ADB commits $300-M loan for financial services

The Asian Development Bank (ADB) committed to government’s program aimed at expanding Filipinos’ access to financial services, especially in unserved and underserved areas in the country.

The Manila-based lender announced yesterday the approval of a $300-million policy-based loan to the Philippines under the bank’s inclusive finance development program (subprogram 2).

ADB said the fresh financing should strengthen the institutional and policy environment for financial inclusion in the country, improve financial infrastructure, and increase the capacity as well as reach of service providers, especially rural banks and non-bank financial institutions.

“The Philippine government’s anti-poverty strategy aims to equip Filipinos in the bottom 40 percent of the income strata with education, skills, and livelihood assistance so they can break away from a vicious cycle of intergenerational poverty,” Ahmed M. Saeed, ADB vice-president said.

Ensuring all Filipinos are part of the financial system is important to this approach, Saeed said

Kelly Hattel, ADB senior financial sector specialist for Southeast Asia, meanwhile, said the implementation of digital finance will significantly improve poor Filipinos’ access to financial services and products as a way to lift their incomes and well-being.

According to the 2017 Global Findex Survey, the Philippines ranked among the lowest in Southeast Asia on almost all financial inclusion indicators.

Only 34 percent of Filipino adults have an account at a formal financial institution, compared with 49 percent in Indonesia, 82 percent in Thailand, and 85 percent in Malaysia.

“The Philippines can expand financial access to poor Filipinos through credit, savings, insurance, pensions, and remittances,” ADB said.

Reforms supported by the loan are being implemented by the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, the Philippine Guarantee Corp. (Philguarantee), the Philippine Statistics Authority, the Department of Justice, and the Insurance Commission.