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PRESS RELEASE

World Bank Approves US$258.64m Financing for Reconstruction and Environmental Improvement in the Philippines

May 20, 2010



WASHINGTON DC, May 20, 2010—The World Bank’s Board of Executive Directors approved today two financing operations worth US$258.64 million to support the country’s recovery and reconstruction from the recent natural disasters as well as the Philippines’ capability to manage toxic chemicals that threaten people’s health and the environment.

The first is the US$250 million Philippine Development Policy Operation (DPO): Supplemental Support for Post-Typhoon Recovery designed to cushion the economic and social impacts of the 2009 typhoons Ondoy and Pepeng, which continue to affect a large segment of the poor population in the country. It is a quick disbursing loan that can be used by the Government to speed up reconstruction efforts.

The second is a US$8.64 million grant to support the Government’s Integrated Organic Pollutants Management Project (IPOP) aimed at reducing human and environmental exposure to harmful persistent organic pollutants (POPs) such as furans and dioxins that are known to cause cancer.

“We thank the World Bank Board for the approval of the supplemental financing for the DPO as it will give the country some fiscal space to accelerate reconstruction efforts. It will provide us quick disbursing budget support to bridge the financing gap following the disasters that hit the country in late-2009,” said Finance Secretary Margarito Teves. “This also demonstrates the country's commitment to a transparent expenditure tracking system that will monitor and report on overall reconstruction spending.”

Secretary Teves also welcomed the approval of the US$8.64 million IPOPs grant, saying that the country needs more resources for environmental improvement. “This grant would go a long way in enhancing the country’s regulatory and monitoring framework and its capacity to manage toxic substances.”

The supplemental financing will ensure continuity of the social protection measures and programs outlined in the original Food Crisis Response DPO approved by the World Bank Board in December 17, 2008. The DPO was designed to enhance policy coordination and institutional arrangements for social protection, improve targeting of poor households, and deepen the impact and efficiency of social safety nets through a conditional cash transfer (CCT) program.

The World Bank has been providing support to the Government in the development of a targeting system and its CCT program since 2007. In November 17, 2009, the World Bank approved an additional US$405 million loan to support the CCT and strengthen the Department of Social Welfare and Development (DSWD) as a social protection agency.

World Bank Country Director Bert Hofman said that the newly approved loan is part of a financing package that was agreed last December with Development Partners, and was designed to help the Philippines address reconstruction needs following the natural disasters that hit the country.

“The loan will support the Government’s reconstruction plan and will help overall growth and poverty alleviation,” said Mr. Hofman, who commended the Government for putting into place a reconstruction expenditure monitoring system to ensure transparency and efficient use of resources.

An earlier report, the Post-Disaster Needs Assessment (PDNA), estimated that damage and losses from the two major typhoons in 2009 amounted to about $4.38 billion, with associated losses in production and other flows of the economy placed at nearly $2.93 billion. These associated changes in economic flows were projected to last beyond 2010.

The assessment also pointed to total requirements of about US$2.4 billion for recovery and reconstruction efforts to be undertaken by the public sector through 2012. Larger investments, particularly in flood control and housing, may need to be considered in the longer term, the report said. The support for post-disaster reconstruction is part of a broader initiative for disaster risk reduction and management in the Philippines that the World Bank is supporting.

Mr. Hofman also highlighted the importance of the GEF grant, stressing that the project is part of the global effort under the Stockholm Convention to phase out use and reduce emission of toxic compounds. Of the various sources pollutants in the Philippines, POPs are of particular concern because they remain in the environment for long periods, can be transported over long distances, and accumulate in body tissue through the food chain, causing severe health problems among people.

“The grant will help improve the country’s management of air quality and reduce waste and land contamination,” said Mr. Hofman. “It will assist national and local government efforts to improve sanitation by assisting in the closure of open dumpsites and improving garbage collection services to replace unsafe burning practices.” 

The grant, which will come from the Global Environment Facility Trust Fund, is designed to strengthen the country’s regulatory and monitoring framework for managing toxic chemicals including polychlorinated biphenyls or PCBs found predominantly in electrical transformers. It also aims to reduce releases of unintentionally produced POPs coming mostly from open burning of waste, as well as lessen human exposure to land, soil, or groundwater contaminated by POPs.

Media Contacts
In Manila
David Llorito
Tel : (632) 917-3047
dllorito@worldbank.org
In Manila
Erika Lacson
Tel : (632) 917-3013
elacson@worldbank.org
In Washington, DC
Elisabeth Mealey
Tel : (202) 458-5964
emealey@worldbank.org


PRESS RELEASE NO:
2010/411/EAP

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