Finance Secretary Benjamin E. Diokno
underscored the need for
innovative financing solutions to support physical
and digital connectivity
projects during the 2023
Asian Infrastructure Investment Bank (AIIB)
Annual Meeting Flagship
Event: Enhancing Connectivity in a Challenging
World on September 26,
2023 at Sharm El Sheikh,
Egypt.
The flagship
event explored connectivity and its impact on
trade and economic development. It also sought
to emphasize the crucial
role Multilateral Development Banks (MDBs) play
in facilitating connectivity
to enhance resilience in a
challenging world.
During the moderated panel discussion,
Secretary Diokno shared
the challenges to connectivity stemming from
the Philippines’ years of
infrastructure underinvestment.
He cited data
from 2001 to 2015 when
the Philippines only spent
an average of 2 percent
of gross domestic product
(GDP) for infrastructure.
Coming from the
previous administration’s
successful Build Build
Build program, Secretary
Diokno shared that the
Marcos, Jr. administration
plans to arrest the years
of infrastructure underdevelopment through its ambitious Build Better More
program.
The Philippine
government has prioritized
197 infrastructure flagship
projects (IFPs) worth an
estimated US$ 155 billion,
covering energy, water,
logistics, transportation,
agribusiness, manufacturing, tourism, health, and
education.
The Secretary
shared that to ensure adequate financing, the government has reformed its
tax system and committed
to maintain the level of
spending—5 to 6 percent
of GDP—for the duration
of the President’s six-year
term. The government’s
fiscal commitments are
embedded in the Philippines’ first-ever medium-term fiscal program.
To provide more
financing support for the
IFPs, the government has
implemented numerous
game-changing reforms
to attract investments
into the country, including the recently passed
Public-Private Partnership
(PPP) Act, which has been
approved by both Houses
of Congress.
The measure
seeks to establish a PPP
legal framework to enhance the Philippines’
PPP policy environment
for more smart, climate-resilient infrastructure development in the country
without the need to sacrifice fiscal space.
Apart from implementing the right policy
tools, Secretary Diokno
emphasized the importance of bilateral and multilateral development partners, saying that a sizable
portion of the IFP list is being considered for official
development assistance
(ODA) financing support.
These are projects on physical and digital connectivity with an
aggregate investment
requirement of PHP 4.68
trillion (around US$ 82.5
billion) for 80 of the IFPs.
On another note,
the Finance Secretary
underscored the need to
ensure the successful and
quality implementation of
infrastructure projects.
To this end, risk
management solutions
and policy reforms using a
whole-of-government approach are being adapted
and practiced in the Philippines.
Strengthen –
ing connectivity includes
greater digital technology
adoption. Hence, the Philippines is venturing into its
first Digital Transformation
Development Policy Loan,
which will be co-financed
by a US$ 600 million loan
from the World Bank – International Bank for Reconstruction and Development (WB-IBRD).
The Program
will digitalize government
systems for better delivery of services, bolster financial inclusion through
the wide-scale adoption
of digital payments, and
boost business growth in
digital services.
The event was attended by AIIB Governors,
economists, and connectivity project practitioners.
Urgit R. Patel (AIIB Vice
President for Investment
Operations) gave his
opening remarks, while
Dr. Mohamed Maait (AIIB
Board of Governors Chair
and Minister of Finance of
Egypt), Mr. Wang Dongwei (Vice Finance Minister
of China), Professor Iwan
Azis (Cornell University),
and Ms. Sinthya Roesly
(National Electricity Utility
of Indonesia) joined the
discussions as panelists
alongside Secretary Diokno.
