The World Bank announced it has approved a $600-million loan supporting the Philippines’ increased adoption of digital technology.

The Philippines’ first “Digital Transformation Development Policy Loan (DPL)” has already been given a thumbs up by the World Bank’s board of executive directors on Saturday (Manila time) to help the Philippine government digitize operations and service delivery and encourage the adoption of digital payments and financial services.

It will also help facilitate reforms to promote e commerce, enhance competition and value-added activities in digital services markets, and strengthen skills development in the industry.

“Greater adoption of digital technology can improve the efficiency and transparency of government services, empowering individuals who were previously far away from decision-making centers,” said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, the Philippines, and Thailand, in a statement.

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“Digitalization can also drive productivity growth, by reducing operating costs for firms and enhancing their resilience and preparedness for future crises.”

The World Bank said widespread adoption of digital payments in the Philippines is essential for the development of a digital economy, benefiting millions of citizens and small businesses.

Presently, cash remains the dominant form of payment for over-the-counter purchases in grocery stores (95 percent), government service payments such as driver's licenses or birth certificate issuance (97 percent), and government fees and penalties like traffic violation tickets (88 percent).

“Transitioning to a cashless economy would provide various benefits, especially during climate-related and natural disasters, enabling the government and the private sector to respond swiftly and efficiently,” said Smita Kuriakose, Lead Economist in the World Bank’s Finance, Competitiveness, and Innovation Global Practice, for her part.

“With digital transactions, affected individuals can receive government assistance or insurance payouts promptly, facilitating their recovery and rebuilding efforts.”

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Internet use in the Philippines has experienced rapid growth in recent years. But, the country has not fully capitalized on the advantages of digital technology, and the high cost of Internet access poses challenges for small businesses in utilizing digital technology and expanding their operations.

As a result, only a small percentage of small businesses have been able to fully embrace digitalization, cited the World Bank.

Approximately one in three adults still doesn’t have a transaction account with a financial institution.

To help address these concerns, this operation will support reforms that aim to enhance competition and invest in broadband services to reduce the cost and improve the quality of services and increase access, said the World Bank.