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THE World Bank granted the Philippines a $600-million loan to boost and promote its digitization program.
The Bank said that the digital transformation Development Policy Loan (DPL) will help the government digitize its operations and expand and promote digital financial services.
“Greater adoption of digital technology can improve the efficiency and transparency of government services, empowering individuals who were previously far away from decision-making centers,” Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines, and Thailand, said.
He added that digitalization can “drive productivity growth by reducing operating costs for firms and enhancing their resilience and preparedness for future crises.”
“To extend financial inclusion more widely among individuals and businesses, this DPL will support reforms that promote broader acceptance of digital payments, strengthen trust in digital financial services, and enhance competition in digital financial infrastructure,” the World Bank said. “These reforms will help the authorities expand the reach of digital financial services to underserved and unbanked segments of the population, including women, and facilitate the transition from a predominantly cash-based economy to a digital one.”
“To boost business growth in digital services, this DPL will also support reforms that promote the uptake of e-commerce by consumers and businesses and promote competition in digital services markets,” it added.
The World Bank emphasized the importance of the widespread use of digital payments in the Philippines to advance its digital economy.
Currently, cash is the primary mode of payment for in-person transactions, including groceries (95 percent), government services like procurement of driver’s licenses or birth certificates (97 percent), and government fees and penalties such as traffic tickets (88 percent).
“Transitioning to a cashless economy would provide various benefits, especially during climate-related and natural disasters, enabling the government and the private sector to respond swiftly and efficiently,” Smita Kuriakose, lead economist at the World Bank’s Finance, Competitiveness and Innovation Global Practice said. “With digital transactions, affected individuals can receive government assistance or insurance payouts promptly, facilitating their recovery and rebuilding efforts,” Kuriakose added.
The World Bank said that countries relying extensively on cash transactions can face costs of up to 0.1 percent of government revenues for managing cash. It added that using cash can lead to other problems such as increased fraud, corruption risks, service delays, and higher business expenses.
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