ADB OKs $300-M loan for financial services

The Asian Development Bank (ADB) has approved a $300 million loan to support the government’s effort to expand the delivery of financial services in the country.

The policy-based Inclusive Finance Development Program aims to help the Philippines develop a resilient and inclusive financial sector that can service the needs of entrepreneurs, small businesses, farmers, workers, individuals, and vulnerable households.

ADB said the project would help the government strengthen the country’s institutional and policy environment for expanding financial services, invest in support networks and infrastructure such as the national retail payment system and the new national identification system.

It would also improve the abilities of financial institutions, including rural banks, to offer financial products, particularly through the application of new technologies.

As a result, more people would be able to open bank accounts, save more at financial institutions, and have access to a wider range of other financial products and services.

“The program reflects the strong commitment of the government and ADB to expand financial inclusion in the Philippines and address the challenge of high inequality, which has persisted despite rising and sustained economic growth,” said ADB senior financial sector specialist Kelly Hattel.

“The program builds on important actions taken by the government to strengthen the policy framework for financial inclusion and the infrastructure that supports the delivery of these services. We believe this program has all the right ingredients to achieve positive gains in financial inclusion and to improve the lives of Filipinos from Tawi-Tawi to Batanes,” she said.

Public and private sector entities that provide financial services would benefit from the program, Hattel said.

Businesses, including micro, small, and medium-sized enterprises, and individuals would also benefit as they would have better access to a wider range of appropriate financial services and stronger protection against economic shocks.

ADB noted that in 2017, only 34 percent of Filipino adults had a bank account, compared with 82 percent in Thailand and 49 percent in Indonesia. As of last year, just 12 of Filipino adults borrowed from a formal financial institution. Also in 2017, and 35 percent of cities and municipalities had no banks.

Since 2000, ADB has worked with the government and other development partners to support the Philippines’ goal of increasing financial inclusion.