Amidst major climate and environmental challenges and more recently the Covid-19 pandemic, AFD has been supporting the Philippine Government in implementing sustainable solutions to these vulnerabilities and in contributing to the resilience of the country.
For the past years, representatives from the Philippines and AFD have been periodically discussing their cooperation to ensure the alignment of their priorities. This year’s consultations covered a wide range of topics and were held in the presence of Mark Dennis Y.C. Joven, Undersecretary of the Department of Finance (DOF) and Rémi Genevey, Director of the Orients department at AFD.
Hon. Carlos G. Dominguez, Secretary of Finance and the Philippines’ Climate Change Commission Chair designate and Her Excellency Michele Boccoz, France Ambassador to the Philippines, set the tone of discussion while giving their welcome speech by highlighting the importance of climate action.
Cooperation on key issues
Over the past years, AFD's assistance to the Philippines has focused on natural risk management and prevention, low carbon infrastructure, biodiversity conservation, financial inclusion, as well as sustainable urban and rural development,decentralization and local governance.
During this meeting, both parties reviewed the projects being financed by AFD in the Philippines, such as the Cebu Bus Rapid Transit Project and the Disaster Risk Management Institutional Strengthening Project, among others. They also discussed the capacity building support grants attached to the policy-based loans concluded in 2020, namely, the Expanding Private Participation in Infrastructure Program and the Inclusive Finance Development Program. These loans and grants aim at supporting the Philippines’ post-Covid-19 recovery.
“We appreciate AFD’s responsiveness to mobilize policy-based loans, project loans and technical assistance for our critical projects. We acknowledge the unwavering support of France and AFD, which remains a significant provider of official development assistance to the Philippines,” Undersecretary Joven of the DOF’s International Finance Group stated.
To date, AFD’s operations have mainly been carried out through sovereign loans, accompanied by technical assistance and capacity building programs, often financed by European commission through grants delegated to AFD. GPH welcomed AFD’s willingness to also engage in future non-sovereign lending to state-owned banks.
Next steps focusing on climate action
Consistent with the Paris Agreement on Climate Change and in anticipation of the forthcoming submission by the Philippines of its Nationally Determined Contribution (NDC) ahead of the COP 26, the GPH and AFD agreed to focus their development cooperation on climate action in the coming years.
This will translate into policy dialogues and supporting policy-based loans focused on climate action, disaster risk management, biodiversity, agro-ecology and the implementation of nature-based solutions, in order to reinforce the Philippines’ resilience to the effects of climate change, including major risks of seismic, volcanic and meteorological disasters.
Both sides agreed to work towards the conclusion and drawdown of the proposed Disaster Risk Reduction and Management Policy Loan in quarter fourof this year, and thereafter, the Climate Policy-Based Loan in early 2022.
Aside from these policy-based loans, both sides also agreed to further develop their cooperation through project loans to support the implementation of projects with high greenhouse gas emissions (GHG) mitigation or adaptation impacts such as hydroelectric power rehabilitation, flood risk management, community rainwater catchments, and urban cable car development, which would be the first of its kind in the country.
Mr. Rémi Genevey, Director for Eastern Europe, Middle East and Asia at AFD, reaffirmed its commitment to the Philippines: “AFD aligns itself with the Philippines’ clear commitment to implement several policy initiatives to reinforce its fight against the adverse effects of climate change. AFD will stand alongside the Philippines to help meet the emission reduction targets that will be detailed in the forthcoming NDC submission”.