ADB infrastructure lending expected to hit $9.1-B

The Asian Development Bank (ADB) on Thursday said loans supporting the country’s infrastructure projects could hit a record-high of $9.1 billion between 2020 and 2022.

The multilateral lender said it will invest 59.5 percent of its three-year sovereign lending program for transportation projects under the Duterte administrations Build, Build, Build” (BBB) program.

“The increased loan indicates the Philippine government’s commitment to sustainable economic growth via infrastructure projects that achieve inclusive development. While most of the loans will go to BBB to merge rural and urban areas, the rest goes to policy and social support for inclusiveness which is equally important,” Robert Dan Roces, chief economist at Security Bank, told the Daily Tribune.

Citing the provisions of the Philippines Country Operations Business Plan (COPB) 2020–2022, ADB disclosed that the remaining financial support will be earmarked to the social sector, agriculture, public sector management, and sustainable water, and urban development.

“Government expenditure relative to the BBB is programmed to be consistently at a deficit to raise public expenditure further on much-needed infra projects and this loan is actually a positive for the longer-term vision of a middle-income country by 2040,” Roces said.

He noted, however, that the government will only see positive growth if it invests the borrowed funds in high-impact and sustainable projects.

Meanwhile, ADB Country Director for the Philippines Kelly Bird said the latest Country Operations Business Plan reflects ADB’s strong commitment to supporting the Philippines’ efforts to sustain inclusive economic growth, create business and job opportunities in the regions, and widen the reach of the government’s education, health, and social protection programs.

Bird said they plan to spend at least $2.5 billion annually in 2020 and 2021 for projects and programs, matching the record high of $2.5 billion in sovereign lending to the Philippines expected by the end of the year.

In comparison, ADB’s annual lending from 2008–2018 averaged about $800 million.

For this year, half of the ADB’s assistance program went to support the first tranche of the Malolos-Clark Railway Project, one of the government’s big-ticket infrastructure projects under its BBB program.

The $2.75 billion Malolos-Clark Railway is the largest ADB project financing to date.

Contracts for civil works for the project are expected to be awarded before the end of the year and construction work may begin in the second quarter of 2020.

Meanwhile, the ADB is also arranging some additional financing this year for the Infrastructure Preparation and Innovation Facility to support detailed engineering designs and feasibility studies for the government’s priority projects under the BBB program.

ADB said the finance hike is to ensure a steady flow of investments into much-needed infrastructure projects that are viable and innovative.

By next year, transportation and infrastructure will still make up the majority of ADB’s financial support to the Philippines. This includes the South Commuter Railway Project that will connect Manila to Calamba and the EDSA Greenways Project, which will construct elevated walkways in four high-density traffic locations along EDSA.

On the other hand, the Integrated Flood Risk Management Sector Project is also being prepared for 2020 to finance up to six river basins across the country. The Metro Manila Bridges Project will construct three bridges to help ease traffic conditions in the metropolis.

ADB’s 2020 program will also include financing for the Expanded Social Assistance Project, which will build on a decade of ADB assistance to the government’s conditional cash transfer program and support for the government’s agricultural competitiveness program.