The World Bank has authorized a $600-million policy loan to aid the Philippines in its efforts to strengthen financial sector resilience and sustainability following the effects of the COVID-19 epidemic.
The Philippines Second Financial Sector Reform Development Policy Financing will focus on three policy areas — the financial sector; micro, small, and medium enterprises (MSMEs); and climate and disaster risk finance.
The most recent policy loan intends to assist reforms in enhancing the institutional and legal framework to improve oversight and integrity, strengthen the framework for crisis management and resolution, and expand the availability of long-term financing.
It will also encourage banks to adopt sustainability principles into their investing operations and expand the use of digital technology, which will help the financial sector be more resilient to climate-related shocks.
Country Director for the Philippines Ndiamé Diop said in a statement that policy actions aiming to strengthen the stability of the financial sector will protect its stakeholders from financial shocks.
These will also enable the early detection of problems within financial institutions, preventing economic disruptions and enhancing resilience, the director added.
In addition, financial inclusion can enable faster poverty reduction and recovery from the pandemic, Diop said.
“Filipinos who have accounts with financial institutions like banks will have opportunities to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health of their children, manage risks, and weather financial shocks, which can improve the overall quality of their lives,” he added.