The Asian Development Bank's (ADB) Board of Directors on Monday approved a US$500-million short-term fiscal stimulus loan for the Philippines, which is the first loan approval for ADB's Countercyclical Support Facility (CSF).

The loan will help close the government's budget financing gap for this year. It is designed to support the government's countercyclical expenditure program in its 2009 budget, which includes labor-intensive infrastructure projects, and the scaling up of the conditional cash transfer program, among other crisis mitigating programs.

"This loan is critical for the Philippine government to stimulate the economic recovery, protect its social spending and poverty reduction programs, and continue its longer-term development objectives in 2009," said Arjun Thapan, Director General of ADB's Southeast Asia Department.

"It is designed to maintain momentum of the country's key development efforts by expanding the fiscal space at a challengingtime for the global economy," he added.

The loan will have a five-year repayment term, with a three-year grace period, and will cost around 200 basis points over ADB's financing cost, pricing that reflects spreads prior to the onsetof the global economic crisis.

The US$3-billionCSF, established in June 2009, supports ADB's developing member countries (DMC) needing to ramp up fiscal spending to counter the global economic crisis. To be eligible to access the CSF, DMCs must be adversely affected by theglobal economic crisis, demonstrate sound macroeconomic policies, and have a countercyclical program in place.

Besides the Philippines, the following countries have requestedCSF allocations: Bangladesh, Indonesia, Vietnam, Kazakhstan, Pakistan and Sri Lanka. CSF allocations will be subject to Board approval.

(Xinhua News Agency August 25, 2009)