The Philippines has been among the dynamically emerging markets in the region with its sound economic fundamentals and highly-skilled workforce. Growth in the Philippines is on average about 5% since 2002, significantly higher than the rate achieved in the previous two decades.
Amid global uncertainties and a string of calamities that hit the country that included typhoon Haiyan (Yolanda), the economy posted 7.2% GDP growth in 2013, driven by the robust services and industry sector, and boosted by strong household consumption and government spending. Growth momentum was maintained at 6% in the first half of 2014, and remained one of the fastest in East Asia region, surpassed only by China (7.4%) and Malaysia (6.3%).
The country has earned investment grade ratings from major credit raters for the economy’s strong performance and the government’s sound fiscal management. Stable remittances have also provided a strong basis for currency stability and a healthy buildup of international reserves. The country currently enjoys a savings rate that exceeds investment, while its human resources continue to be in high demand around the world.
In recent years, the Philippines has restored stability and proved resilient to food and fuel price hikes, the global financial crisis and recession, and the impact of typhoons and El Niño.
The country’s progress in achieving the Millennium Development Goals (MDGs) is generally on track in improving gender equality in basic education and reducing infant and child mortality. While the country is also making headway in combating tuberculosis, malaria and other major diseases, and in providing access to safe water, it needs to intensify efforts in reducing poverty, achieving universal primary education and in improving child and maternal health. It also needs to address the lack of good jobs among low-income earners, especially those from rural areas where many poor people reside.
To address these challenges and to achieve inclusive growth, the government has vowed to pursue the following measures under its (2011-2016) updated Philippine Development Plan:
* Attain high and sustained economic growth that provides productive employment opportunities;
* Promote equal access to development opportunities through better education, primary health care and nutrition 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
This means making sure no one, especially the poor, is left behind. Households and communities most at risk for poverty should have better income opportunities and less vulnerability 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 participate in growing the economy.
The new strategy is in line with the World Bank Group’s new 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.
• 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.
The World Bank Group (WBG) will support transformational programs and projects that work across sectors to deliver tangible results which have 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) will work closely together to mobilize private sector investment and support job creation in areas such as 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 September 2014, the Philippine portfolio comprises 18 active projects with a total net commitment of $4.4 billion. This includes 11 investment loan operations, three development policy operations and four trust funds that are part of the lending portfolio.
The IFC has committed $250-$300 million in investments in the next two years. It has been active in both the infrastructure and financial institutions space in the country, with $331 million and $306 million current investments, respectively. Investments in power and utilities dominate the infrastructure portfolio while financial institutions are spread across 7 partner institutions, including commercial and thrift banks, distressed asset platforms, and a fund and real estate developer.
Philippines: Commitments by Fiscal Year (in millions of dollars)*
*Amounts include IBRD and IDA commitments
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. The Bank’s assistance later expanded to a wide range of lending and knowledge products, policy advice and capacity development in support of the country’s development agenda.
Encouraged by good results, the government has expanded the CCT program to include children in secondary education, which is supported by new financing. The program, which aims to break the cycle of poverty in the country, has grown to become one of the largest in the world.
In the water and sanitation sector, the Bank has been supporting the government’s efforts to improve services across the country by partnering with service providers and local government units. Residents with improved access to drinking water increased from 85% in 1990 to 92% in 2010, while access to sanitation facilities improved from 57% to 74% over the same period.
In Metro Manila, the Bank’s interventions through Manila Water Company (MWCI) contributed to a dramatic increase in 24-hour water supply from 26% in 1997 to 99% in 2009 as it expanded coverage of sewerage, sanitation and septage management. Through IFC’s advisory and investment support since the 1990s, the company has more than doubled its customer base to 6.2 million people, reduced system losses from 63% to 11% and has grown to be the largest wastewater operator in the Philippines.