory issues concerning banks surpvised by the Bangko Sentral ng Pilipinas, as well as ensuring that there is easy access to credit for small and medium enterprises. At the same time, the funding would go to reforms to promote innovative financial services by harnessing digital technologies.

The new financing to improve the country’s financial sector would come on top of the $3.6 billion granted by the lender to the Philippines for the government’s pandemic response as of April 8 this year. So far, the Duterte administration has raised $15.5 billion in foreign funding for its coronavirus programs, finance department data showed.

$1 = P48.735