ADB sets aside $18 billion for developing countries

MANILA, Philippines — The Asian Development Bank (ADB) has allocated up to $18 billion in policy-based lending (PBL) until 2024 to developing member-countries as they recover from the impact of the pandemic.

The ADB has approved a ceiling of up to $18 billion in PBL starting this year until 2024 to support developing member countries (DMCs) as they pursue a green, resilient, and inclusive recovery.

As one of the DMCs, the Philippines has secured among the highest lending from the Manila-based multilateral bank over the years.

A type of loan, PBL provides general budget support to public sector borrowers, helping countries that are facing a financing gap in their annual budget. PBL is disbursed only when the borrower completes policy reforms or actions that have been agreed with ADB.

It transfers loan amounts to the governments’ general budget instead of paying for explicit project costs.

Examples include reforms to improve revenue collection and management of public resources, create a more business friendly investment climate or those that improve governance and performance of state-owned enterprises.

Last year, ADB lent about $2.2 billion to the Philippines or almost 10 percent of its total commitment to the region.

Of this amount, $1.4 billion was under PBL. This includes a $600 million loan to support reforms in the government’s universal healthcare program to provide continued access to crucial health services for around 109 million Filipinos, including at least 36.9 million homeless people, senior citizens, and other vulnerable groups.

The bank also committed $400 million in PBL for improving local government capacity to provide high-quality public services. Another $400 million was set for facilitating the youth school-to-work transition program.

Despite progress in addressing COVID, ADB- Strategy, Policy, and Partnerships Department director general Tomoyuki Kimura said the region is still facing risks, including new virus variants, inflation threats, financial stress caused by rising interest rates, as well as uncertain ramifications from the war.

“This package of additional assistance will ensure ADB remains responsive to our clients’ needs while helping to address long-term structural challenges facing the region, including climate change, rising inequality, and building resilience to future disasters,” Kimura said.

Expanded PBL commitments will support DMCs to undertake critical policy reforms and to address gaps in governments’ development financing requirements.

To support DMCs facing economic shocks, ADB has enhanced its Countercyclical Support Facility, which provides fast-disbursing emergency budget support during crises.

Revisions include expanding coverage to ADB’s most vulnerable low and lower-middle DMCs, increasing individual country resource ceilings, enhancing the focus on targeting poor and vulnerable groups, and making lending terms less onerous to improve access.