By Beatrice M. Laforga, Reporter
THE Asian Development Bank (ADB) is extending a record $4.2 billion in loans to the Philippines this year, with projects to improve the healthcare system amid the pandemic and the construction of a pedestrian walkway along Metro Manila’s main thoroughfare still awaiting approval.
At the same time, ADB Philippines Country Director Kelly Bird estimated the country’s gross domestic product (GDP) to shrink by about 5% this year, near the low end of its 2.3-5.3% expected contraction as recovery slows.
ADB Philippines Senior Program Officer Oscar Badiola said the multilateral bank’s 2020 lending program for the country was increased to $4.207 billion from $3.3 billion set before the pandemic, largely due to the $1.5-billion additional loan extended in April for the government’s coronavirus disease 2019 (COVID-19) pandemic response.
“ADB’s annual lending operations have increased substantially compared with a few years ago, from an annual program averaging $800 million in 2011 to 2017. We are now looking at a $4-billion program for 2020 and an average of $3 billion in the next few years,” Mr. Badiola said at an online media briefing on Thursday.
Mr. Bird said this marked the bank’s “largest ever” lending program for the Philippines, exceeding the record $2.5 billion it lent last year.
Out of 11 projects, Mr. Badiola said six projects worth $2.752 billion have been approved as of July.
Projects set to be approved in August include the $400-million Competitive and Inclusive Agriculture Development Program; the $300-million Inclusive Finance Development Program; and the $125-million Health Systems Enhancement to Address and Limit COVID-19 project.
Mr. Badiola said the $500-million Disaster Resilience Improvement Program will likely get the go-signal in September, while the $130-million loan for the proposed EDSA Greenways Project may be approved by November.
For next year, ADB’s lending program is set at $4.118 billion, plus a standby loan of $1 billion for the Bataan-Cavite Bridge project, with the infrastructure sector still the top priority.
“Moving on to 2021, we have 10 projects and programs in the pipeline for next year. Our 2021 program will continue to build on our three strategic pillars — accelerating infrastructure development, promoting the development of local economies and investing in people,” Mr. Badiola said.
Last year, ADB said it would boost its lending program for the Philippines with a shift in focus to infrastructure and transportation.
The ADB Philippines Country Operations Business Plan 2020-2022 released last year had a total programmed lending worth $9.1 billion.
The ADB is maintaining its earlier projection of a 2.3-5.3% contraction for the Philippine economy this year, although Mr. Bird said GDP might settle at the lower end.
“At the moment, overall, at the end of the year, probably (2020 GDP will lean) more towards the 5% contraction,” he said at the same briefing.
The bank’s June supplement to the Asian Development Outlook 2020 gave a 3.8% contraction forecast for 2020, down from 2% growth estimate in April and also deeper than the 2-3.4% contraction projected by economic managers.
While a deeper slump is expected in the second quarter, Mr. Bird said the “worst is most likely over now” as the economic contraction might have bottomed out in May. He said the recovery might be gradual.
“The Q2 contraction will clearly be a deep one because 70% of the economy (was under lockdown) for most of April and May… It will probably be really deep, but given that it might have bottomed out, we see a gradual improvement quarter to quarter so I would see that there will be a soft rebound,” he said.
He said they projected the unemployment rate to peak at 22% in the second quarter after a 17.7% surge in April, before slowly easing to 12% in the fourth quarter of 2020 and by about 9% by the second quarter of next year.
“We don’t expect it to get back to pre-COVID levels until about 2022,” he said.
“So it’s really about consumer competence being restored, it’s about fiscal stimulus, and international trade, particularly on the export sector, he said. These three factors will help lead economic recovery in the next six to eight months,” he added.