MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $250 million loan to restore the Philippines to a long-term sustainable growth path through greater fiscal discipline and an improved investment climate.
The ADB's Board of Directors today approved the Development Policy Support Program (DPSP) Subprogram 3 to help the country achieve higher investment inflows by improving its macroeconomic and fiscal management, strengthening public financial management, reducing corruption and transaction costs of doing business, and scaling up its social safety net programs.
Like many other developing countries, the Philippines' economic growth momentum was slowed down by the global economic crisis that plunged the country's major trading partners into severe recession.
"The subprogram is designed to support the country's key development efforts at a time of a significant global economic downturn," said Kelly Bird, Senior Economist at ADB's Southeast Asia Department.
Aside from the macroeconomic policy adjustments, the subprogram also increases its focus on institutionalizing governance programs, including the anticorruption revenue programs at the Bureau of Internal Revenue, the investment climate, and the social sector.
The subprogram 3 also has a post-program monitoring framework, creating the basis for continuous policy dialogue and engagement with the Government over the next 12 months.
The loan is payable in 15 years, with a grace period of three years. The interest rate is determined in accordance with ADB's LIBOR-based lending facility.
ADB will also provide $800,000 in technical assistance grant to help support key public financial management reforms by the Department of Budget and Management, Bureau of Treasury, and the Department of Finance.
The DPSP3 is a joint effort of ADB, the Government of Japan through Japan International Cooperation Agency, and other development partners to support a common reform agenda with the Government of the Philippines. The DPSP subprogram 1 was implemented in 2006 and 2007, while the subprogram 2 was undertaken in 2008.
In addition to the ADB funding, the Government of Japan will provide parallel cofinancing of $100 million to $150 million to the subprogram.