$500 million loaned to the Philippines for economic stimulus

The Asian Development Bank is lending money to nations to help with their own economic stimulus programs, and the first such loan went the Philippines. $500 million dollars will be lent to the country. The ADB started the program because many governments were having trouble raising money as credit markets have been very tight during the global recession.

From the Peninsula On-Line, reporter Roel Landingin tells us more details about the loan program.

The bank said it had received applications for more than the $3bn available, with Bangladesh, Indonesia, Kazakhstan, Pakistan, Sri Lanka and Vietnam also requesting help.

Bangladesh, like the Philippines, has asked for the maximum $500m. The International Monetary Fund is allocating special drawing rights worth $735m to Dhaka to strengthen its foreign exchange reserves amid the global downturn, a fund official told Reuters yesterday.

The Philippines is struggling to fund its stimulus measures, which include labour-intensive infrastructure projects and increased cash transfers, amid falling government revenues and a widening budget deficit. The economy shrank 2.3 percent quarter-on-quarter in the January-March period and the government sharply cut its full-year growth forecast in June to only just 0.8-1.8 percent, from the previous target of 3.1-4.1 percent. Manila warned of the budget deficit reaching as much as 250bn pesos ($5.2bn), equivalent to 3.5 percent of gross domestic product, because of revenue shortfalls.

Yesterday, the ADB said the new loan would “help close the government’s budget financing gap for this year”.