ADB lends fresh $500-M to Philippines disaster response

MANILA, Philippines — A new loan was extended by the Asian Development Bank (ADB) to the Philippines to fund projects improving the country's response to natural disasters and public health emergencies.

In a statement on Thursday, the Manila-based multilateral lender said $500 million was approved to be disbursed to its host country under the Disaster Resilience Improvement Program.

The loan is payable in 15 years, including a three-year grace period. An annual interest rate based on ADB’s London interbank offered rate-based lending facility will also be charged.

“The Philippines has been hit by several major disasters in recent years, including Typhoon Haiyan (Yolanda) in 2013, the Taal Volcano eruption in January 2020, and the ongoing coronavirus disease (COVID-19) pandemic,” Ahmed Saeed, the lender's vice-president, said.

"This new contingent disaster financing instrument will help the government manage fiscal risks posed by those shocks and lessen the economic and social impacts on people’s livelihoods and the country’s economy," Saeed added.

According to ADB, the fresh loan will support pending legislation in Congress to merge the functions of the National Disaster Risk Reduction and Management Council and the Office of Civil Defense under one disaster agency, a priority bill of the Duterte administration.

The loan will support the launch of a disaster insurance scheme, the first of its kind in Southeast Asia, in several cities to ensure areas remain financially afloat even when a disaster strikes.

Located in the Pacific Ring of Fire, the Philippines is among the most disaster-prone countries in the world, including active volcanoes, frequent earthquakes, and an average of 20 typhoons a year causing floods and landslides.

Last year, the country was declared facing the highest risk of climate change hazards, according to the latest Global Peace Index released by Institute for Economics and Peace, an Australia-based independent think tank. The country lodged the highest scores in terms of hazards such as floods, cyclones and droughts.

Based on ADB's estimate, nearly three-fourths of the country’s population are vulnerable to natural disasters, which could worsen poverty especially in typhoon-prone provinces. The multilateral lender added that disasters wipe out 0.7% to 1% of economic output in the country every year. — Ian Nicolas Cigaral