Another $600-M WB loan added to PH pipeline

The World Bank (WB) is set to lend the Philippines another $600 million, the last among three tranches of financing mainly aimed at building up the country’s defenses against natural calamities.

The Philippines’ promoting competitiveness and enhancing resilience to natural disasters sub-program 3 development policy loan was added by the Washington-based multilateral lender to its near-term lending pipeline last week, documents showed.

The Department of Finance (DOF) will borrow on behalf of the Philippines. Earlier documents showed that this third and final in a series of related loans was expected to be approved by the World Bank board in 2022.

This additional upcoming financing jacked up to $3 billion the World Bank’s lending program for the Philippines.

The World Bank in 2019 extended the first loan in the series, amounting to $400 million. It was followed by the bigger $600-million second tranche green-lit in December last year that took effect or started disbursements last February.

The World Bank had said the recently approved loan for sub-program 2 would “support transformational reforms to hasten the adoption of digital technologies, promote greater competition, and reduce the costs of doing business to revive more economic activities and jobs in the country.”

Small businesses

Specifically, the reforms expected to benefit small businesses as well as vulnerable sectors included “promoting competition and digital infrastructure expansion in the telecommunications sector, shifting to digital transactions for customs procedures to reduce trade costs, indemnity insurance to protect public assets (such as schools and hospitals) from natural disasters, and implementing the national ID program for financial inclusion and social transfer program delivery,” the World Bank had said.

Meanwhile, the Bureau of the Treasury on Monday also continued to ramp-up domestic borrowings, raising a total of P30.2 billion from short-dated treasury bills as bid rates fell across the board.

The amount that the Treasury awarded exceeded the P25-billion offering as it doubled the noncompetitive bids for the benchmark 91- and 182-day debt paper.

The P7 billion in three-month treasury bills were sold at 1.278 percent, down from 1.306 percent last week.

The average rate for the P11.2 billion in six-month IOUs also declined to 1.549 percent from 1.629 percent previously.

The P12 billion in 364-day T-bills fetched an annual rate of 1.829 percent, down from 1.863 percent.

Oversubscribed

Across the three tenors, tenders totaled P97.2 billion, making the auction nearly four times oversubscribed.

As such, the Treasury opened its tap facility window to sell another P7 billion of the one-year bills.

National Treasurer Rosalia de Leon attributed the robust demand to market expectations that the Bangko Sentral ng Pilipinas will continuously provide an anchor so the economy can rebound from the pandemic-induced recession.

As yields ease, De Leon said the Treasury will continue positioning the country’s debt portfolio toward the local currency. INQ