ADB okays $400-M loan for PH capital market devt

THE Asian Development Bank (ADB) has approved a $400 million policy-based loan to support the Philippine government’s efforts to strengthen its domestic capital markets.

In a statement on Tuesday, the Manila-based multilateral lender said the loan brought the bank’s total lending to the country so far to $2.1 billion this year.

The loan — called the “Support to Capital Market-Generated Infrastructure Financing Program, subprogram 1” — aims to address key constraints that limited the growth of local capital markets, especially government and corporate bond markets.

The program also aims to build a vibrant domestic institutional investor base that would become a sustainable source of long-tenor infrastructure finance.

By boosting infrastructure finance, the ADB said, the capital market development program would support higher public infrastructure spending in the next few years.

“Resilient and vibrant capital markets are key to achieving economic development, growth and poverty reduction as set out in the government’s long- term strategy AmBisyon Natin 2040,” ADB Vice President Ahmed Saeed said in the statement.

The National Economic and Development Authority has described AmBisyon Natin 2040 as representing “the collective longterm vision and aspirations of the Filipino people for themselves and for the country in the next 25 years.”

“By developing domestic capital markets, funds are generated to support higher levels of long-term investments and sustainable quality job creation,” Saaed said.

“The program approved [on Tuesday] will support the Philippine government’s development goals, including its response to the Covid-19 pandemic,” he added, referring to the coronavirus disease 2019 crisis that claimed the lives of more than 346,000 people worldwide and prompted governments to impose economy-distrupting lockdowns.

The program has supported various reforms in recent years, according to the ADB. These include the launch and implementation of the first government-led, comprehensive domestic bond market development plan.

The financial institution noted that the Philippines also modernized its government debt trading infrastructure and provided a reliable yield curve to support the pricing of private sector debt instruments.

Other reforms helped build an enabling environment for private sector debt instruments, it said.

The latest assistance builds on decades of the ADB’s support to financial sector reforms in the country, including strengthening governance and investor protection measures during the 1997 Asian financial crisis.