ADB eyes record $12B in loans to PH in 4 years

By: - Reporter / @bendeveraINQ
/ 05:30 AM October 18, 2019

In what an official dubbed as a “big-bang lending program,” the Asian Development Bank (ADB) on Thursday said it would extend to its host country, the Philippines, up to $12.1 billion in loans between 2019 and 2022 or a record $3 billion yearly.

ADB country director for the Philippines Kelly Bird said in a press briefing that from only $6.4 billion in approved loans or $800 million yearly from 2011 to 2018, the Manila-based lender was “scaling up significantly” its financing support particularly for transport and agriculture projects.


With up to $3 billion in annual financing, the Philippines would easily be among the top three recipients of ADB loans in the next three years, Bird said.

Last year, the Philippines received $1.4 billion in loans, the fifth-biggest among the ADB members.  For this year, the projected $2.6 billion in loans would be the second largest after those extended to India, he said.


Not only did the ADB jack up the lending pipeline but it also “balanced” the sectors that would get the loans, as transport would now be the biggest beneficiary.

From 2019 to 2022, 59.9 percent of the ADB’s lending portfolio to the Philippines will be for transportation projects; 14 percent for public sector management programs supporting the government’s policy reforms, and 9.9 percent for projects in the agriculture and natural resources sector.

The 2019-2022 lending pipeline for the Philippines was “custom-made, reflecting the government’s priority of ‘Build, Build, Build,’” Bird said, referring to the Duterte administration’s ambitious infrastructure development program.

The ADB was also ramping up lending to agriculture as Bird noted that the sector had become a “drag to economic growth” in the past two to three years.

“You still have a large segment of the population reliant on agriculture. And if you look at the reasons why it’s been a drag, one is low competitiveness. There were previous policy restrictions that were a drag on agriculture. The government has now implemented some major reforms that will help set the agriculture sector on a par for improved competitiveness. What we’re doing now is implementing some programs and projects that are going to support that. We now see agriculture as a priority,” Bird explained.

In comparison, between 2011 and 2018, the top three sectors that received the biggest ADB loans were public sector management (53 percent of total), finance (14 percent), and education (12 percent). Lending for transport was only 7.7 percent and for agriculture and natural resources, just 1.6 percent of total.

This year, the ADB’s lending program covered two already approved projects—$1.3 billion for the Malolos-Clark Railway Project and $300 million for the Secondary Education Support Program.


Expected to be approved by the ADB board in November and December are the following: additional financing for the Infrastructure Preparation and Innovation Facility ($200 million); additional financing for the Angat Water Transmission Improvement Project ($126 million); the Local Government Development Program ($300 million); Capacity-Building to Foster Competition Project ($25 million) and Facilitating Youth School-to-Work Transition Program ($400 million).

For 2020 to 2022, Bird said the ADB was targeting at least $2.5 billion in loans for the Philippines yearly as some proposals might prove to be nonfeasible.

The projects in the ADB’s Country Operations Business Plan for the Philippines 2020-2022 pipeline “must have complete government approvals, including meeting thresholds for economic rates of return, before financing decisions are made,” Bird said.

Big-ticket projects lined up for ADB financing in 2021 are: South Commuter Railway Project between Manila and Calamba, Laguna ($1.2 billion); Integrated Flood Risk Management Sector Project to minimize flooding in six river basins—three in Mindanao, two in Luzon and one in Visayas ($400 million); support for Capital Market Generated Infrastructure Financing Program ($300 million); Metro Manila Bridges Project along Marikina River ($180 million) and the Edsa Greenways Project ($100 million).

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TAGS: Asian Development Bank (ADB), big-bang lending program, Loans
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