Washington DC, MAY 19, 2011 —/b>>/>>/>>/> The World Bank’s Board of Executive Directors approved today a US$250 million financing in support of the Philippine government’s agenda for good governance, growth, and poverty reduction.
This fresh financing for the Philippines supports the country’s achievements and efforts for promoting inclusive growth through better fiscal management, improved investment climate, and investments in human capital (specifically in health and education) to enable the poor to take advantage of emerging economic opportunities.
“The approval of the Development Policy Lending (DPL) is a clear recognition by the World Bank of the country’s efforts to undertake reforms for achieving growth that benefits a broader segment of the Philippine society,” said Finance Secretary Cesar Purisima. “Many of the reforms envisioned are already off to a good start and promise to yield important benefits for the country.”
Secretary Purisima said the country has started to put in place reforms for raising public revenues and better fiscal risk management; reducing the costs of doing business and raising public investment through better Public-Private Partnership (PPP); promoting better public financial management, budget transparency and accountability; and improving access to and quality of basic education and health services especially for the poor.
“The government is committed to vigorously pursue these reforms as part of President Benigno Aquino’s social contract with the Filipino people,” said Secretary Purisima. “Given the support from the different sectors of society and the global community, I believe we can achieve growth that is more inclusive and beneficial to the less fortunate.”
According to Budget and Management Secretary Florencio B. Abad, among the key outcome indicators that the Philippine government wants to see with the new financing operations include higher tax revenues, lower public debt ratios and higher sovereign credit ratings, increased total investment ratios, and enhanced transparency in public financial management.
“Most of all, we expect these improved public financial outcomes to result into direct, immediate and substantial support and social protection for the poor and vulnerable; better outcomes in basic education by closing gaps in the supply of students and teachers; and improved access to public health services for the poor through universal health care,” said Secretary Abad.
The World Bank provides DPLs to support good economic management and policy reforms. DPLs typically support development results through a medium-term program of policy and institutional actions consistent with a country's economic and sectoral programs. The loan disburses in a single tranche to finance regular budget expenditures of the government.
This new financing is the first of a programmatic series of three DPLs. If adequate reform progress continues, subsequent DPLs are envisaged to follow an annual schedule.
“The transition to the new Administration has brought renewed energy and strong focus on poverty reduction and good governance. We are pleased to support this reform agenda through this DPL as well as through a broader program under our extended Country Assistant Strategy (CAS),” said World Bank Country Director Bert Hofman.“We have updated our Country Assistance Strategy (CAS) to align it with the government’s new Philippines Development Plan (PDP).”
The World Bank’s Board of Executive Directors has discussed the World Bank Group’s CAS Progress Report on the same day that the DPL was approved.
The CAS is extended for a year through June 2013. The Bank plans to expand financing for the Philippines in response to the Governments request for financing of US$1.5 billion a year to meet the need for increased public investment in infrastructure and poverty reduction efforts. The International Finance Corporation (IFC), the private sector financing arm of the World Bank Group (WBG), plans to increase the investment program to US$300-350 million per year, supplemented by advisory activities. The Multilateral Investment Guarantee Agency (MIGA), also a member of the WBG, will continue to help promote foreign direct investments in the country to support economic growth and poverty reduction by providing political risk insurance (guarantees) to the private sector.
In response to the new priorities of the Aquino Administration, the World Bank will develop some new initiatives in fiscal risk management, agriculture sector reform, basic education, and convergence of social protection measures. The Bank will intensify ongoing engagements in areas such as PPPs, universal health care, education, disaster risk management, and budget transparency.