THE PHILIPPINES is eyeing two loans from the Asian Infrastructure Investment Bank (AIIB) and Asian Development Bank (ADB) worth a combined $800 million next year to fund the government’s post-pandemic business and employment recovery program.
The AIIB and ADB will co-finance the program, which is aimed at sustaining the business and job market recovery from the coronavirus pandemic. Each multilateral lender will provide a $400-million loan to the Philippines.
“The pandemic shock to the Philippines’ economy created a longer-lasting negative impact on private sector employment in the country and has persisted even after the economy has started to recover. Working-age population and elders, especially women, have been the most negatively affected,” the AIIB said.
The annual unemployment rate reached a record-high 10.3% in 2020, reflecting the impact of the strict lockdowns to curb the spread of COVID-19. As the economy continued to reopen, the jobless rate dropped to 6% in June 2022.
The proposed Post-COVID-19 Business and Employment Recovery Program is based on the National Employment Recovery Strategy, which incorporates business, skill development and employment-related reforms.
“The expected outcome will be to enhance the business environment and increase access to formal employment in the private sector. The proposed program will lead to an increase in wage and salary employment in the private sector by an average of 600,000 to 700,000 jobs per year, with the share of such employment in total employment increased to 53% by 2025,” the AIIB said.
The program seeks to liberalize the post pandemic business and investment framework, address “pandemic-induced skills mismatch,” and implement labor market programs.
Vulnerable or informal workers, especially women, are expected to benefit from the training, reskilling, and upskilling programs.
“A jobs transition program tailor-made for the needs of women will be piloted, including skills training, livelihood grants and childcare assistance,” the AIIB said.
It said the estimated date of financing approval is in November, while the loan closing will be in December 2023.
Program loans account for 39.6% of the country’s proposed total gross external borrowings for 2023. The rest is composed of project loans, as well as bonds and other inflows, which account for 12.5% and 47.9%, respectively.
The government will borrow from local and external sources to help fund a budget deficit capped at P1.45 trillion next year, equivalent to 6.1% of gross domestic product. As a lower middle-income economy this year, the country has access to concessional loans of its development partners. — Diego Gabriel C. Robles