THE Philippine government is seeking a $600 million loan from the World Bank (WB) to support reforms that would help achieve a “resilient, inclusive and sustainable financial sector.”
The World Bank Board of Directors is expected to approve the Philippines’ second financial development financing at its December 20 meeting.
Documents from the World Bank website showed that the loan aims to bolster the Philippine government’s efforts to build financial sector resilience, expand financial inclusion of individuals and businesses, and support climate, disaster risk and sustainable finance.
“This operation builds on the reform agenda launched under the first financial sector development policy loan and focuses on the continuity of reform implementation, which includes the recent policy transition,” the multilateral lender said.
In 2021, the World Bank approved a US$400 million loan to support the Philippine financial sector’s recovery from the COVID-19 pandemic.
Programs supported by the second loan include expansion of deposit insurance coverage by the Philippine Deposit Insurance Corp.; Strengthening the supervision of banks and conglomerates and the capacity of Bangkok Sentral ng Pilipinas (BSP) to address banking risks at an early stage.
The loan also supports the expansion of digital financial services through digital banks, the development of a financial consumer protection program and the strengthening of the credit reporting ecosystem.
Reforms also include the establishment of the Disaster Risk Insurance Facility and the adoption of BSP requirements on climate risk management.
“Supporting an inclusive economic recovery and addressing the risks of climate change by promoting a green economy has become a priority for the Philippines. The proposed operation will allow the financial sector to play an effective role in achieving this goal,” the World Bank said.
The Ministry of Finance will be the main implementing body of the programme.
According to the World Bank, development loans typically support policy and institutional changes needed to create an environment conducive to sustainable and equitable growth, as defined in borrower countries’ own development agendas.
In March, the World Bank was the Philippines’ third largest source of official development assistance, with loans and grants accounting for 23.38% of the total.
The World Bank currently supports 15 ongoing programs and projects worth US$4.96 billion in areas such as transport, rural development, disaster preparedness and management, social protection, customs modernization and COVID-19 response. – LMJC Jocson