The Asian Development Bank (ADB) has approved two large loans in support of the Philippine government’s efforts to develop much-needed infrastructure.
A statement by the Manila-based multilateral lender said its board approved loans totaling $600 million to help the state tap more private participation for urgently needed infrastructure investment.
The first $300-million loan is earmarked to support expanded private participation in infrastructure investment through the promotion of public-private partnership (PPP) projects.
The second loan, for the same amount, supports policy changes to deepen the nonbank financial sector to unlock more long-term private funding for infrastructure.
“PPPs are vital for infrastructure development and for a sustainable economy. While there has been significant progress on PPPs, further reforms are needed to increase private investment,” said Juan Luis Gomez, ADB principal public management specialist. “These loans will help the government pursue policy reforms clearing obstacles to PPPs and increasing long-term private sector finance for them.”
Under-developed infrastructure is a drag on the Philippine economy, with the country ranked at 95 out of 144 countries globally for infrastructure quality, according to the latest World Economic Forum’s Global Competitiveness Report.
The PPP-oriented loan would support improved systems to assess and budget for right-of-way acquisition and resettlement of communities, ADB said.
It will boost capacity and staff at the national PPP Center and help to finalize work on proposed amendments to the build-operate-transfer (BOT) law that are critical for sustaining the PPP program. The government has so far awarded 10 PPP projects with total investments of $4.2 billion.
The second loan supports the development of long-term finance in the Philippines, where capital markets are comparatively small and illiquid, and provide limited intermediation to the private sector and to infrastructure finance.