ASIAN DEVELOPMENT BANK APPROVES $300 MILLION LOAN TO ADVANCE FINANCIAL INCLUSION IN THE PHILIPPINES

The Asian Development Bank (ADB) has greenlit a $300 million policy-based loan to assist the Philippine government in fortifying the institutional and policy framework, fostering an environment conducive to expanding access to financial services for all Filipinos, especially the vulnerable segments of the population. The loan, part of ADB’s Inclusive Finance Development Program, Subprogram 3, aims to promote economic growth and resilience.

The program supports a range of reforms to enhance financial inclusion by bolstering the country’s financial infrastructure and widening the digital financing ecosystem. Additionally, it seeks to build the capacity of financial service providers, including rural banks and nonbank financial institutions, to offer accessible and quality products and services through various delivery channels.

ADB Senior Financial Sector Specialist Kelly Hattel highlighted the significance of the loan, stating, “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.”

The reforms supported by the loan align with the government’s objectives to improve financial stability, expedite government assistance during crises, enhance climate resilience for farmers and micro, small, and medium-scale businesses through expanded insurance, and facilitate a more efficient response to emergencies.

The 2021 Global Findex Database indicates positive trends in financial inclusion in the Philippines. The percentage of Filipino adults with accounts at financial institutions or mobile money providers increased from 34% in 2017 to 51% in 2021. Accelerated by lockdowns during the COVID-19 pandemic, the country nearly doubled the number of accounts for the bottom 40% of the population by income, rising from 18% in 2017 to 34% in 2021.

The government’s ambition is to elevate the percentage of Filipinos with accounts at financial institutions or mobile money providers to 70% by 2024, leveraging streamlined requirements with the Philippine Identification System (PhilSys). As of September 1, 2023, almost 88% of the population has been registered under PhilSys, an initiative launched in 2020 amid the COVID-19 pandemic to expand financial inclusion.

Key reforms implemented by the government to eliminate barriers to financial services access and mainstream gender in policies include updating the National Strategy for Financial Inclusion 2022–2028, enacting the Financial Products and Services Consumer Protection Act, and establishing rules to encourage digital platforms to provide financing to agriculture value chain members under the Agriculture, Fisheries, and Rural Development Financing Enhancement Act 2022.

The loan builds on ADB’s prior assistance provided under the Inclusive Finance Development Program Subprogram 1 and Subprogram 2 in October 2018 and August 2020, respectively. The ongoing reforms will complement other ADB programs in the Philippines, such as the Competitive and Inclusive Agriculture Development Program Subprogram 2 approved in January 2023.

ADB remains committed to fostering a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, working towards eradicating extreme poverty. Established in 1966, ADB is owned by 68 members, with 49 from the region.