ADB lends $300 million to Philippines for financial inclusion program

MANILA, Philippines — The Asian Development Bank (ADB) has approved a $300-million policy-based loan for the Philippines to help expand Filipinos’ access to financial services and promote the country’s economic growth.

In a statement yesterday, the multilateral lender said the Inclusive Finance Development Program, Subprogram 3, would support the Philippine government’s reforms aimed at increasing financial inclusion by improving the financial infrastructure, including widening the digital financing ecosystem.

The policy-based loan will also support efforts to enable financial service providers, including rural banks and non-bank financial institutions to make quality products and services available through various delivery channels.

“Through this loan, ADB is expanding its partnership with the Philippines in ensuring all Filipinos will have access to financial products and services, including via digital platforms, to help improve their lives and livelihoods,” ADB senior financial sector specialist Kelly Hattel said.

“Considering the significant impact of climate change on the vulnerable segments of the population, the reform actions supported by the loan will ensure government assistance can reach people faster during crises and emergencies; help raise climate resilience of farmers and micro, small and medium-scale businesses through expanded insurance, and promote improved financial stability,” she said further.

According to the World Bank’s 2021 Global Findex Database, 51 percent of Filipinos had financial accounts in 2021, up from 34 percent in 2017.

The government aims to increase the number of Filipinos with accounts with financial institutions or mobile money providers to 70 percent by 2024. This will be aided by streamlined requirements with the Philippine Identification System (PhilSys) or the national ID.

Nearly 88 percent of the population had registered with PhilSys as of Sept. 1 this year.

The PhilSys was launched in 2020 as part of efforts to widen financial inclusion in the country.

The government has been pursuing reforms to remove barriers to access financial services and mainstream gender across its policies, including updating and providing action plans for the National Strategy for Financial Inclusion 2022 to 2028.

It has also passed and implemented key legislation on financial consumer protection under the Financial Products and Services Consumer Protection Act.

In addition, it has rules encouraging digital platforms to provide financing to agriculture value chain members in support of the Agriculture, Fisheries and Rural Development Financing Enhancement Act 2022.

The government has also implemented a regulatory sandbox framework for financial solutions to test new business models and facilitate the adoption of innovative technology approaches.

The new ADB loan builds on assistance provided by the multilateral lender under the Inclusive Finance Development Program Subprogram 1 in October 2018, and Subprogram 2 in August 2020.

Reforms under the loan are expected to complement other ADB programs in the country including the Competitive and Inclusive Agriculture Development Program Subprogram 2 approved last January.