The Philippines will get a $600-million policy loan from the World Bank for the government’s COVID-19 recovery efforts.
The World Bank said it has approved the loan to assist the country to boost resiliency and the sustainability of its financial sector following the impact of the pandemic.
The program is dubbed the Philippines Second Financial Sector Reform Development Policy Financing, which will support three policy areas —the financial sector; micro, small, and medium enterprises (MSMEs); and climate and disaster risk finance, GMA News reported.
The latest loan seeks to support reforms on strengthening the legal and institutional framework to improve oversight and integrity, boost crisis management and resolution framework, and improve long-term finance availability.
It will also support the financial sector’s resilience to climate-related shocks through encouraging banks to incorporate sustainability principles into their investment activities, and reforms promoting financial services which utilize digital technologies.
“Policy actions that strengthen the stability of the financial sector— including banks and insurance companies — will help Filipino families, businesses, and investors withstand financial shocks and enhance their resilience by ensuring that problems in these financial institutions are detected at an early stage without severe disruptions to the economy,” Ndiamé Diop, World Bank country director for the Philippines, quoted in the GMA News report, said.
The World Bank cited that only 51% of Filipinos aged 15 and above having a transaction account with a financial institution, lower than the 80% regional average in East Asia and the Pacific.
“Financial inclusion can be a key enabler to speed up poverty reduction and strengthen recovery from the pandemic,” Diop said.
The Philippine government earlier said it plans to secure nearly $40 billion worth of assistance and loans from development partners and bilateral lenders this year.
Data from the Bureau of the Treasury (BTr) showed that the government’s debt stock remained at a record level of over P13.64 trillion as of end-November 2022.