PHL, ADB sign US$4.3-B loan pact for South Commuter Railway Project

The Philippines and the Asian Development Bank (ADB) have marked their 56 years of productive partnership with the signing of the first tranche of the multilateral institution’s largest single infrastructure loan package—the US$4.3-billion funding support for the South Commuter Railway Project (SCRP), which is one of the flagship ventures under President Rodrigo Duterte’s centerpiece infrastructure development program “Build, Build, Build.”

President Duterte witnessed the signing by Finance Secretary Carlos Dominguez III and ADB President Masatsugu Asakawa of the agreement for the first tranche of the loan amounting to US$1.75 billion in ceremonies held at Malacañan Palace Thursday night (June 16).

Dominguez said ADB’s high level of approved financing to the Philippines–totaling over US$30 billion since 1969 and of which more than half was released under the Duterte administration–is “a vote of confidence for President Duterte’s economic development agenda and fiscal management.”

This vote of confidence is also reinforced by the fact that in the last six years, other ADB-supported projects in the country have attracted from various partner institutions a total of US$8.7 billion in co-financing, which represents 74 percent of the total sovereign co-financing from 1972 to 2022, Dominguez said.

The Japan International Cooperation Agency (JICA), which has extended US$4.5 billion to ADB’s projects in the Philippines since 2017, has been the largest of these co-financing partners.

Under the Duterte administration, the Philippines-ADB portfolio has also been rebalanced to closely align with the priorities set by the Philippine government, such as President Duterte’s “Build, Build, Build” program and his ambitious climate action agenda, which led the Bank to extend its first-ever climate change policy-based loan to the country, Dominguez said.

The Bank has also provided technical assistance to the government for the design of various projects, Dominguez noted.

“At every turn, it was the Duterte administration’s priorities that drove the ADB’s development assistance agenda for the Philippines,” Dominguez said during the event.

Dominguez reminded the ADB that being the region’s largest and most experienced development institution, “it needs to step up again to assist its members” and become a “more agile and flexible” instrument in responding to their needs, now that the recovery efforts of the Philippines and other pandemic-battered Asia Pacific economies are being weighed down by the impact of the conflict in Ukraine.

He thanked the institution for being the Philippines’ most reliable multilateral development partner, and expressed confidence “that our successors will continue the same close collaboration with the ADB–a longstanding partnership that has been mutually beneficial to the Filipino people and to the institution.”

The ADB will extend the US$4.3-billion financing package for the SCRP, which has a total estimated project cost of US$8.07 billion, through a multi-tranche facility.

JICA is co-financing the SCRP through a US$1.67 billion loan, with the Philippine government covering the rest of the balance of the project cost.

Another US$1.75 billion loan is expected to be provided by the ADB in 2024, representing the second tranche of the financing package.

The final tranche of US$800 million for this project is scheduled to be given in 2026.

The SCRP will bring much-needed relief to thousands of Filipinos traveling between Manila and Calamba along with several nearby towns in Laguna as this is expected to cut travel time between the two points from about two hours by bus to less than an hour by rail.

On top of reducing traffic congestion and offering an affordable, safe and reliable means of transportation for commuters, the SCRP will also contribute to the Philippines’ climate action agenda through the reduction of greenhouse gas emissions once the project is complete.

The 54.6-kilometer (km) SCRP is part of the larger 163-km North-South Commuter Railway (NSCR) system, which is expected to create more than 35,500 jobs during the construction stage and over 3,000 permanent jobs during its operation.

With 18 stations, the SCRP is also expected to improve connectivity in the public transport network by connecting with all existing rail-based public transport lines in Metro Manila. It includes a connecting line to the planned Metro Manila Subway, which will improve connectivity by operation of direct trains for passengers traveling from Calamba to Bonifacio Global City, Ortigas and Quezon City along the Metro Manila Subway.

Dominguez cited the ADB strong support to the Philippines, which, in return, provided the institution “with a good home.”

“Because of the ADB’s excellent financial management and its decision to establish its headquarters in the Philippines, it has the lowest and most cost-effective and efficient operations among all multilateral finance institutions. This benefits the entire Asia and Pacific region. This is, in effect, our contribution to the ADB in fulfilling its commitments to its members,” Dominguez said.

Dominguez said the Philippines also treats the ADB staff as family as he recalled the time when Afghanistan fell to the Taliban, and the government provided asylum to many of the Bank’s staff members from Afghanistan and their families who had left the country with no travel documents.

“This provided safe passage to ensure the continuity of the ADB’s program of support to Afghanistan,” Dominguez said.

On top of infrastructure and climate change-related financing, the ADB has been one of the Philippines’ reliable partners in accessing support for its COVID-19 response.

The ADB has also extended loans, grants, and technical assistance to the Philippines to assist local government units (LGUs) in improving social services, revenue mobilization, and job generation; expand social protection to vulnerable groups; strengthen the quality of secondary education in the country; sustain financing for universal health care (UHC); expand economic opportunities in agriculture; deepen the capital markets and widen financial inclusion through digitalization; and support tax reform, among others. (DOF)