EconomyForex

ADB approves $500-million standby financing for local calamities

2 Mins read
PIA.GOV.PH

THE Asian Development Bank (ADB) said it approved Thursday a $500-million (P24.3 billion) standby line providing the Philippines quick access to emergency funds in the event of calamities.

The bank said access to the funds under the Disaster Resilience Improvement Program is triggered by a state of calamity.

The ADB said the Philippines is disaster-prone, costing its economy between 0.7% and 1% of gross domestic product (GDP) every year. This includes the estimated P43.5 billion in potential revenue lost due to earthquakes and P133 billion from typhoons.

“The Philippines has been hit by several major disasters in recent years, including Typhoon Haiyan (Yolanda) in 2013, the Taal Volcano eruption in January 2020, and the ongoing coronavirus disease (COVID-19) pandemic,” ADB Vice-President Ahmed M. Saeed was quoted as saying.

“This new contingent disaster financing instrument will help the government manage fiscal risks posed by those shocks and lessen the economic and social impacts on people’s livelihoods and the country’s economy,” Mr. Saeed added.

Aside from the immediate assistance, the ADB said the program can also help ease financial planning by making available a predictable source of funds for its post-disaster spending.

Benita Ainabe, financial sector specialist for Southeast Asia at the ADB, said the program will support the government’s policy reforms ensuring quick access to financing in case of disasters, and help the country improve its overall response to disasters and pandemics.

The bank said the program will likewise support a pilot disaster insurance system to be implemented in selected cities to upgrade their fiscal resilience. It said the scheme will be the first in Southeast Asia.

The ADB supports pending legislation that will create a new Department of Disaster Resilience, merging the offices of the National Disaster Risk Reduction and Management Council and the Office of Civil Defense, it said.

The proposed law is expected to expedite disaster response by minimizing bureaucracy.

It also supports reforms requiring local governments to include climate change adaptation and disaster risk reduction in their comprehensive development plans.

It will also help them create better medium-term plans for pandemic preparedness, it said.

“Nearly three-fourths of the country’s population are vulnerable to multiple natural hazards, and such disasters worsen poverty in typhoon-prone provinces along the country’s eastern seaboard,” it said.

Including the recently-approved facility, the ADB has lent the Philippines $3.834 billion so far this year, as the bank ramps up its support for the government’s coronavirus disease 2019 (COVID-19) pandemic containment effort.

In July, the bank said it will extend a total of $4.2 billion in financing to the Philippines this year, its biggest annual commitment to the country so far. The previous record was $2.5 billion in 2019.

Next year, ADB’s lending program for the Philippines was set at $4.118 billion, plus a standby loan of $1 billion for the Bataan-Cavite Bridge project.

The government plans to borrow P3 trillion overall this year to plug its budget deficit, which is expected to hit 9.6% of GDP.

As of the end of August, the government has secured $8.83 billion in loans and grants from external sources for pandemic-related spending. — Beatrice M. Laforga





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