THE Philippine government has secured a $400-million loan from the Asian Development Bank (ADB) that will strengthen the domestic capital market and boost infrastructure financing efforts.
In a statement on Tuesday, the Manila-based multilateral lender said it approved the $400-million policy-based loan, which will “address key constraints that have limited the growth of domestic capital markets, especially government and corporate bond markets.”
“It also focuses on building a vibrant domestic institutional investor base that will become a sustainable source of long-tenor infrastructure finance. By boosting infrastructure finance, the capital market development program will support higher public infrastructure spending for years to come,” the ADB said.
The government is banking on the P8-trillion “Build, Build, Build” program to help the economy bounce back from the coronavirus crisis. It had targeted to boost infrastructure spending to about 7% of gross domestic product (GDP) by 2022, up from 5.4% in 2019. State spending on infrastructure projects averaged 2.8% of GDP in the past three decades.
This month, the economic team projected infrastructure spending to account for 3.8% of GDP in 2020, due to budget constraints.
“Resilient and vibrant capital markets are key to achieving economic development, growth, and poverty reduction as set out in the government’s long-term strategy AmBisyon Natin 2040. By developing domestic capital markets, funds are generated to support higher levels of long-term investments and sustainable quality job creation,” ADB Vice-President Ahmed M. Saeed said in the statement.
The ADB said the capital market development program had backed reforms on the domestic bond market and modernization of debt trading infrastructure.
The latest loan approval brought ADB’s total lending to the Philippines to $2.1 billion so far this year, after a $1.5-billion loan extended for the government’s pandemic response and $200 million in additional funding for the social protection program. — BML