ADB shifts Philippines lending focus to transport infrastructure

MANILA, Philippines — The Asian Development Bank (ADB) is rebalancing its financial assistance to the Philippines to cover more transport infrastructure projects under its new six-year country partnership strategy (CPS).

The bank’s board of directors approved on Sept. 19 the CPS for 2018 to 2023 under which ADB’s programs and projects in the country would be focused on three priority areas: accelerating infrastructure and long-term investments, promoting local economic development in Mindanao and Visayas, and investing in people.

Specifically, this entails lending of an estimated $7.8 billion ($1.9 billion annually) from 2018 to 2021, the highest level in any four-year period for the Philippines. Funding for transportation projects would make up 47 percent of lending operations while public sector management (PSM) which provides for policy support would comprise 21 percent of ADB operations under the new CPS. Support to improving the country’s finance sector would make up 13 percent of operations.

Prioritization under the new CPS contrasts with that of the previous CPS covering lending approvals from 2011 to 2017 which were more focused on public sector management (54 percent of operations), education (15 percent) and finance (12 percent).

Big-ticket infrastructure transport projects lined up for possible funding under the new CPS include the following: Malolos-Clark Railway, North-South Commuter Rail, Metro Manila bridges, Bataan-Cavite Long-Span bridge, and EDSA Greenways projects.

ADB would also support capital market development, private sector participation, and innovations such as green finance solutions to create more options for long-term infrastructure finance.

ADB country director for the Philippines Kelly Bird said the rebalancing of the bank’s financing strategies for the Philippines is meant to be aligned with the administration’s aggressive push for infrastructure development. The bank usually aligns its CPS with the needs and priorities of the current administration.

“This provides the opportunity for ADB to work closely with the government to support its Build Build Build program,” he said during a media roundtable yesterday.

“ADB is fully supportive of and fully-committed to that program of the government and that’s why we are shifting significant resources to that program,” he added.

ADB principal country specialist Joven Balbosa said the second highest priority in the CPS – public sector management – would support the

increased funding for infrastructure as the bank can help the government come up with quality projects and utilize resources well.

“With PSM support, we are also taking about project preparation, budgeting, expenditure management (for projects). Those are the foundations of the new directions in expenditure as the government props up infrastructure spending,” he said.

The new strategy has also been designed to withstand the possible shift to a federal form of government within the six-year plan.

Bird said the strategies have been identified to be long-term investments that can contribute to the attainment of inclusive growth with or without the shift to a new form of government.

“The CPS is designed to support (the government) with or without (federalism). If it does move to that, it adjustments can be made through the country operating business plan. It’s important with our without federalism and that’s the way it is being designed. We are focusing on a long-term economic development,” he said.

Balbosa said the CPS contains strategies for strengthening local governance and fostering cooperation among local government units.

“It’s (federalism) is a political decision, it’s up to the country. But what is fundamental is local governance whatever state you have,” he said. “It’s not only about leadership but also about building a set of civil servants and experts and professionals that is needed to sustain and support the state. One of our projects on local development is inter-local government cooperation.”

Under the new CPS, ADB would put greater focus on local economic development, especially in Visayas and Mindanao, to address wide income disparities across regions and mitigate the impact of natural disasters. It would assist local governments in policy reforms, capacity development, building livable cities, and disaster risk management and in tapping private capital for their infrastructure needs.

Balbosa said Investing in the poor is necessary to address income inequalities as such, the CPS would support policies and programs that seek to strengthen people’s capacities to gain better jobs and participate fully in society. These include increasing access to quality secondary education, jobs market for the youth and unemployed, financial services, social protection, and finding innovative ways to deliver social services.

The new CPS incorporates gender equality, private sector development, governance, and environmental sustainability across the three priority areas mentioned earlier.

The strategy is aligned with the government’s long-term development plan AmBisyon Natin (Our Ambition) 2040 as well as the medium-term Philippine Development Plan. It is also the first partnership strategy to be developed in line with ADB’s Strategy 2030 approved in July.

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