The Department of Finance (DOF) of the Philippines and Agence Française de Développement (AFD; French Development Agency) have signed two credit facility agreements worth EUR 250 million (PHP 14 billion or USD 294 million) combined, to support two major policy reforms of the Philippine government that aim to expand financial services to vulnerable sectors and increase private sector participation in infrastructure projects. Both programs, co-financed with the Asian Development Bank (ADB), also aim to support the Philippine economy and strengthen its resilience in the post-Covid-19 period.
Finance Secretary Carlos Dominguez III and French Ambassador to the Philippines and to Micronesia Nicolas Galey signed the loan agreements for the Inclusive Finance Development Program (IFDP) worth EUR 100 million (USD 118 million) and the Expanding Private Participation in Infrastructure Program (EPPIP) worth EUR 150 million (USD 177 million) on June 9. Secretary Dominguez pointed out that President Duterte has put his signature project “Build, Build, Build” back on the fast track amid the COVID-19 pandemic, given that infrastructure investments have a high multiplier effect on the economy.
The EUR 100 million policy-based loan for the first sub-program of the IFDP will help fund initiatives of the Philippine government to expand financial services across the country, especially among small entrepreneurs, farmers and fisherfolk, women and other vulnerable sectors. The AFD loan for the Program will also help the government consolidate its institutional and regulatory environment, improve its financial infrastructure, and strengthen the capacities of financial service providers, supervisors and regulatory bodies in line with its goal of building an inclusive and resilient financial sector.
The EUR 150 million loan for the EPPIP aims to heighten private sector participation in infrastructure financing in line with the government’s goal of fast-tracking the implementation of its “Build, Build, Build” program to jumpstart the economy and create more jobs. This policy-based loan will complement the government’s funding plan to secure financial resources for critical programs, such as the “Build, Build, Build,” as it grapples with market uncertainties and volatility, as well as increased social expenses and reduced fiscal resources amid the economic crisis triggered by the Covid-19 pandemic.
Three main outputs are targeted through the EPPIP program in order to develop sustainable public-private partnership (PPP) projects: strengthen the government’s support to PPPs; expand and efficiently implement a pipeline of PPP projects and strengthen the legal and regulatory framework for PPPs.
Beside this policy loan, discussions are underway to secure additional funding from the European Union’s Asian Investment Facility in the form of a grant to be channeled through the Philippines’ PPP Center. The proposed grant aims to facilitate and encourage the development of sustainable PPP projects at the local level, both in terms of promoting resilient infrastructure and in the mitigation of greenhouse gas emissions. Stimulating the development of health infrastructure will be a key component of the forthcoming European Union support.
(Source: Department of Finance, Philippines)
