Philippines, Japan ink PHP 65B loan deals

The Philippines has secured PHP 65.43 billion worth of loans from Japan to fund big-ticket infrastructure projects such as a four-lane bypass road in Davao City and two major flood control projects in Metro Manila.

The five financing agreements were signed by Finance Secretary Ralph G. Recto and Japan International Cooperation Agency (JICA) Country Chief Representative Baba Takashi during a high-level meeting on Monday, the Department of Finance (DoF) said in a statement.

“We are deeply grateful to the government of Japan for its confidence in our ability to turn these projects into realities. On the part of the Philippine government, we will honor this trust by ensuring that every peso, every yen, and every commitment made today translates into real improvements to the people we serve,” Mr. Recto was quoted as saying.

“Indeed, Japan is not just a friend in words but in action. And today is just one of the many proofs that our friendship is growing stronger each day through concrete efforts.”

The Davao City Bypass Construction Project (III) will receive financing worth JPY 46.34 billion (around PHP 17.67 billion). The project involves the construction of a 45.5-kilometer, four-lane bypass road that aims to improve mobility and facilitate trade in Davao City.

The Pasig-Marikina River Channel Improvement Project Phase IV (II) will get funding worth JPY 45.76 billion (around PHP 17.45 billion). The project will involve measures to control flooding in Metro Manila, such as the construction of dikes, revetments, flood gates, as well as channel dredging.

Japan will also provide JPY 14.48 billion (PHP 5.52 billion) in financing for the Cavite Industrial Area Flood Risk Management Project (II). The project also seeks to reduce flood risks in the lower San Juan River Basin and Maalimango Creek Drainage Area.

The DoF and JICA also signed agreements to provide budget support financing for climate change and health initiatives.

The Climate Change Action Program (Subprogram 2) will receive JPY 35 billion (around PHP 13.35 billion) “to boost climate adaptation, mitigation, and disaster preparedness initiatives.”

On the other hand, the Build Universal Health Care program (Subprogram 2) will receive JPY 30 billion (PHP 11.44 billion) to boost access to healthcare as well as address “gender-specific needs and climate-related health concerns.”

Mr. Recto and National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan led the Philippine delegation to the 15^th Philippines-Japan High-Level Joint Committee Meeting on Infrastructure Development and Economic Cooperation.

The meeting was aimed at accelerating the rollout of Japan-supported projects in the Philippines.

The Japanese delegation was led by Mori Masafumi, special adviser to the Japanese prime minister.

According to the DoF statement, Japan is in discussions with the Philippines to support more infrastructure projects. These include the Central Mindanao High Standard Highway, the second San Juanico Bridge Construction Project, the Flood Control and Drainage Project in Davao City, the Paranaque Spillway Project, the National Public Broadcasting Digital Terrestrial Broadcasting Network Development Project, and the Magat Dam Reconstruction Project.

“The Philippine government likewise presented prospects for future infrastructure development with a specific focus on public-private partnership (PPP) integration and official development assistance (ODA) financing as the country makes its ascent to upper middle-income status,” the DoF said.

Under the World Bank’s classification, the Philippines is still a lower middle-income country but is on track to move to middle-income status by 2026. Once the Philippines reaches upper middle-income status, the country will lose access to ODA loans that are typically long-term and have low interest rates.

According to the latest ODA portfolio review, Japan was the biggest source of loans and grants with $12.07 billion or 32.36% of the $37.29-billion total value in 2023.

At the same time, the DoF said the Japanese government reaffirmed its commitment to support the administration’s “Build Better More” program during the meeting, as well as ways to fast-track the rollout of major projects funded by Japan.

These include the Metro Manila Subway Project (Phase I), the North-South Commuter Railway Project, the Metro Rail Transit Line 3 Rehabilitation Project, the Dalton Pass East Alignment Road Project, and the Metro Manila Priority Bridges Seismic Improvement Project.

Meanwhile, the World Bank has sought input from the NEDA as it prepares for the formulation of their Poverty and Equity Assessment (PEA) report.

Mr. Balisacan met with World Bank Country Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoğlu on March 20.

The World Bank conducted a poverty assessment for the country in 2001 and 2018.

“They now seek to create an updated version in light of the country’s recent economic and poverty developments. The World Bank’s consultation with NEDA is among one of the many efforts to ensure that our inputs will be used as reference in the contents of the PEA,” the NEDA said in a Viber message. — A.R.A. Inosante