THE World Bank announced in Manila yesterday a US$520 million loan instalment to bolster the Government's programme of strengthening the Philippines' financial system. Mr Thomas Allen, the World Bank's resident representative in the Philippines, said the loan would be used to strengthen the regulation of commercial banks, improve depositor protection and enhance the delivery of long-term credit. ''The Government of the Philippines has made remarkable progress in the reform of the financial system,'' Mr Allen said. Mr Allen said the creation earlier this year of the new Bangko Sentral ng Pilipinas was a landmark action that ''will pave the way for the development of more robust financial and capital markets''. The Bangko Sentral replaced the debt-laden Central Bank of the Philippines under a financial restructuring program aimed at stopping the drain on the country's capital resources. The World Bank will provide $150 million to the government, the second instalment of a two-stage loan that was approved in May 1989. Mr Allen said the other financiers - the Japan Export-Import Bank and the Overseas Economic Co-operation Fund of Japan - are expected to follow the World Bank's lead and each release $185 million. All three institutions provided $450 million to the government in 1989 as part of the first phase of the Financial Sector Adjustment Loan. The second instalment was delayed until financial reforms were made. Meanwhile, the Asian Development Bank (ADB) has approved a US$85 million loan to Indonesia to develop the urban areas of five islands in the eastern part of the country. The project will support urban infrastructure investment in West Nusa Tenggara, East Nusa Tenggara, East Timor, Maluku and Irian Jaya, which account for nearly a third of the country's land area but is the least economically developed. The loan is payable in 25 years, including a five-year grace period, with the interest rate to be based on the ADB's variable rate system for dollar loans. The ADB also approved a $107 million loan to Bangladesh to help it develop its natural gas. Natural gas, the main natural energy resource in Bangladesh, will be enhanced to meet increasing demand in the country, the ADB said. An increased supply of natural gas will also help reduce deforestation and air pollution in Bangladesh as demand for wood and coal as fuel decline, the bank said. Two grants amounting to over $1 million were also approved to fund studies on natural gas.