DBP releases P39.5 billion for infrastructure lending

DBP releases P39.5 billion for infrastructure lending

MANILA, Philippines — State-owned Development Bank of the Philippines (DBP) has issued about P40 billion in loans to government and private firms to finance more than 400 infrastructure projects nationwide.

DBP president and CEO Emmanuel Herbosa said yesterday the bank approved P39.5 billion in loans in the first semester through its Infrastructure Contractors Support (ICONS) program.

Herbosa said the amount benefited public works handled by at least 440 contractors across the country: 151 in Luzon, 134 in Visayas and 145 in Mindanao, including 10 in multiple sites.

According to Herbosa, the program extended financing to contractors of infrastructure projects involving communications, transport and water supply and wastewater management. The DBP also granted loans to borrowers putting up energy and social projects.

Herbosa vowed the DBP would sustain the ICONS to support the government and private sector in their effort to address the country’s infrastructure gap. He said the bank would extend financing to contractors tapped to complete projects under the Build Build Build program.

“DBP has sharpened its focus on the infrastructure buildup program of the national government to provide further impetus to the country’s economic rebound,” the DBP chief said.

“Infrastructure development is indispensable to propel economic growth, as well as to enhance quality of life,” he said.

Private firms licensed by the Philippine Contractors Accreditation Board may borrow through the ICONS to cover for their capital requirements in building public infrastructure.

For short term loans, the amount can be used by the borrower to bankroll purchase orders and contract receivables and clear checks via domestic bills purchase lines. For long term loans, the contractor can deploy the capital to finance capital expenditures and even multi-year deals.

Borrowers can also obtain loans of up to 70 percent of the validated purchase order amount for awarded contracts and 60 percent of the appraised collateral for expansion projects. On the other hand, the interest will be computed based on DBP’s prevailing rates.

Last year, DBP expanded its loan portfolio by roughly 19 percent to P423.32 billion, of which over half or P225.9 billion went to infrastructure and logistics.

Government spending on Build Build Build projects is projected to jump by nearly 25 percent to P1.26 trillion in 2022, or 5.8 percent of the economy, from P1.01 trillion this year.