Philippines and ADB

ADB's Work in the Philippines

The Philippines has maintained its position as one of the fastest-growing economies in Southeast Asia in recent years, with average annual gross domestic product growth at 6.3% since 2010 against 4.5% in 2000 to 2009.

ADB has been a strong partner in the development of the Philippines, the bank’s host country, and is one of its largest sources of official development assistance, with average annual lending of $952 million over the past 10 years to 2019.

Ortigas Center is a financial and central business district located at the boundaries of Pasig, Mandaluyong, and Quezon City in the Philippines.

The Philippine government wants to attain upper middle-income status in 2020, rooted on inclusive growth, a socially responsible society, and a globally competitive economy. In its Philippine Development Plan 2017–2022, the government placed emphasis on addressing underinvestment in infrastructure, tackling poverty and income inequality, and reducing regional growth disparities.

Since 1966, ADB has committed public sector loans, grants, and technical assistance totaling $21.9 billion to the Philippines.

The partnership strategy also promotes inclusive growth and increases focus on development in Visayas and Mindanao; targets assistance to the bottom 40% of the population through increased access to quality secondary education, labor market programs, financial inclusion, universal health care, and improved social protection; and includes crosscutting support to promote private sector participation, gender equality, good governance, environmentally sustainable development, regional integration, and knowledge generation and sharing.

In 2019, ADB approved its single-biggest project financing in Asia to date, the Malolos-Clark Railway Project, which will use cutting-edge technology to construct a 53-kilometer section of a new railway line connecting Metro Manila to the regional business center in Clark, north of Manila. The new line, part of the North-South Commuter Railway system, will provide affordable, reliable, and safe public transport; reduce greenhouse gas emissions; and cut commuting time by half, to about 1 hour.

New Clark City demonstrates how PPP can help build Asia's massive infrastructure needs

The $200 million additional financing for the Infrastructure Preparation and Innovation Facility, also approved in 2019, will help the government prepare several transformative projects under its BBB program. Such projects include longspan bridges, railways, roads, and flood protection facilities.

ADB approved a $300 million resultsbased loan for the Secondary Education Support Program in 2019. The program supports government efforts to achieve inclusive growth by improving access to high-quality secondary education that responds to labor market needs. This investment is complemented by a $400 million policy-based loan, approved in December 2019, for subprogram 2 of the Facilitating Youth School-to-Work Transition Program, which aims to improve the employability of Filipino youth through labor market programs and easier access to on-the-job training schemes.

Electronics students at the Laguna Polytechnic State University (LSPU) in San Pablo City, Laguna, Philippines

In November 2019, ADB approved a $300 million policy-based loan for the Local Governance Reform Program to empower and equip local government units across the country to deliver services aligned with local preferences, improve their revenue-raising capacities, and lower the cost of doing business for the private sector.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of longterm cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in the Philippines in 1972. Since then, sovereign cofinancing commitments for the Philippines have amounted to $6.38 billion for 59 investment projects and $99.99 million for 65 technical assistance projects. Nonsovereign cofinancing for the Philippines has amounted to $961.12 million for 10 investment projects and $1.13 million for three technical assistance projects.

In 2019, the Philippines received $2.01 billion in loan cofinancing from the Japan International Cooperation Agency for the Malolos-Clark Railway–Tranche 1.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Government spending on infrastructure reached over 5% of gross domestic product in 2018 from less than 3% average in previous decades, and the government aims to further raise this to about 7% by 2022. Given the wide array of infrastructure projects under the BBB program, government agencies’ capacity to roll out such large and complex plans will need to be further strengthened. ADB is supporting the government in this area through loans, grants, and technical assistance. The bank is working closely with the government to enhance the technical and institutional capacities of national and local agencies and staff; improve interagency coordination; and strengthen partnerships among the government, private sector, and development partners.

Future Directions

ADB’s future assistance to the Philippines will focus on larger investments in fewer sectors, to closely align with the government’s strategic priorities. The bank has rebalanced its financing program to infrastructure in support of the government’s BBB program, local economic development, and social investments to help the bottom 40% of the population.

ADB is preparing the EDSA Greenways Project, which will construct elevated walkways in four high-density traffic locations along the EDSA highway in Metro Manila. It is also preparing the Integrated Flood Risk Management Sector Project to improve flood protection systems and infrastructure in six river basins across the Philippines.

Apart from infrastructure support, lending operations will be devoted to social services, agriculture, public sector management, tourism development, and sustainable water and urban development.

A rendering of the Malolos–Clark Railway Project. Photo courtesy of JICA.