ADB approves $500 million loan for emergencies

MANILA, Philippines — The Asian Development Bank (ADB) has approved a $500-million loan for the Philippines as emergency financing in the event of natural disasters and public health emergencies resulting in the declaration of a state of calamity.

“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 2019 or COVID-19 pandemic,” said ADB vice president Ahmed Saeed.

“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,” he said.

Located in the Pacific Ring of Fire, the Philippines is among the most disaster-prone countries in the world with threats from active volcanoes and an average of 20 typhoons entering the country in a year.

Nearly three-fourths of the country’s population are vulnerable to multiple natural hazards and such disasters worsen poverty in typhoon-prone provinces along the country’s eastern seaboard.

ADB said disasters cost the Philippines 0.7 up to one percent of gross domestic product every year, including about P43.5 billion ($890 million) caused by earthquakes and around P113 billion ($2.7 billion) from typhoons.

“The Disaster Resilience Improvement Program will support government policy reforms aimed at ensuring the government can quickly address the needs of vulnerable segments of the population following disasters. It will also strengthen the Philippines’ overall response to disasters and pandemics,” said ADB financial sector specialist for Southeast Asia Benita Ainabe.

The program supports reforms to make climate change adaptation and disaster risk reduction an integral part of comprehensive development plans of local government units.

It will support a pilot disaster insurance scheme, the first of its kind in Southeast Asia, in several cities across the country to bolster their fiscal resilience. It also aims to provide a predictable, timely source of financing for post-disaster response.