The Department of Finance (DOF) has called upon international financial institutions to bolster their response capabilities and undertake comprehensive reforms amid the global economic recovery.

Finance Secretary Benjamin E. Diokno said the combined impact of the pandemic, its aftermath, and the Russia-Ukraine conflict has significantly set back the global advancement towards inclusive and sustainable growth.

“Global growth is recovering,” Diokno said at the 2023 Asian Infrastructure Investment Bank (AIIB) Annual Meeting in Sharm El Sheikh, Egypt.

“But the recovery remains fragile in the face of the lingering impact of the pandemic, geopolitical tensions, extreme weather conditions, humanitarian disasters, debt vulnerabilities, and elevated inflation,” he added.

Diokno emphasized that these challenges have a ripple effect on important areas such as food security, healthcare, education, environment, global trade, and peace and security.

In response to these global challenges, Diokno stressed the need for Multilateral Development Banks (MDBs), such as the AIIB, World Bank, and Asian Development Bank, to step up their efforts and make necessary reforms.

MDBs are a group of countries collaborating to establish special banks. These banks provide low-interest loans to developing countries for significant projects that contribute to their growth, such as infrastructure development and access to clean water.

As for the AIIB, Diokno expressed the Philippines' agreement with the bank's assessment of the short- to medium-term needs of its members in tackling the economic challenges while focusing on sustainable economic growth.

“This is consistent with the Philippines’ priorities as laid out in the Marcos Jr. administration’s 8-point Socioeconomic Agenda, which aims to propel the country to upper middle-income status and bring down the poverty incidence to single digits by 2028,” Diokno said.

The AIIB has been responsive to the needs of its members and has established the Crisis Recovery Facility to swiftly support pandemic-related requirements, including emergency healthcare, critical infrastructure maintenance, and financing for post-pandemic recovery measures.

To assist its pandemic and post-pandemic recovery efforts, the Philippines has secured loan commitments amounting to $3.4 billion from the AIIB for completed, ongoing, and future programs and projects.

Diokno commended the AIIB's collaborative efforts with other MDBs in developing co-financing operations, particularly through policy-based loans.

To effectively fulfill its role, Diokno said the AIIB should implement its Corporate Strategy in a flexible manner while staying true to its main objective of financing infrastructure projects.

“The Philippines welcomes the extension of the use of policy-based co-financing to further enhance the Bank’s ability to respond to client demands amid current and emerging crises,” Diokno said.

“In addition, we encourage the Bank to make available more grant facilities to aid in the implementation of programs/projects and enhance the concessionality of its terms,” he added.

In order to ensure effective monitoring of development cooperation projects, Diokno urged the AIIB to increase its presence in member countries.

“This will enable the AIIB to maintain an effective client-demand-driven approach,” he said.