The Asian Development Bank (ADB) has granted a $300 million policy-based loan to the Philippines government to strengthen the institutional and policy environment and expand access to financial services for Filipinos, particularly those in vulnerable populations. The loan falls under ADB’s Inclusive Finance Development Program, Subprogram 3, which focuses on improving the country’s financial infrastructure and expanding the digital financing ecosystem.
The loan also aims to enhance the capabilities of financial service providers, including rural banks and non-bank institutions, to offer high-quality products and services through various delivery channels. ADB Senior Financial Sector Specialist Kelly Hattel emphasized that the loan aims to ensure that all Filipinos have access to financial products and services, including digital platforms, to improve their lives and livelihoods.
In addition to financial inclusion, the loan’s reform actions will help address the impact of climate change on vulnerable populations. It aims to facilitate faster government assistance during crises and emergencies and increase the climate resilience of farmers and micro, small, and medium-scale businesses through expanded insurance. The loan will also contribute to improved financial stability.
According to the 2021 Global Findex Database, the percentage of Filipino adults with a financial account has increased from 34% in 2017 to 51% in 2021. The COVID-19 pandemic lockdowns played a significant role in nearly doubling the number of financial accounts for the bottom 40% of the population, reaching 34% in 2021. The government aims to raise the account ownership rate to 70% by 2024, aided by streamlined requirements with the Philippine Identification System (PhilSys). As of September 1, 2023, nearly 88% of the population has been registered under PhilSys.
The government has been implementing key reforms to remove barriers to financial services access and promote gender equality. These include updating the National Strategy for Financial Inclusion 2022-2028 and enforcing legislation on financial consumer protection and digital financing for agriculture value chain members. The government has also created a regulatory sandbox framework to test new financial solutions and adopt innovative technological approaches.
This new loan builds on previous ADB assistance provided through the Inclusive Finance Development Program Subprogram 1 and Subprogram 2 in 2018 and 2020, respectively. The reforms supported by the loan will complement other ADB programs in the Philippines, such as the Competitive and Inclusive Agriculture Development Program Subprogram 2 approved in January 2023.
ADB, established in 1966, is dedicated to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, with a focus on eradicating extreme poverty. It is owned by 68 members, with 49 from the region.
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