ADB approves $300-M financial inclusion loan

The Asian Development Bank (ADB) has approved a $300-million policy-based loan to support the government’s efforts to implement reforms in expanding Filipinos’ access to financial services.

In a statement on Friday, the Manila-based multilateral lender said the new loan, called the “Inclusive Finance Development Program, Subprogram 2,” would support these reforms to help the government reach targets linked to its National Strategy for Financial Inclusion.

These reforms would strengthen the institutional and policy environment for financial inclusion, improve financial infrastructure and expand the capacity and reach of service providers, especially rural banks and nonbank financial institutions.

“The Philippine government’s antipoverty strategy aims to equip Filipinos in the bottom 40 percent of the income strata with education, skills and livelihood assistance so they can break away from a vicious cycle of intergenerational poverty,” ADB Vice President Ahmed Saeed said in the statement.

“Ensuring all Filipinos are part of the financial system is important to this approach,” he added.

Kelly Hattel, ADB senior financial sector specialist for Southeast Asia, said that with “this loan, [the] 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 well-being.”

The Bangko Sentral ng Pilipinas, Securities and Exchange Commission, Philippine Guarantee Corp., Philippine Statistics Authority, Department of Justice and Insurance Commission are implementing the reforms that the loan will support.

These reforms target to more than double the number of Filipinos holding an account at a formal financial institution by 2023. These include the rollout of the country’s National Identification System, which is expected to help hasten the delivery of social assistance programs; the launch of pilots on agriculture value-chain finance; and public–private partnerships for crop insurance.

The loan will also support reforms to incorporate financial literacy programs in the country’s Kindergarten-to-Grade 12 basic education curriculum and increase the use of digital payments.

The loan is the latest extended by the lending institution this year. It previously approved a $400-million loan to boost local farmers’ incomes; $26.5-million loan to help local government units boost revenues; $126-million loan to support the Metropolitan
Waterworks and Sewerage System’s construction of a water transmission pipeline; $500-million loan to bolster the government’s conditional cash-transfer program; $400-million loan to strengthen the country’s capital markets; $200-million loan to support poor households; and $1.6-billion loan for the government’s Covid-19 response.

Combined, these loans are worth at least P3.55 trillion.

Source: TheManila Times