By Ben de Vera
With a total of $2.336 billion in approved loans across six projects, the Philippines has risen to become the World Bank’s fifth-largest borrower in fiscal year 2023, coinciding with President Bongbong Marcos’ first year in office.
In its 2023 annual report, published last week, the World Bank indicated that the new concessional borrowings under Marcos Jr.—whose father, dictator Ferdinand Marcos Sr., witnessed the Philippine economy suffering from a debt crisis in the early 1980s before his eventual ousting—would bankroll additional reforms.
The six loans extended to the Philippines during the fiscal year 2023, covering the period from July 1, 2022, to June 30, 2023, are as follows: the $600 million Second Financial Sector Reform Development Policy Financing; $100 million Mindanao Inclusive Agriculture Development Project; $176 million Fisheries and Coastal Resiliency Project; $750 million First Sustainable Recovery Developing Policy Financing; $110 million Teacher Effectiveness and Competencies Enhancement Project; and $600 million Rural Development Project Scale-Up, according to World Bank records.
Documents from the World Bank showed that these six new loans obtained by the Marcos Jr. administration will be repaid between 2028 and 2052.
In terms of borrowing across the World Bank Group’s International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA), which lends to the poorest countries, India remained the top borrower for two consecutive years, securing $4.32 billion in loans during fiscal year 2023.
To recall, in fiscal year 2022 (from July 1, 2021, to June 30, 2022), India regained its perennial position as the World Bank’s largest annual borrower, securing commitments worth $3.99 billion. This surpassed the $1.58 billion borrowed by the Duterte administration during its final year in office, ranking the Philippines seventh among IBRD clients.
In fiscal year 2021 (from July 1, 2020, to June 30, 2021), the Philippines emerged as the top recipient of loans – totaling $3.07 billion – among all of the Washington-based multilateral lender’s country-borrowers, displacing India. These low-interest loans were primarily used to combat COVID-19, which inflicted the largest pandemic-induced output gap in the region on the Philippines.
In the just-ended fiscal year 2023, Türkiye became the World Bank’s second-largest borrower with $3.881 billion, followed by Indonesia ($3.25 billion), and war-torn Ukraine ($3.133 billion).
As of mid-2023, the Philippines ranked eighth in terms of the World Bank’s country exposures, with a total of $11.6 billion in outstanding loans. This placed it behind India ($20.1 billion), Indonesia ($18.9 billion), Brazil ($15.9 billion), Mexico ($15.6 billion), Colombia ($15.5 billion), China ($15.4 billion), and Egypt ($12.2 billion).
As of June 30 this year, the Philippines had a total of $15.179 billion in World Bank loans, including $11.638 billion in outstanding loans, undisbursed balances worth $2.94 billion in signed loan commitments, and $600 million in approved but unsigned loans. The Philippines’s 12 active operations or loans accounted for 4.77 percent of the World Bank’s total loans outstanding.
From 2019 to 2023, the Philippines’ World Bank loans totaled $9.602 billion, second only to Indonesia’s $11.664 billion in the East Asia and Pacific region.
Since 1945, up to the 2023 fiscal year, the Philippines has borrowed a cumulative $28.663 billion from the World Bank—$28.369 billion under the IBRD and $294 million under the IDA.
In the Philippines, the World Bank said that it was “supporting a program to strengthen financial sector stability, expand financial inclusion, and bolster sustainable financing for mitigating climate and disaster risk.
Additionally, the bank is supporting “reforms to boost job creation, human capital, and resilience to conflict and natural disasters.
“We are working to address the persistence of high levels of childhood undernutrition and reverse the trends that could seriously damage the country’s human and economic potential,” the World Bank said, referring to its loan to combat prevalent stunting among Filipino children.
Here in the Philippines, ‘where floods are a recurring problem, the Metro Manila Flood Management Project is improving the city’s drainage infrastructure, establishing flood-prevention systems, and relocating informal settler families,’ the World Bank said.
These measures are protecting the lives and livelihoods of over a million people, many of whom live in informal settlements along the city’s most flood-prone waterways,’ it added.
Additionally, ‘our engagement in Mindanao brought together groups engaged in conflict to collectively allocate resources and solve problems,’ according to the World Bank.
With the World Bank’s assistance, ‘even though climate change is already exacting a heavy toll on the Philippines, the country has many of the tools required to reduce damages substantially,’ the lender said.
In the Philippines, as well as in Argentina, China, Ethiopia, Ghana, India, and Vietnam, the World Bank has injected a total of $2.3 billion in investments for transport projects aimed at promoting global road safety across more than 1,800 kilometers of road infrastructure assessed in these countries.
As Bilyonaryo.com first reported back in June, the Philippines remains the only Association of Southeast Asian Nations (ASEAN) founding member languishing in the World Bank’s lower-middle-income classification.
While the Philippines’ gross national income (GNI) per capita reached a new record high of $3,950 in 2022, it was surpassed by Vietnam, whose total economic output per person amounted to $4,010 last year. This means that Vietnam has a better chance of becoming an upper-middle-income country sooner than the Philippines.
In his inaugural State of the Nation Address (SONA) last year, President Ferdinand Marcos Jr. said that the Philippines aspires to become an upper-middle-income country by 2024. However, his economic managers later conceded that this goal would be more attainable in 2025.
Once the Philippines becomes an upper-middle-income country, it will lose its access to low-interest rates currently applied to official development assistance (ODA) or cheap loans extended by bilateral development partners like Japan, China, and South Korea, as well as multilateral lenders such as the World Bank, the Manila-based Asian Development Bank (ADB), and the China-led Asian Infrastructure Investment Bank (AIIB).