Business Mirror
Mar 1, 2006
ADB preparing new finance-sector program for RP
By Artemio F. Cusi III
Reporter
Reporter
ANOTHER financial-sector program for the Philippines is underway, according to an official of the Asian Development Bank (ADB).
"We are now processing our next financial-sector program that will also cover PDIC [Philippine Deposit Insurance Corp.], Insurance Commission and Bangko Sentral ng Pilipinas," said Geert H.P.B. van der Linden, ADB vice president for knowledge management and sustainable development.
In a speech before participants of the recent "International Seminar on Deposit Insurances," van der Linden said this is part of the bank's "continuous involvement in financial-sector development and reform through ongoing policy advice, as well as policy-based loans and capacity-building services."
While ADB support is needed to push reforms, van der Linden said the role of policymakers is to put in place a strong institutional framework.
He said this is to reduce the risk of banking failures or crises, and to help minimize the costs of bank failures.
Although institutional arrangements differ from country to country, the ADB executive considers four elements necessary to provide financial stability in the banking sector.
These are prudential regulation and supervision; a lender of last resort function; deposit insurance; and a clearly defined resolution mechanism for banks in distress.
Van der Linden noted that ADB has helped the Philippine government with capital-market development by pouring in $150 million in 1995.
In nonbank financial governance, the bank extended $75 million in 2001 and $150 million in 2003.
In 2005 ADB approved a $150-million Microfinance Development Program to help better regulate the microfinance sector. Van der Linden viewed this as "a new line of support and an important one in the fight against poverty."
Also included in the partnership with the Philippine government are the strengthening of the financial-sector oversight and the antimoney-laundering regime, and the development of an early warning system of currency and banking crisis.
From 2002 to 2004, nearly half of all ADB program loans were dedicated to financial-sector work.
Total assistance to Asia 's financial sector during this period reached $1.2 billion, which is $200 million more than what the World Bank extended.
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