The World Bank approved a fresh $400-million loan for the Philippines which will be used to support financial sector reforms as the country recovers from the pandemic.
The First Financial Sector Reform Development Policy Financing loan is the first of two World Bank programs aimed at strengthening the country’s financial sector stability, and expanding financial inclusion for firms and individuals. It also aims to promote disaster risk finance that will ultimately benefit the national budget, businesses and lives.
“In addition to providing timely financial resources to support government financing needs, the financial sector reforms supported under this loan will help meet the immediate needs of individuals and micro, small and medium enterprises under strain,” Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines, and Thailand, said in a statement.
Mr. Diop said a strong and inclusive financial sector will be a crucial support to economic recovery from the pandemic.
“The health crisis, the economic impact of containment measures, and the global slowdown have increased the urgency for reforms, not only to ensure financial sector stability or financial inclusion, but also to support economic recovery and minimize the impact of future shocks particularly on poor and vulnerable segments of the population,” he said.
The World Bank loan will support reforms to improve the capacity of Bangko Sentral ng Pilipinas in supervising lenders; bring local insurance laws in line with global standards; and ensure long-term availability of loans for small businesses.
It will also back programs to boost financial inclusion and digitalization of financial services.
“The use of financial technology to improve access to finance by small and medium enterprises will help address urgent liquidity problems, thus limiting closures and bankruptcies and preventing widespread layoffs,” Mr. Diop said.
Meanwhile, the loan will also be utilized to support the establishment of public-private partnerships to provide inclusive access to catastrophe-risk insurance for businesses as they adapt to the impact of climate change-induced disasters.
The World Bank has lent the government $3.67 billion as of April 8, based on data from the Department of Finance. — L.W.T.Noble