The Philippines is one of the most dynamic economies in the East Asia region, with sound economic fundamentals and a globally recognized competitive workforce. Growth in the Philippines has been  averaged above 5%  in the past decade, significantly higher than in the previous decades.

Following high growth of above 6% in the past three years, growth slowed down to 5.3% in the first half of 2015. Growth was limited by the slow pace of public spending and the contraction in net exports on the demand side, as well as stagnant agriculture on the supply side. Nevertheless, the Philippines was one of only two major economies in East Asia Region, along with Vietnam, to accelerate its quarterly growth from Q1 to Q2. Due to the slow start, economic growth is expected to settle at 5.8% in 2015, before rebounding to 6.4% in 2016.

The country has earned investment grade ratings from major credit rating agencies as a result of its sound macroeconomic fundamentals. It is increasingly characterized by robust inclusive economic growth, low and stable inflation, healthy current account surplus, more-than-adequate international reserves, and a sustainable fiscal position – a combination never before seen in its history. However, with GDP growth having reached its potential, the country should make use of its sound fiscal position to fund much needed infrastructure to sustain high growth in the following decades.

With a solid macro economy that has proven to be resilient to some major shocks, the country can now focus its attention on implementing crucial structural reforms that can sustain inclusive growth, create more and better jobs, and eradicate extreme poverty.

The government is pursuing the following measures under its (2011-2016) updated Philippine Development Plan, which adopts a framework of sustained inclusive growth. The overall theme of good governance and anti-corruption guides each intervention, aiming to:

  • Attain high and sustained economic growth that provides productive employment opportunities;
  • Promote equal access to development opportunities through better education, primary health care and other basic social services; equal access to infrastructure, credit, land, technology, and other productive inputs;
  • Reduce the cost of doing business, consistent with upholding good governance and strong institutions to encourage competition; and
  • Establish effective and responsive social safety nets to assist those who are less capable of participating in economic activities

Last Updated: Oct 19, 2015

The World Bank Group’s new country assistance strategy for the Philippines from 2015 to 2018 revolves around the theme “Making Growth Work for the Poor”. It supports the government’s goal of promoting sustained inclusive economic growth that reduces poverty and creates more and better jobs – jobs that raise real wages and bring people out of poverty..

Households and communities most at risk for poverty should have better income opportunities and become less vulnerable to sudden economic difficulties and natural disasters. They should have better education, good health care, as well as access to infrastructure and information to improve their lives and to help grow the economy.

The new strategy is in line with the World Bank Group’s twin goals of eradicating extreme poverty and promoting shared prosperity. It also supports the country’s goal of promoting and sustaining inclusive growth that reduces poverty and creates more and better jobs—jobs that raise real wages or bring people out of poverty. The new strategy continues to support the country’s development programs in five key engagement areas:

• Transparent and accountable governance: strengthening public financial management, improving fiscal transparency and financial accountability, and supporting greater demand from citizens for government accountability.

Empowerment of the poor and vulnerable: improving health and education outcomes, strengthening social protection and ensuring the availability of more timely and improved measurements of poverty.

• Rapid, inclusive and sustained economic growth: promoting economic policy reform for inclusive growth, boosting private sector development by improving the investment climate for firms of all sizes, including greater access to finance, and increasing productivity and job creation, especially in rural areas.

Climate change, environment, and disaster risk management: increasing physical, financial and institutional resilience to natural disaster and climate change impacts, and improving natural resource management and sustainable development.

• Peace, institution building, and social and economic opportunity: supporting governance, social and economic development, and citizen security and justice in conflict-affected regions in Mindanao, including the territory of the proposed new Bangsamoro autonomous political entity.

The World Bank Group (WBG) supports transformational programs and projects that work across sectors to deliver tangible results with high and long-term impact. The International Bank for Reconstruction and Development (IBRD) and the WBG’s private sector arm, the International Finance Corporation (IFC) work closely to mobilize private sector investment and support job creation in sectors like agriculture and agribusiness, trade and logistics, infrastructure and public-private partnerships.

The indicative new financial commitment from the IBRD may average $800 million a year, along with non-lending support in the form of analytical and advisory assistance. As of August 2015, the Philippine portfolio comprises 15 active projects with a total net commitment of $2.8 billion. This includes ten investment loan operations, one development policy operation and four projects funded by grants.

As of June 2015, IFC has a committed portfolio of $605 million in the Philippines. It includes both the infrastructure and financial institution sectors, with $294 million and $210 million current investments, respectively. Investments in power and utilities dominate the infrastructure portfolio while investments in financial institutions include investments in commercial and thrift banks, distressed asset platforms, and an investment fund.

Last Updated: Oct 19, 2015

Since 1957 when the government received its first World Bank loan, the Bank has financed irrigation and other agriculture-related infrastructure and rural development needs that have produced significant results for its citizens. In the last three decades, the Bank’s assistance expanded to a wide range of projects and analytical work, policy advice and capacity development in support of the country’s development agenda.

