Philippines: World Bank Approves New Funding to Improve Delivery of Services to Poor Communities

December 1, 2011

WASHINGTON DC, DECEMBER 1, 2011—The World Bank’s Board of Executive Directors approved today a new loan to the Development Bank of the Philippines (DBP) for a project designed to support investments in local public infrastructure and services.

The new financing amounting to US$50 million will fund the Regional Infrastructure for Growth Project (RIGP) which aims to improve physical and economic integration within and across local government units in participating provinces and regions by increasing access to finance for an open menu of local public infrastructure and services.

DBP President and Chief Executive Officer Francisco F. Del Rosario Jr. welcomed approval of the loan saying, “This project will build on DBPs existing support for improved physical and economic integration - such as the Roll-on-roll-off (RORO) network - by encouraging LGUs to work with each other and with private sector partners to improve connectivity and access to better infrastructure development and services, especially to poor communities.” 

DBP will on-lend the US$50 million loan to LGUs, public utilities or eligible local government-owned and controlled corporations, and private sector enterprises developing local infrastructure as well as providing services through public-private partnerships (PPP). In addition to offering direct retail sub-loans, DBP will also channel financing through wholesale loans to eligible private financial institutions for on-lending to local service providers.

“The project will finance a wide array of local public infrastructure and services that meet the objective of improving physical and economic integration,” said Mr. Del Rosario. “These projects will typically be among the priorities identified by a provincial agency or by a regional body or authority through their development and physical framework plans.”

Among the eligible projects are environmental infrastructure (water supply, solid waste facilities, drainage systems); agriculture support systems (irrigation, small impounding reservoirs, supply chain infrastructure); disaster risk mitigation (sea walls, flood protection, slope protection); social (school buildings, hospitals, health centers); transport (provincial and local roads, local ports, public transport facilities); and tourism support (eco-parks, convention centers, heritage sites, resorts).

In 1991, Congress enacted the Local Government Code to promote local autonomy and accountability as well as empower LGUs to improve public services and stimulate local development. The Code has devolved significant responsibility for the delivery of key services, and has provided annual transfers to LGUs through Internal Revenue Allotments (IRA) to support core operations. Moreover, the Code has given LGUs the mandate to raise additional funds for investment in infrastructure and services through taxation and borrowing.

While significant strides have been made to improve local infrastructure and service delivery in many parts of the country, a number of LGUs and communities continue to face development challenges, including inadequate infrastructure and inefficient services due to limited access to finance. “RIGP aims to help address these challenges,” said Mr. Del Rosario.

“Many poor communities in the Philippines do not have access to adequate physical and economic infrastructure and services that promote integration such as vital link roads and bridges, and critical inputs such as electricity and water supply, among others,” said World Bank Acting Country Director Chiyo Kanda. “That is why the World Bank is committed to work with development banks, LGUs and other stakeholders to accelerate the implementation of these provincial and regional priorities.”

“Projects like RIGP are important for achieving inclusive growth or growth that works for the poor,” Ms. Kanda added.

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