The Philippines is ramping up borrowings from multilateral lenders led by the World Bank (WB) and Asian Development Bank (ADB) as the government continues to tap cheaper sources of funds to bankroll key infrastructure projects.

Finance Secretary Carlos Dominguez told reporters after signing the agreement with the WB for the development policy loan on implementing the Promoting Competitiveness and Enhancing Resilience to Natural Disasters Sub-Program 1 the government continues to diversify its sources of funds by tapping more official development assistance (ODA) through multilateral lending institutions such as the World Bank, ADB & Asian Infrastructure Investment Bank (AIIB), among others.

“When we borrow, we will go first to the cheapest and longest forms of funding and that is the ODA. The next tier of borrowings is our multilateral partners such as WB, ADB, AIIB and the third is commercial sources which are shorter in tenor and quite a bit more expensive than the first two,” he said.

The Duterte administration has committed P8 trillion to ramp up its infrastructure spending until 2023.

Dominguez and WB acting Country Director Achim Fock signed the $400 million loan deal, representing the first tranche of a three-part financing package that aims to further boost the country’s competitiveness and fiscal sustainability while enhancing its resilience to natural disasters and the impact of climate change.

This is a component of a three-part loan package from the World Bank with a total amount of $1.2 billion.

“With this financing series, we are expecting to ramp up our portfolio with the World Bank to about $1.5 to $2 billion annually, starting next year. This is about three times higher than the bank’s average annual lending commitment of about $600 million to the Philippines for the past 10 years,” Dominguez said.

He said the Philippines is maximising the World Bank’s financing support as a donor institution, and its expertise and experience as a knowledge bank in various areas including strengthening governance, human capital development, disaster preparedness, and addressing fragility and conflict, among others.