According to the Bank’s website, the government has requested an $800 million policy-based loan (PBL) to be disbursed through two subprograms to implement its priority actions under the smooth transition strategy (STS) through well-sequenced reforms focusing on domestic resource mobilization (DRM), an enabling business environment, and export diversification. Subprogram 1 ($400 million) from September 2023 to October 2024 will support the government in initiating the rationalization of direct tax expenditure, the automation and digitalization of direct tax collections, the simplification of the regulatory environment for doing business, and policy reforms related to trade openness and upstream engagement in logistics sector development. Subprogram 2 ($400 million) from November 2024 to October 2025 will deepen the reforms initiated under subprogram 1, focusing on the rationalization of indirect tax expenditure, enhancing the automation and digitalization of indirect tax collections, strengthening the competition framework, deepening the reforms of tariff and nontariff barriers, and strengthening the logistics value chain for trade facilitation and promoting e-commerce.

The program focuses on policy and institutional reforms that do not entail involuntary resettlement or impact the livelihood systems, culture, and territories of Indigenous Peoples, and is thus classified category C for involuntary resettlement and Indigenous Peoples. The program does not envisage financing actions or reforms that would result in any environmental risks and impacts, and is classified category C for the environment.

The government’s development financing needs are calculated based on estimated budget deficits of 4.5% in FY2025 ($22,029.0 million); 5.1% in FY2026 ($27,641.9 million); and 5.0% in FY2027 ($30,378.9 million). The government has requested a loan of $400 million from ADB’s ordinary capital resources to help finance subprogram 1, which will support 1.8% of the budget deficit for FY2025. To bridge the gap, the government is exploring funding options from other development partners.

No contacts available at the time of disclosure.

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