Philippines disaster facility supports El Niño response with $500 million ADB backstop

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Philippines ADB El Niño response

Highlights

Asian Development Bank's $500-million Disaster Risk Improvement Project 2 facility can be accessed by the Philippines if a state of emergency is declared.
Part of the DRIP 2 facility has been used previously, remains replenishable, and aims to provide immediate funding and strengthen disaster policy frameworks.
Ongoing El Niño has affected 115,246 families in 906 barangays, prompting urgent contingency planning and ready instruments for potential emergency financial assistance.

Emergency financing mechanism and trigger

As reported by BusinessWorld Online, the Asian Development Bank said the Philippines can draw on the facility if the government needs additional support to limit the effects of El Niño. ADB Country Director for the Philippines Andrew Jeffries said on the sidelines of the 15th Arangkada Philippines Forum last week that the bank has existing emergency assistance facilities available for drawdown.

Jeffries said the $500-million facility can be accessed if a state of emergency is declared. He added that the funding vehicle, known as Disaster Risk Improvement Project 2, is designed to provide short-term and immediate financing after disasters, and that part of it has been used before but remains replenishable.

ADB says DRIP 2 is intended not only to support immediate response but also to strengthen government policies and institutional frameworks for disaster management at both national and subnational levels. The bank says the program is meant to help the country adopt a more anticipatory disaster-response approach and build longer-term resilience by addressing underlying sources of risk in public systems.

El Niño pressure on communities and response planning

Jeffries said Super El Niño poses a near-term risk, particularly in the fourth quarter through the first quarter of next year. That risk is adding urgency to contingency planning as the dry spell continues to affect vulnerable communities.

The National Disaster Risk Reduction and Management Council said in an Oct. 7 report that 115,246 families in 906 barangays across several regions have been affected during the early phase of El Niño conditions. Jeffries said ADB has instruments ready, if needed and if requested, to provide emergency financial assistance and related support.

Our earlier article on rising Philippine government securities yields explained how a hotter-than-expected September inflation print pushed borrowing costs higher across the curve and strengthened expectations of further BSP tightening. It also noted that elevated oil prices, high U.S. Treasury yields, and geopolitical risks were adding to volatility and keeping local bond markets cautious ahead of the central bank’s policy meeting.

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