Philippines seen to borrow $9.1 billion from ADB

MANILA, Philippines — The Philippines would likely be among the top three biggest borrowers of the Asian Development Bank (ADB) as lending to the country is expected to reach $9.1 billion between 2020 and 2022, in line with its support to the government’s infrastructure program.

In the Philippines Country Operations Business Plan (COPB) 2020–2022, ADB said it will invest 59.5 percent of its three-year sovereign lending program in transportation projects, such as railways, bridges, road networks and elevated pedestrian walkways.

The rest of its financial support will be devoted to the social sector, agriculture, public sector management, and sustainable water and urban development.

 “This latest Country Operations Business Plan reflects ADB’s strong commitment to supporting the Philippines’ efforts to sustain inclusive economic growth, create business and job opportunities in the regions, and widen the reach of the government’s education, health, and social protection programs,“ ADB country director for the Philippines Kelly Bird said.

The $9.1 billion programmed borrowing would be higher than ADB’s total lending to the Philippines of $6.4 billion from 2011 to 2018, which focused on public sector management, finance and education.

Bird said the ADB plans to finance projects and programs worth at least $2.5 billion annually in 2020 to 2022,  matching the record high $2.5 billion in sovereign lending to the Philippines expected by the end of the year.

In comparison, ADB’s annual lending from 2008 to 2018 averaged about $800 million.

Bird said the Philippines was the ADB’s fifth largest borrower last year and the ninth largest the year before.

“This year, if we are able to accomplish at $2.5 billion, we would perhaps...certainly in the top three,” Bird said.

Half of ADB’s 2019 assistance program will fund the first tranche of the Malolos–Clark Railway Project, one of the government’s big-ticket infrastructure projects under its Build Build Build (BBB) program.

“It is also the largest ADB project financing to date, worth $2.75 billion in total. Contracts for civil works for the project are expected to be awarded before the end of the year and construction work may begin in the second quarter of 2020,” ADB said.

ADB added that it is preparing additional financing this year for the Infrastructure Preparation and Innovation Facility to support detailed engineering designs and feasibility studies for the government’s priority projects under the BBB program.

“This will ensure a steady flow of investments into much-needed infrastructure projects that are viable and innovative,” ADB said.

Moving forward, ADB said transportation and infrastructure will still make up the majority of ADB’s financial support to the Philippines next year.

Among the projects in the pipeline for 2020 include the South Commuter Railway Project that will connect Manila to Calamba and the EDSA Greenways Project, which will construct elevated walkways in four high density traffic locations along the main EDSA highway in Metro Manila.

The Integrated Flood Risk Management Sector Project is also being prepared for 2020 to finance up to six river basins across the country, and the Metro Manila Bridges Project will construct three bridges to help ease traffic conditions in the metropolis.

The support to capital market generated infrastructure financing program is also part of the ADB’s 2020 lending program.

“ADB’s 2020 program will also include financing for the Expanded Social Assistance Project, which will build on a decade of ADB assistance to the government’s conditional cash transfer program and support for the government’s agricultural competitiveness program,”the bank said.

In 2020, the bank is also targeting to support projects that promote local economic development such as the Support for Agrifood competitiveness program, Philippine City Disaster Insurance Pool Project, Sustainable Tourism Development(Livable Cities Investment) Project, Regional Development Facility, Davao Public Transport Modernization Project,and the Local Government Revenue Mobilization Project.

Moreover, for 2021, the ADB program is targeting to support projects such as the Metro Rail Transit Line 4, Bataan-Cavite Bridge, Laguna Lakeshore Road Transport project, Malolos-Clark Railway Project(second tranche), the Mindanao Irrigation Development project, local government development program, the facilitating youth school to work transition program, and the support to universal health coverage project.

ADB said that all projects included in the COBP must complete government approvals including meeting thresholds for economic rates of returns before financing decisions are made.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. In 2018, it made commitments of new loans and grants amounting to $21.6 billion. Established in 1966, it is owned by 68 members—49 from the region.