IFC investing $500 million to address Philippines development challenges

February 29, 2024 | 12:00am

HONG KONG — The private sector arm of the World Bank Group is aiming to invest up to $500 million in the current fiscal year in the Philippines to support efforts to address climate change, financial inclusion and infrastructure development.

“In this current fiscal year, which ends on June 30th, our objective is to be able to invest somewhere between $400 million and $500 million in the Philippines,” Allen Forlemu, regional industry director of the financial institutions group for Asia and Pacific at the International Finance Corp. (IFC) told The STAR.

In terms of priority areas for investments, he said the IFC has a strong focus on  efforts to address climate change.

For the IFC, he said climate change “is by far the most important challenge that the Philippines faces.”

According to the World Risk Index, the Philippines is most at risk to climate change globally.

Left unaddressed, the Department of Environment and Natural Resources said earlier, about P1.4 trillion or eight percent of the country’s gross domestic product in 2020 would be at risk due to climate change.

While climate change is seen as the biggest challenge for the Philippines, Forlemu said it also presents an opportunity for the country.

An earlier study conducted by the IFC estimated the climate-smart investment potential in selected sectors in the Philippines at about $115 billion from 2016 to 2030.

Investments made by IFC to support climate action in the past years include the subscription to the maiden blue bond issuance of the country’s largest bank, BDO Unibank Inc. in 2022 to help increase access to finance for projects to preserve clean water resources, as well as in the green bond issued by Ayala-led Bank of the Philippine Islands in 2023 with proceeds to finance renewable energy, energy efficiency, green buildings, electric vehicles and climate-smart agriculture projects.

On financial inclusion, Forlemu said the IFC has a strong emphasis on the inclusion of women, as well as digital financial services, and the digital economy.

He said the IFC is providing advisory services to banks and non-bank financial institutions and working with the regulator to scale up support for micro, small and medium-sized enterprises in the Philippines.

The IFC is also working with policymakers in the Philippines to address barriers to digital financial inclusion.

“We’re very supportive of lots of reforms that have been undertaken over the past few years, including the launching of a national digital ID. These are the kinds of improvements that will really make the ecosystem a lot stronger,” Forlemu said.

He said the IFC is also focused on supporting  manufacturing, agribusiness and the services sectors in the Philippines.

In the coming years, he said IFC’s investment commitment  to the Philippines is expected to increase.

“We expect to be able to grow that commitment over the years as we tackle these global challenges that are affecting the country as well,” he said.