Finance Secretary Carlos Dominguez III has urged the Asian Development Bank (ADB) to spearhead an ASEAN-wide initiative that would enable member-countries of the regional organization to exchange information and best practices on localized climate adaptation and mitigation programs.
Secretary Dominguez broached this proposal as the Philippines marked the signing of two loan agreements with the ADB through an exchange of documents last June 3.
One of the loan accords is aimed at supporting the country’s climate action agenda, while the other seeks to further develop the domestic capital market as a source of financing for the country’s infrastructure modernization program.
Secretary Dominguez said his proposed intra-ASEAN exchange of information plan is a better option than relying solely on international fora such as the annual United Nations Climate Change Conference of the Parties (COP) which focuses on the big picture in tackling the climate crisis, and usually overlooks solutions tailor-fit for local communities.
“Climate change might be a global problem. The issue, however, exhibits itself most starkly in our smallest communities. I am sure that the ADB will be ready to help us promote the exchange of climate change action and adaptation practices among the ASEAN countries,” Secretary Dominguez said in his speech after the exchange of the loan documents at the Department of Finance (DOF) office in Manila.
Secretary Dominguez, on behalf of the Philippine government, and ADB Deputy Director General Winfried Wicklein, representing the multilateral development institution, exchanged documents for the US$250 million policy-based loan for the Climate Change Action Program, Subprogram 1 (CCAP1).
The government of France, through the Agence Française de Développement (AFD), is also providing a separate 150-million Euro loan to support the CCAP1’s objectives.
The signing of the loan accord for the CCAP1 makes the Philippines one of the pioneers in climate policy development financing in the region, as this is the ADB’s first-ever climate change policy-based loan.
“This initiative will hopefully encourage other countries to design and accelerate the implementation of their own climate programs. This sends a very strong signal to the international community that the Philippines is fully committed to deliver on our climate ambitions,” said Secretary Dominguez during the event.
“We hope to inspire other emerging economies not only with our determination but also with innovative financial systems,” he added.
Mr. Wicklein said Secretary Dominguez’s leadership and “unrelenting commitment to the development of the Philippines has brought us all here together for the signing of these two policy based loan agreements.”
“We at the ADB have been honored and proud to partner with the Philippines, and to partner with you, including also through these difficult times in the pandemic. We are fully committed to supporting the Philippines and improving the livelihoods of all Filipinos, and creating a stronger, green and resilient economy,” Mr Wicklein added.
The Philippines has set an ambitious goal of a projected reduction in, and avoidance of, greenhouse gas (GHG) emissions of 75 percent by 2030 for the sectors of agriculture, wastes, industry, transport, and energy as its Nationally Determined Contribution (NDC) to the Paris Agreement.
“We owe it to the Filipino people to build the nation’s resiliency against climate change. We cannot wait for the industrial economies to break their inertia and accept the urgency of reducing greenhouse gas emissions and providing climate finance to vulnerable countries,” said Secretary Dominguez. “We share only one planet. The whole world must act as one before global warming becomes a tsunami we can no longer push back.”
The ADB and AFD co-financed CCAP1 in recognition of the Philippine government’s accomplishments of policy actions in the following reform areas: (i) planning, financing, and institutional linkages for climate action (ii) enhancing resilience to climate impacts, and (iii) strengthening low-carbon pathways.
During the event, Secretary Dominguez and Mr. Wicklein also signed the agreement for the Capital Market Generated Infrastructure Financing, Subprogram 2 (CMGIF2), which provides the Philippines with a US$400-million loan to help deepen the capital markets as a source of financing for both the public and private sectors for infrastructure projects.
The CMGIF2 aims to enable the government to fund its infrastructure program at lower relative costs and allow the private sector to fund infrastructure projects through the capital markets.
“The two programs (CCAP1 and CMGIF2) are not unrelated. An improved infrastructure backbone will increase the efficiency of our economy. It will enable us to improve our climate resiliency and spur sustainable growth,” Secretary Dominguez said.
The CMGIF2 will build on the gains of the first CMGIF, which kicked-off the country’s pivot to building a domestic institutional investor base by amending legislation, most notably the Social Security System (SSS) Act; enhancing the voluntary retirement scheme; and providing the contractual savings sector more latitude to invest in a wider array of products.
The CCAP and CMGIF 2 are intended to be budget-support loans that will form part of the country’s external financing program for 2022.
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