Citing the need to strengthen the country’s connectivity infrastructure to increase digital technology adoption, the Department of Finance (DOF) has announced that the Philippine government is venturing into its first Digital Transformation Development Policy Loan worth $1 billion.
The huge loan will be co-financed by a $600-million loan from the World Bank – International Bank for Reconstruction and Development (WB-IBRD) and the other $400-million balance to be borrowed from the Asian Infrastructure Investment Bank (AIIB).
The program seeks to digitalize government systems for better delivery of services, bolster financial inclusion through the wide-scale adoption of digital payments, and boost business growth in digital services.
DOF secretary Benjamin E. Diokno said on Tuesday, Sept. 26, during the 2023 AIIB annual meeting in Egypt that there is a need for the Philippines to significantly invest in connectivity after years of infrastructure underinvestment.
He cited data from 2001 to 2015 when the Philippines only spent an average of 2 percent of gross domestic product (GDP) for infrastructure.
Diokno said the current administration plans to arrest the years of infrastructure underdevelopment through its ambitious “Build Better More” program.
The Philippine government has prioritized 197 infrastructure flagship projects (IFPs) worth an estimated $155 billion, covering energy, water, logistics, transportation, agribusiness, manufacturing, tourism, health, and education.
To provide more financing support for the IFPs, the government has implemented reforms to attract investments into the country, including the recently passed Public-Private Partnership (PPP) Act, which has been approved by both Houses of Congress.
The measure seeks to establish a PPP legal framework to enhance the Philippines’ PPP policy environment for smarter and climate-resilient infrastructure development in the country without the need to sacrifice fiscal space.
Apart from implementing the right policy tools, Diokno emphasized the importance of bilateral and multilateral development partners, saying that a sizable portion of the IFP list is being considered for official development assistance (ODA) financing support.
These are projects on physical and digital connectivity with an aggregate investment requirement of P4.68 trillion (around $82.5 billion) for 80 of the IFPs.
