The World Bank has approved a fresh loan to the Philippines that aims to ensure the local financial sector’s stability as well as support the nation’s economic recovery.
In a statement, the World Bank announced on Friday, June 25, that a $400 million development policy loan (DPL) was approved to assist the government in achieving a resilient financial sector and help ensure a more inclusive recovery from the COIVD-19 pandemic.
According to the Washington-based lender, the loan should strengthen financial sector stability, integrity, and resilience. It also aims to expand financial inclusion for individuals and companies.
Moreover, the financing, equivalent to P19.4 billion, seeks to promote disaster risk finance that protects national budgets and businesses as well as the lives and livelihoods of families from the impacts of disasters.
Ndiame Diop, World Bank country director for Philippines, said they welcome the country’s commitment to reforms, stressing that the pandemic’s impact on the economy has highlighted the importance of a strong and inclusive financial sector.
“The health crisis, the economic impact of containment measures, and the global slowdown have increased the urgency for reforms, not only to ensure financial sector stability or financial inclusion, but also to support economic recovery,” Diop said.
“In addition to providing timely financial resources to support government financing needs, the financial sector reforms supported under this loan will help meet the immediate needs of individuals and micro, small and medium enterprises under strain,” he added.
The DPL provides quick-disbursing assistance to countries undertaking reforms, which typically support policy and institutional changes needed to create an environment conducive to sustained and equitable growth.
Among the policy reforms supported by the DPL are measures addressing legal, regulatory, and supervisory issues to improve prudential supervision of banks by the Bangko Sentral ng Pilipinas.
To expand access to finance by individuals and firms, the DPL also supports reforms that promote innovative financial services and increase the reliability of credit information.
“Expanding financial inclusion through digital transformation will help individuals and firms increase access to essential financial services in economic recovery,” Diop said.
“The use of financial technology to improve access to finance by small and medium enterprises will help address urgent liquidity problems, thus limiting closures and bankruptcies and preventing widespread layoffs,” he added.