The Mindanao Rural Development Program (MRDP) Phase II promoted rural growth in southern Philippines, increasing the average household income of beneficiaries by about 36% by end-project on December 31, 2014, exceeding the target of 20% increase. The Bank has expanded support for the agriculture sector through the Philippine Rural Development Project (PRDP), which aims to increase rural incomes and enhance farm and fishery productivity and improvement of market access throughout the country. The project developed ICT-enabled tools such as geotagging and expanded vulnerability and suitability assessments in guiding public investments towards a modern, value-chain oriented, and climate resilient agriculture and fisheries sector.

The Participatory Irrigation Development Project (PIDP) is supporting the improvement of 58 irrigation systems throughout the country.  From the beginning of 2011 to date, the project has rehabilitated and modernized irrigation infrastructure that serves 80,000 hectares benefiting more than 160,000 farm families, and has provided training to more than 900 Irrigators Associations.

In education, the Bank’s assistance through the Learning, Equity and Accountability Program Support (LEAPS) Project, approved in March 2014, is supporting government efforts to improve early grade learning outcomes particularly for disadvantaged children. The Social Welfare and Development Reform Project, also helped to bring about almost universal enrolment (98%) for poor children between the ages of 6-11 years old in project areas. This was made possible through the government’s conditional cash transfer program (CCT) called Pantawid Pamilyang Pilipino Program, which helps poor households invest in the education and health of children aged 0-14 years. The Bank also helped establish the national household targeting system and design for the CCT.

Encouraged by good results, the government expanded the CCT program to include children in secondary education, which is supported by new financing. The program has made significant impact on reducing poverty and inequality, and has grown to become one of the largest in the world. From 0.7 million households in 2009, it has supported 4.4 million households with about 22 million members in 2014. In health-related projects, the Philippines passed the landmark Sin Tax Law in 2012 with advisory and budgetary support from the Bank. The measure raised tobacco and alcohol taxes and allocated the revenues for universal health coverage. This more than doubled the budget of the Department of Health, expanding free health insurance from 5.2 million (2012) to 14.7 million families (2014) and contributing to a reduction in smoking prevalence from 29% (2012) to 26% (2014).

The Kapitbisig Laban Sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) Project has reached approximately 1.2 million households whose incomes rose by 12% as of December 2010. Through a community-driven development approach, the poorest communities have benefitted from new water systems, school buildings, day care centers, health stations and post-harvest facilities. The program has been expanded across the country including areas in Central Philippines devastated by typhoon Haiyan (Yolanda) in 2013. Under the new National Community Driven Development Project, affected communities will have access to social services and rebuild infrastructure such as local roads and bridges.

The Bank is also providing budgetary support to the government to help respond to financing gaps in the wake of typhoon Haiyan. With its global expertise in post-disaster reconstruction, the Bank is working with development partners and the government in helping develop effective disaster recovery programs and building back better infrastructure and communities.

The Bank’s assistance also extends to conflict-affected areas in the country, helping to support better governance, access to services, job creation and enhanced citizen security and justice. The Mindanao Trust Fund-Reconstruction and Development Program is supported by a range of development partners and has provided classrooms, access roads, post-harvest facilities, water supply systems and bridges, while at the same time promoting social cohesion for around 500,000 people in Mindanao since 2006.

The Bank also actively supports the peace process between the Government and the Moro Islamic Liberation Front through technical and advisory services to various bodies set up to implement the March 2014 Comprehensive Agreement on the Bangsamoro. Analytical and advisory work supports job creation, land conflict management, financial inclusion (including Islamic finance) and conflict resolution.   

The Bank is also helping the government achieve its goal of improving quality and access to basic water supply and sanitation services, institutionalizing integrated water resources management and reducing climate-related vulnerability through flood management.

In Metro Manila, the Bank’s interventions through the Manila Water Company (MWCI) and Maynilad Water Services, Inc. (MWSI) contributed to a dramatic increase in 24-hour water supply: from 26% in 1997 to 99.6% in 2012 at MWCI’s East Concession Area and 97.4% in 2015 at MWSI’s West Concession Area, as it expanded coverage of sewerage, sanitation and septage management. Since the 1990s, IFC’s advisory and investment support helped MWCI more than double its customer base to 6.3 million people and reduce system losses from 63% to 12.2%, making it the largest wastewater operator in the Philippines.

Outside Metro Manila, the Bank has assisted water and sanitation service providers in improving efficiency and sustainability by strengthening local governments’ accountability and management systems on water supply and sanitation services for all, harnessing private sector participation. In rural areas, close to 90,000 households now have latrines while 40 municipalities in 18 provinces have participated in the Zero Open Defecation campaign as of September 2015.

Last Updated: Oct 19, 2015


Philippines: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments