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Manila Bulletin devider Business devider World Bank's $500-M standby loan benefits PH—DOF

World Bank's $500-M standby loan benefits PH—DOF

Published Nov 21, 2023 06:40 am

At A Glance

  • The Department of Finance (DOF) said the Philippines would benefit from a new credit line approved by the World Bank that aims to help minimize the impact of major natural disasters and health crises on the domestic economy.<br>Finance Secretary Benjamin E. Diokno stated that the credit line allows the government immediate access to funds for managing shocks and protecting vulnerable sectors.<br>The World Bank's International Bank for Reconstruction and Development (IBRD) will finance the Philippines Disaster Risk Management and Climate Development Policy Loan with a Catastrophe Deferred Drawdown Option (DDO).<br>The loan sets aside $500 million that the Philippine government can draw upon in times of natural disasters and health crises.<br>The funds can be disbursed when the President declares a State of Calamity in response to such events.

The Philippines will benefit from the new credit line approved by the World Bank that aims to minimize the impact of major natural disasters and health crises on the domestic economy, the Department of Finance (DOF) said.

Finance Secretary Benjamin E. Diokno said the $500-million standby credit line provides the government with immediate access to funds, enabling better management of the costs associated with shocks and safeguarding vulnerable sectors.

Last Nov. 16, the International Bank for Reconstruction and Development (IBRD), a lending arm of the World Bank Group, approved the financing for the Philippines Disaster Risk Management and Climate Development Policy Loan with a Catastrophe Deferred Drawdown Option.

The funds, which are available for three years, can be disbursed upon the declaration of a State of Calamity by the President in response to natural disasters and health crises.

In addition, it has a revolving feature, as well as a three-year drawdown period which may be renewed up to four times, for a total maximum period of 15 years.

“The Philippines will greatly benefit from the development policy loan as one of the most disaster-prone countries in the world,” Diokno said in a statement on Tuesday, Nov. 21.

“The drawdown feature is particularly helpful as it allows the quick disbursement of funds upon the declaration of a state of calamity by the President, providing the government immediate liquidity to rapidly deliver crucial services – such as healthcare, shelter, and food, in times of emergency,” he added.

In addition to enhancing disaster response capabilities, the policy loan guarantees that the government has the necessary resources to prepare and bolster critical sectors like education and health, enabling them to withstand future crises.

To date, the total approved commitments from the IBRD to the Philippines for the fiscal year 2024 stand at $ 1.1 billion.

The IBRD, being the largest development bank globally, offers loans, guarantees, risk management products, and advisory services to middle-income and creditworthy low-income countries.

According to the 2023 World Risk Index, the Philippines keeps its status as the most vulnerable country in the world when it comes to exposure to natural disasters.

Scoring 46.86 out of 100, the Philippines ranked highest among the 193 countries assessed in the report, maintaining this top position since 2011.

With this, President Marcos has emphasized the importance of enhancing the country's disaster resilience and response capabilities.

Chapter 15 of the Philippine Development Plan (PDP) 2023-2028 is dedicated to expediting climate action and fortifying disaster resilience in the Philippines.

Related Tags

government borrowings World Bank Finance Secretary Benjamin E. Diokno
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