$2.7B in public sector loans cleared by Bangko Sentral in Q3

MANILA  -A total of $2.7 billion in government foreign borrowing was approved by the Bangko Sentral ng Pilipinas (BSP) in the third quarter of 2023, the proceeds from which are intended mostly to help ensure continued recovery of the Philippine economy and bolster the country’s resilience amid climate change.

The third-quarter data brings the nine-month external debt inflows to the public sector for this year to $10.99 billion, which already surpasses the full-year tally of $10.32 billion for 2022.

However, foreign debt that was green-lit in the January-September period is still less than the $13.1 billion recorded in 2021.

According to the BSP, the foreign loans approved by its policy-making Monetary Board (MB) in the third quarter alone were all borrowings by the national government (NG).

These include four project loans amounting to $1.95 billion and one program loan amounting to $750 million.

“These borrowings will fund the (NG) program on economic recovery, environmental protection and climate resilience, as well as projects for the transport and agricultural sectors,” the BSP said.

The 1987 Philippine Constitution requires prior MB approval of all foreign loans that the public sector — the national government itself as well as its agencies and financial institutions — will take or guarantee.

Before actual negotiations can begin, proposals for foreign borrowings must be submitted to the MB for approval in principle.

ADB-funded projects

In September, the Asian Development Bank said a $303-million project loan — intended to reduce flood and climate risks and protect people and livelihoods around the river basins in Abra, Ranao and Agus, and Tagum and Libuganon — had been approved.

READ: ADB approves $303-M flood risk mitigation loan

The ADB noted that the Philippines was one of the countries most vulnerable to the effects of climate change and disasters caused by natural hazards.

Also last month, Finance Secretary Benjamin Diokno said the Philippines was well-supported to push sustainable agricultural practices and development as the Marcos administration secured $1.6 billion in overseas development assistance (ODA) from foreign governments for such purposes.

Part of this ODA kitty, earmarked for agriculture-related programs and projects, is the $500-million loan agreement with the ADB for the Competitive and Inclusive Agriculture Development Program Subprogram 2, which aims to increase the competitiveness and inclusiveness of the agriculture sector.

Multilateral assistance

There is also a $876-million loan from the World Bank, meant for initiatives to develop the agriculture and fisheries sectors.

One such initiative, the Mindanao Inclusive Agriculture Development Project, aims to sustainably increase the agricultural productivity, resiliency, and accessibility to markets and services of organized farmers and fisherfolk in selected ancestral domains and for selected value chains in Mindanao.

READ: Developing countries need $1T a year in climate finance -report

On Friday, the ADB said climate financing support for low- and middle-income countries granted by multilateral development banks (MDBs) had reached a new record high at a total of $60.7 billion in 2022.

Citing a 100-page joint report of 10 MDBs covering 2022, the lenders said that $38 billion or 63 percent of the total amount was for climate change mitigation finance.

Also, $22.7 billion or 37 percent was for climate change adaptation finance. In addition, there was $16.9 billion worth of private financing.