WASHINGTON, March 19, 2013 - The World Bank’s Board of Directors approved today a new financing program to support the Philippines’ critical reforms for accelerating inclusive growth or growth that creates more jobs and reduces poverty.
This new development policy loan (DPL) worth US$300 million will support the government’s budget for programs to improve the country’s investment climate, strengthen governance and enhance poor families’ access to basic education and health care, as outlined in the Philippine Development Plan (PDP) 2011-2016.
“Our game plan for putting the Philippine economy on solid ground amidst a tough global environment is producing good results. This new financing, coupled with the support of other sectors of society, will boost our efforts for making sure that more of our countrymen, particularly the poor and the most vulnerable, are contributing to and benefitting from economic growth,” said Finance Secretary Cesar V. Purisima in welcoming the approval of the DPL.
The Philippine economy has emerged as one of the fastest growing economies in East Asia in recent years. Growth accelerated to 7.1 percent in the third quarter of 2012, reaching 6.6 percent for the full year, a significant improvement over 3.9 percent in 2011.
Economists attribute this growth trend to the country’s strong macroeconomic fundamentals, improved government finances and execution of public investments, expansion of the construction sector, buoyant private consumption, and high confidence in the Aquino government’s commitment to reform.
“With this new financing program, we are ramping up investments in infrastructure to make the country more conducive to doing business. We have increased allocation for tourism infrastructure in order to attract more tourists from within the country and abroad. All these measures help generate more jobs,” said Secretary Purisima.
DPLs provide quick-disbursing assistance to countries undertaking reforms. DPLs typically support policy and institutional changes needed to create an environment conducive to sustained and equitable growth as defined by borrower-countries’ own development agenda.
“The Philippines is vigorously implementing a comprehensive reform agenda centered on restoring people’s trust in government through improved governance and empowering them to rise above poverty. We are pleased to support the program through the DPL as well as through our broader engagement under the Bank’s country assistance strategy,” said World Bank Country Director Motoo Konishi following the DPL’s approval.
Under the DPL, the government expects to increase tax-to-GDP (Gross Domestic Product) ratio by two percentage points from 12.1 in 2012 to 14.1 to generate more resources for financing important economic and social programs.
According to Budget Secretary Florencio B. Abad, some key results that the country has already accomplished under the DPL are:
- Improved transparency and accountability in government budgeting and spending;
- Increased and better spending for basic education, targeting low-income families; and
- Enrolment of the beneficiaries of conditional cash transfer program in the country’s universal health care program, thus providing these poor families better access to basic health care services.
“The government has opened up the budget preparation process to civil society organizations and has launched the “people’s budget” website containing citizen-friendly information about the budget. Measures like these improve transparency and social accountability as well as help ensure better delivery of public services,” said Secretary Abad.