MANILA, Philippines—The Asian Development Bank (ADB) has approved a $300 million dollar loan for the Philippines to support efforts to boost inclusive growth.
ADB’s financial assistance, the institution said in a statement, will help the Philippine government implement reforms that will expand access by citizens to financial services especially for those in unserved areas of the country.
The loan was released through the ADB’s Inclusive Financial Development Program, Subprogram 2, that aims to support reforms that will help a country’s government reach targets linked to the National Strategy for Financial Institution.
Such measures will help strengthen the institutional and policy environment for financial inclusion while also improving financial infrastructure and increasing the capacity and reach of service providers for rural banks and non-bank financial institutions.
“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. Ensuring all Filipinos are part of the financial system is important to this approach,” said ADB Vice-President Ahmed M. Saeed.
The loan is the third that ADB had granted to the Philippines in terms of societal development after the institution granted a $400 million program in agriculture development and $500 million geared towards child health and education, all of which happened in a span of two months.
Kelly Hattel, ADB Senior Financial Sector Specialist for Southeast Asia, said the loan will help innovate initiatives geared towards digital finance and improve the poor members of the Philippine society’s access to financial services.
“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,” said Hattel.
According to the 2017 Global Findex Survey, the Philippines is dead last in Southeast Asia in terms of financial inclusion indicators with only 34 percent of Filipino adults having an account at a formal financial institution.
This is disparagingly low compared to neighbors Indonesia (49%), Thailand (82%), and Malaysia (85%).
The Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Philippine Guarantee Corporation, Philippine Statistics Authority, Department of Justice, and Insurance Commission will implement the reforms that the ADB loan will support.
Key reforms include the rollout of the National ID System, pilots on agriculture value chain finance, public-private partnerships for crop insurance, the financial literacy programs in the K-12 curriculum, and the increased usage of digital payments in the country.