World Bank approves $600-M loan for PH's financial sector, economic recovery

First Published by CNN Philippines on Jan 31, 2023, 4:57:26 PM

Metro Manila (CNN Philippines, January 31) — The Philippines is set to secure a $600-million fresh loan from the World Bank.

In a statement on Tuesday, the lender said proceeds are eyed to bolster the country's economic rebound from the pandemic.

The multimillion-dollar financing would cover three policy reform areas: strengthening the financial sector, expanding financial inclusion, and improving disaster risk finance.

"Policy actions that strengthen the stability of the financial sector – including banks and insurance companies – will help Filipino families, businesses, and investors withstand financial shocks and enhance their resilience by ensuring that problems in these financial institutions are detected at an early stage without severe disruptions to the economy," said Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines, and Thailand.

Financial inclusion in the Philippines remains low, with only 51% of Filipinos aged 15 and above having a transaction account with a financial institution, the World Bank said.

Diop said improving this segment could accelerate poverty reduction while pushing the local economy out of the global health crisis' economic slowdown.

"Filipinos who have accounts with financial institutions like banks will have opportunities to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health of their children, manage risks, and weather financial shocks, which can improve the overall quality of their lives," the official said.

To improve access to finance, the loan program would support reforms promoting innovative financial services by harnessing digital technologies and building consumer trust and credit information infrastructure.

The loan also aims to cover the development of the catastrophe insurance market, with offerings designed to protect households, assets, and businesses against natural disasters like floods and earthquakes.

To boost financial sector resilience to climate-related shocks, the program would also support integrating climate and environmental risks in financial institutions' risk management frameworks and mobilizing private sector financing for green investments.