Announcement of Investment-Credit Project in Philippines Will Boost Industrial Activity on October 6, 1989

FOR IMMEDIATE RELEASE World Bank .8 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 90/14 Contact: P.B. Sison (202) 477-4347 Leandro V. Coronel (202) 477-3641 INVESTMENT-CREDIT PROJECT IN PHILIPPINES WILL BOOST INDUSTRIAL ACTIVITY WASHINGTON, October 6, 1989 -- Economic recovery in the Philippines will get a boost through a project designed to further stimulate industrial activity. The World Bank has approved a loan of $65 million to support the project, which will provide long-term finance to medium- and large-sized private enterprises through the Development Bank of the Philippines (DBP). DBP will relend the World Bank loan to accredited participating financial institutions which will on-lend the funds to enterprises at market rates. The loan is expected to finance equipment purchases, lease arrangements and equity investments in about 45 industrial subprojects, which will generate some 5,300 jobs. Japan will provide a grant equivalent to $3.5 million to finance technical assistance for DBP and the Department of Trade and Industry, which will undertake industrial subsector studies. The objective is to develop proposals for restructuring specific subsectors. The Philippines' economic recovery in the last two years has been largely led by the industrial sector, which accounts for about one-third of gross domestic product (GDP), two-thirds of merchandise exports and 15 percent of total employment. But, despite its size, the industrial sector still provides scope for expansion. The provision of term credit to Philippine industries has been inadequate. The government has designated DBP as the principal channel for official foreign borrowings that are to be used for financing private industrial activities. The project will help improve the delivery of credit for industry by assisting DBP carry out its function of channeling funds through retail financial institutions. The World Bank loan is for 20 years, including five years' grace, with a variable interest rate, cu-rently 7.74 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. NOTE: Money figures are expressed in U.S. dollar equivalents.