DOF Secures Concessional Financing For "Build Better More" Program

The Department of Finance (DOF) has successfully negotiated concessional funding through official development assistance (ODA) for the Marcos Jr. administration's ambitious "Build Better More" program.

The DOF's approach mitigates foreign exchange risks, leverages domestic financial system liquidity, and supports the development of local debt and capital markets. I Photo: Department of Public Works and Highways

"The Department of Finance takes the responsibility over our people’s money very seriously. Dahil bawat piso na ipinagkatiwala ng Pilipino sa atin ay simbolo ng milyong-milyong pangarap, pagsisikap, at pag-asa. That is why we make sure that we enter into partnerships with very trusted partners and that the terms of our agreements are very concessional and cost-effective so we can deliver more projects that create lasting impact for generations," Finance Secretary Ralph G. Recto stated.

In 2024, the DOF signed 12 financing agreements totaling USD 5.67 billion (PHP 333.42 billion) for projects spanning infrastructure, transport, defense, digital technology, health, and agriculture.

Notably, these agreements include the third tranche of financing for the Metro Manila Subway Project (Phase 1), the country's first-ever underground railway system.

Other infrastructure projects covered by these agreements are:

• Dalton Pass East Alignment Alternative Road Project

• First tranche of financing for the Bataan-Cavite Interlink Bridge Project

• Samar Pacific Coastal Road II Project

• Laguna Lakeshore Road Network Project

• New Dumaguete Airport Development Project

• Maritime Safety Capability Improvement Project Phase III

• Infrastructure for Safer and Resilient Schools Project

Additionally, the DOF secured financing for:

• Philippines’ First and Second Digital Transformation Program

• Second Sustainable Recovery Program

• Build Universal Health Care (UHC) Program, Subprogram 2

• Value Chain Innovation for Sustainable Transformation in Agrarian Reform Communities Project

• Climate Change Action Program Subprogram 2

Beyond these, the DOF obtained USD 73.73 million (approximately PHP 4.34 billion) in grants from bilateral and development partners for 13 projects in areas such as infrastructure, peace and development, climate adaptation and mitigation, water security, and artificial intelligence-based systems in agriculture.

Grants, which do not require repayment, include projects like:

• Capacity Development of Public Utility Vehicles (PUV) in Metro Manila and its adjoining areas

• Establishment of an AI-based Flood Forecasting and Warning System in the Laoag River Basin

• Master Plan on Comprehensive Sewerage System Development for Metro Cebu of the Metropolitan Cebu Water District

• Partnership for Peace and Development in Mindanao

• Integrated Urban Climate Action for Low-Carbon and Resilient Cities (Urban-Act) Project

Furthermore, the DOF established government-to-government (G2G) agreements with the French Republic and Sweden, along with a Memorandum of Understanding (MOU) and Cooperation Arrangement with the Republic of Korea through its Export-Import Bank.

These agreements provide the Philippine government with access to grants, technical assistance, concessional ODA, and blended financing for priority programs and projects.

With the DOF's prudent debt management strategy, the country's financing mix stood at 77:23 in favor of domestic borrowings as of the end of November 2024.

This approach mitigates foreign exchange risks, leverages domestic financial system liquidity, and supports the development of local debt and capital markets. Consequently, the country's debt remains manageable at 61.3% of GDP as of the third quarter of 2024.