ADB hikes financing for PH infra projects

Total of $4 B for 2018 to 2020

The Asian Development Bank (ADB) has increased available funding for the Philippines’ infrastructure-related investments for the next three years on the back of the government’s massive infrastructure program.

In a statement, the Department of Finance (DOF) said that from 34 percent actual share of infrastructure lending from ADB between 2011 and 2016, the figure will rise to 48 percent for the next three years.

According to the finance department, the increase in the share is in recognition of the government’s strong resolve to bridge the country’s massive infrastructure gap.

From 2011 to last year, actual lending approvals by the ADB to the Philippines under the Country Operations Business Plan (COBP) totalled $1.45 billion for sustainable and climate resilient infrastructure.

Another financing given by the Manila-based lender amounting to $2.57 billion for good governance and finance, as well as $300 million for employment and education.

Meanwhile, for the new COBP covering 2018 to 2020, the bank will provide $1.9 billion for sustainable infrastructure and development, $1.2 billion for regional development and finance and $900 million for human development, for a total of $4.0 billion.

On top of these available funds under the COBP, sovereign loans offered by the multilateral institution for infrastructure-related projects account for almost 40 percent of its $3.68-billion Philippine Sovereign Lending Program for 2018 to 2020.

The ADB, led by its president Takehiko Nakao, also updated Finance Secretary Carlos G. Dominguez III on the bank’s four new lending programs for the Philippines this year amounting to $1.08 billion, in a recent meeting in Manila.

On behalf of the Philippine government, Dominguez thanked the ADB for continuing to extend its assistance to the Philippines, especially for its “Build, Build, Build” infrastructure program and for approving the new loans.

The new loans comprise of Encouraging Investment through Capital Market Reforms Subprogram 2 ($300 million), Improving Growth Corridors in the Mindanao Road Sector ($380 million), the Facilitating Youth School-to-Work Transition ($300 million) and the establishment of an Infrastructure Preparation and Innovation Facility (IPIF) ($100 million).

Dominguez, who currently chairs the ADB Board of Governors, cited, for one, the IPIF, which will support initiatives of the Department of Transportation (DOTr) and Department of Public Works and Highways (DPWH) in conducting pre-investment activities for public infra projects.

The IPIF will include support for feasibility studies, detailed engineering design, preparation of bid documents, due diligence review and other activities.

In that meeting, the ADB, in turn, expressed its support for the Duterte administration’s “hybrid” approach to PPP infrastructure projects, in which the government finances the initial construction phase of the projects to speed up their implementation and bids out the other stages, usually the operation and maintenance, to the private sector.

“It’s very positive that the government is very serious about the ‘Build, Build, Build,’” said ADB principal country specialist Joven Balbosa during the meeting.

The Duterte administration is planning to spend R8.4 trillion on its “Build, Build, Build” program to rapidly modernize the country’s infrastructure over the medium term.

In the meeting, the ADB also expressed its support for the government’s tax reform initiatives to help raise revenues for its “Build, Build, Build” and social protection programs.