The Philippines is expected to sign in July a record-high $1-billion loan agreement (over ₱57 billion) from the World Bank to fund its sustainable agricultural transformation program, according to the Department of Agriculture (DA).

In a statement, the DA said Agriculture Secretary Francisco Tiu Laurel held a dialogue with World Bank Country Director Zafer Mustafaoğlu last month to review the deal’s progress.

Mustafaoğlu, according to the agency, reaffirmed the bank’s commitment to provide funding for the Philippine Sustainable Agricultural Transformation (PSAT) loan program.

A document published on the World Bank’s website indicated that PSAT is projected to cost $20 billion (over ₱1.1 trillion), of which the Philippine government would shoulder the $11.895 billion (over ₱683 billion) out of the $12.8975 billion (over ₱741 billion) operation cost.

With the World Bank’s $1-billion funding, this means that there would be a financing gap of $2.5 million.

The Washington-based multilateral lender disclosed last year that its board is scheduled to approve the loan on June 5 of this year.

The signing between both parties is planned for July. While the DA did not provide a specific date, it noted that it should coincide with the fourth State of the Nation Address (SONA) of President Ferdinand “Bongbong” Marcos Jr.

Once signed, PSAT would mark the Philippines’ first project under the World Bank’s Program-for-Results (PforR) financing framework.

The Department of Finance (DOF), the agency responsible for the financial resources of the government, shall borrow on behalf of the DA—the project’s implementing agency.

PSAT, which will span five years of operations, is set to launch in August.

The DA-led program aims to significantly boost the country’s agri-fishery sector through “targeted support” to agri-food systems, including climate-responsive strategies, policy reforms, diversification, and enhanced fiscal management.

“PSAT aims to improve the efficiency of government spending while ensuring sustainable outcomes by building institutional capacity and strengthening governance,” the agency said.

During Laurel’s meeting with Mustafaoğlu, they also discussed the $15-million grant funded by the United Kingdom (UK) under the Technical Assistance for Sustainable Agricultural Transformation (TASAT).

TASAT will support the DA’s implementation of PSAT by enhancing internal audits, evaluating resource use alternatives, assessing sectoral transformation, and expanding the availability of improved planting materials for high-value crops.

The supplementary funding will be endorsed by the DOF and the National Economic and Development Authority (NEDA) through the Development Budget Coordination Committee (DBCC).

The DA chief assured that the agency will continue to collaborate with the World Bank to ensure the timely execution of PSAT.

“This multiyear loan from the World Bank will provide us with the critical resources needed to advance the government’s food security agenda and promote sustainable agriculture,” said Laurel.

He added that PSAT shall bring forward key development in areas that will help uplift the lives of millions of Filipinos who depend on farming and fishery.

During the project’s concept stage review in December of last year, it received an overall rating of “substantial” under the World Bank’s systematic operations risk rating tool system (SORT).

The rating was based on certain risks the bank is concerned about, particularly with the program’s technical design, sector strategies and policies, fiduciary, and environment and social issues.

The World Bank has vowed to work closely with the Philippine government to mitigate these risks throughout the program’s implementation, alongside guiding and advising as necessary.

The Philippines was once again ranked as the World Bank’s fifth biggest borrower last year, receiving a total of $2.35 billion across four loans from the period of July 1, 2023, to June 30, 2024.