The Market Monitor Minding the Nation's Business
By Riza Lozada
The Asian Development Bank (ADB) is increasing its concessional loans to the country to $3 billion between 2016 and 2018, or about a 66-percent hike from $1.8 billion from 2015 to 2017, but the government’s low loan absorption is a major concern in the country benefiting from the hiked funding.
A check on the the status report from the National Economic and Development Authority (Neda) website showed ADB-funded projects are being held up by bureaucratuic requirements.
The Angat Water Transmission Improvement Project (Awtip) in Bulacan, for instance, involved only a portion of the program and would need another special authority from the President to contract another loan package from ADB, according to the Neda status report as of last June.
The inability of the government to use up loan is related to its underspending problem such as coming up with counterpart funds for ADB-funded projects. Before the ADB releases the loan amount for a project, the government is required to come up with a counterpart financing which are sourced locally.
The Awtip, with counterpart agency the Metropolitan Waterworks and Sewerage System (MWSS), was still awaiting special authority of the President and the Monetary Board for approval in principle of loan negotiations for the total project cost of $120 million.
Last February 20, the MWSS released its first stage bid for the Angat water project involving the design and construction of the Ipo to Bigte Tunnel no. 4 and with a deadline on bid submission on April 7.
The project would rehabilitate and/or reconstruct the aqueducts aside from the provision of technical assistance.
However, the special authority for the loan approval coming from the President remains pending, Neda said.
The Department of Finance (DOF) reported that the ADB will be increasing its sovereign lending to the Philippines as a resut of ADB’s expanded lending capacity.
ADB President Takehiko Nakao said that the bank was satisfied with the recent progress of Public-Private Partnership (PPP) programs and will continue to support their implementation, according to the DOF statement.
Nakao held a meeting with Finance Secretary Cesar V. Purisima last July with the discussions centering on the ADB’s lending programs.
“ADB will continue to support infrastructure needs; programs to strengthen senior high school education, job creation for youth, and social protection; deeper capital markets; improved access to finance; and development in southern Philippines including Mindanao,” Nakao said.
A PPP project assisted by an ADB private-sector loan of $75 million was the Mactan-Cebu International Passenger Terminal Project with construction commencing in June.
The DOF reported that in May this year, ADB’s Office of PPP, together with its co-advisor the Development Bank of the Philippines, was appointed as Transaction Advisor for the North-South Railway Project South Line (Manila to Legazpi, with extensions to Batangas and Matnog).
Purisima noted that the Philippines’s PPP Center was recently upheld as a global model cited by the Asia-Pacific Infrastructure Partnership due to its strong track record and clear structure.
“We will continue innovating on the infrastructure financing front, knowing full well that our future growth rests on our ability to create mobility and connectivity networks to support our 100 million-strong population,” Purisima said.