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Philippines loans $600 million from ADB for PPPs, reforms

Staff writer |
The Asian Development Bank (ADB) has approved loans totaling $600 million to support the Government of the Philippines’ efforts to tap more private participation for urgently needed infrastructure investment.

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The first $300 million loan is earmarked to support expanded private participation in infrastructure investment through the promotion of public-private partnership (PPP) projects. The second loan, for the same amount, supports policy changes to deepen the nonbank financial sector to unlock more long-term private funding for infrastructure.

Under-developed infrastructure is a drag on the Philippine economy, with the country ranked at 95 out of 144 countries globally for infrastructure quality, according to the World Economic Forum’s Global Competitiveness Report 2014-2015.

The government has revived the national PPP program and taken steps to boost its effectiveness. Remaining challenges include addressing right-of-way issues, tapping capital markets, designing infrastructure master plans, and completing legal and regulatory frameworks.

The PPP-oriented loan will support improved systems to assess and budget for right-of-way acquisition and resettlement of communities.

It will boost capacity and staff at the national PPP Center, and help to finalize work on proposed amendments to the build-operate-transfer law which are critical for sustaining the PPP program. The government has so far awarded ten PPP projects with total investments of $4.2 billion, including the ADB-assisted Mactan Cebu International Airport Passenger Terminal.

The second loan supports the development of long-term finance in the Philippines, where capital markets are comparatively small and illiquid, and provide limited intermediation to the private sector and to infrastructure finance.

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