MANILA – The World Bank on Tuesday said it is lending the Philippines $600 million to support country’s financial sector and boost its pandemic recovery.
The loan aims to strengthen the financial sector’s stability, integrity, and resilience; expand financial inclusion especially for MSMEs; and help climate and disaster risk finance, the multilateral lender said.
“Policy actions that strengthen the stability of the financial sector – including banks and insurance companies – will help Filipino families, businesses, and investors withstand financial shocks and enhance their resilience by ensuring that problems in these financial institutions are detected at an early stage without severe disruptions to the economy,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.
The Bank noted that only 51 percent of Filipinos aged 15 and above have a bank account “which is below the East Asia and Pacific regional average of 80 percent.”
Meanwhile, in the bottom 40 percent of the population, only 34 percent of adults have an account, it added.
“Financial inclusion can be a key enabler to speed up poverty reduction and strengthen recovery from the pandemic,” said Diop.
The Philippines also needs to develop its catastrophe insurance market to prevent people from falling into poverty following natural disasters, Diop added. This type of insurance is meant to protect households, assets, and businesses against natural disasters like floods and earthquakes.
The World Bank said it also aims to build consumer trust in the financial sector, and improve credit information to support MSME access to finance during the recovery.
The loan also supports the financial sector resilience to climate-related shocks by integrating climate and environmental risks in financial institutions' risk management frameworks and mobilizing private sector financing for green investments by encouraging banks to incorporate sustainability principles into their investment activities, the Bank said.