MANILA, Philippines – The Bangko Sentral ng Pilipinas has approved the government’s plan to borrow an amount equivalent to $500 million (nearly P22 billion) from Japan to fund road projects nationwide.
Data from the BSP indicated that the loan—exactly 40.847 billion yen—will be provided by the Japan International Cooperation Agency (JICA), the development lending institution of the Japanese government.
Japan remains the Philippines’ biggest source of developmental loans. It is likewise one of the country’s biggest trading partners.
The loan, which is concessional in nature, carries an interest rate of 1.4 percent per annum and may be payable in 25 years.
The money will be used to fund the “Road Upgrade and Preservation” project of the government. The Department of Public Works and Highways will implement the project aimed at improving various national roads throughout the country.
The loan will allow the government to fully pursue its infrastructure development initiative considered to be key in attaining economic growth targets.
The project will complement other public infrastructure projects, particularly those falling under the government’s Public-Private Partnership (PPP) program.
Although the government launched the PPP program in 2010, most of the projects would only be implemented late this year or early next year due to the tedious feasibility studies, officials said.
Under the PPP program, the government will invite private firms to invest in infrastructure projects. The strategy will allow the government, which is currently burdened by a huge deficit, to meet its development objectives.
Annual public infrastructure spending in the Philippines is estimated at less than 3 percent of its gross domestic product (GDP)—way below the regional average of 5 percent.