A $250 Million ADB Loan Will Assist the Philippines in Achieving Their Climate Objectives

Tuesday, May 31, 2022 Edit this post

By Marquez, Rosemarie F., Senior Communications Officer, Philippines Country Office, Asian Development Bank

Cover Image by Jah Cordova from Pixabay
Cover Image: Coron island by Jah Cordova from Pixabay

The Asian Development Bank (ADB) has granted a $250 million policy-based loan to assist the Philippines in adapting to and mitigating the effects of climate change.

The Climate Change Action Program will assist the Philippines in delivering its nationally determined contribution — its commitment to help advance global efforts to stabilize the world's climate by the Paris Agreement — and intensify efforts to transform vulnerable sectors into a climate-resilient low-carbon economy.

“We have a climate emergency, and all countries must come together and address the causes and adapt in a way that ensures food security, protects our biodiversity, and improves the well-being of millions of vulnerable persons,” said ADB Vice-President for East Asia, Southeast Asia, and the Pacific Ahmed M. Saeed. “The Philippines has adopted important climate actions and goals that will help address these threats and challenges and guide a green and resilient recovery after the COVID-19 pandemic.”

“This is ADB’s first climate action policy-based loan. It will support the Philippines develop, delivering, and financing a holistic approach to address climate change by transitioning to low-carbon pathways, strengthening the ability of vulnerable sectors to adapt to climate change, and increasing conservation of land and marine resources,” he said. 

According to the Global Climate Risk Index 2021, the Philippines ranked fourth among the most affected by extreme weather worldwide from 2000 to 2019. The epidemic has increased the nation's susceptibility to the economic effects of severe weather. Poorer households are disproportionately affected, particularly in metropolitan areas with less secure infrastructure and along the country's expansive coastline, most susceptible to harsh weather.

The new program focuses on policy reforms and will assist the Philippine government in establishing planning, financing, and institutional frameworks to intensify climate action. In addition, it will support measures to increase the climate change resilience of farming and fishing communities and reduce greenhouse gas emissions by deploying renewable energy, energy efficiency, and sustainable transportation. The program was developed in collaboration with the French Agency for Development, giving $172 million in cofinancing to the government.

The ADB's loan is part of its commitment to enacting aggressive climate action. This includes its increased ambition to deliver $100 billion in cumulative climate finance to its developing member countries (DMCs) from 2019 to 2030, its collaboration with the Philippine government to pilot its Energy Transition Mechanism to accelerate the retirement of coal power plants and replace them with clean power infrastructure, and its support for a green recovery via the ASEAN Catalytic Green Finance Facility. In addition, ADB has joined other multilateral development banks in committing to a just transition that assists DMCs in transitioning to economies with net-zero emissions.

Instead of paying for specific project expenditures, policy-based loans transfer loan funds to a government's general budget. When the borrower completes ADB-approved policy adjustments or activities, only then are loan funds disbursed. This is ADB's first policy-based loan with a central focus on climate change.

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IndraStra Global: A $250 Million ADB Loan Will Assist the Philippines in Achieving Their Climate Objectives
A $250 Million ADB Loan Will Assist the Philippines in Achieving Their Climate Objectives
By Marquez, Rosemarie F., Senior Communications Officer, Philippines Country Office, Asian Development Bank
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