Saturday, 2 May 2009

World Bank approves $3-B aid program for the Philippines

BusinessWorld Online

The World Bank has approved its new funding program for the Philippines for the next three years to 2012, which would support the government’s infrastructure, financial sector, social protection and anticorruption programs against a backdrop of a global economic crisis and tighter capital markets.

In a statement issued yesterday, the Washington-based lender said it will provide the Philippines $700 million-$1 billion in annual foreign aid under the so-called Country Assistance Strategy Program for the fiscal years 2010-2012.

The World Bank’s board of executive directors approved the funding in a meeting held last Thursday [Friday, Manila time], it said.

The International Finance Corp. (IFC), the World Bank’s private investment arm, will grant $250 million-$300 million in separate funding to collaborate with its parent firm on efforts to improve the government’s infrastructure, agribusiness and financial sectors.

Another member of the World Bank Group, the Multilateral Investment Guarantee Agency (MIGA), will provide guarantees to foreign investors against losses caused by non-commercial risks, as well as technical assistance to help countries disseminate information on investment opportunities.

The fresh World Bank aid "focuses on poverty alleviation measures and on operationalizing governance in all Bank-supported activities," the statement read.

"It also addresses emerging global challenges such as climate change, disaster risk management, and the financial crisis and emphasizes a knowledge agenda that supports the Philippines in addressing its own development challenges."

World Bank Country Director Bert Hofman said the tie-up would be relevant as the global recession could result in having more people fall back into poverty.

The new CAS supports the government’s bid to increase public spending to lift the economy out of a widely expected slowdown, Finance Secretary Margarito B. Teves said in the statement.

Funding for the new assistance program is greater than the 2006-2008 CAS, which ranged from $450-$900 million.

IFC resident representative Jesse Ang said the investment firm has developed instruments to help private firms deal with increased liquidity constraints amid the global economic crisis.

These instruments include the capitalization fund that provides equity funds to capitalize banks, as well as the trade finance program that guarantees trade-related payment obligations of financial institutions.

The IFC has also created the Infrastructure Crisis Facility that bridges the financing gaps in privately funded infrastructure projects facing financial difficulties, and a program that will assist the microfinance sector serving the needs of small and micro enterprises in the Philippines.

"IFC’s financial instruments are intended to help strengthen the private sector in dealing with the global crisis, upgrade vital infrastructure, generate jobs by supporting small and micro enterprises, and create more opportunities for the poor, especially those who are most affected by the economic distress," Mr. Ang said in a statement.

The same statement quoted Socioeconomic Planning Secretary Ralph G. Recto as welcoming the new CAS, saying that the new framework for the World Bank Group’s operations in the Philippines is broadly aligned with the country’s updated Medium Term Philippine Development Plan (MTPDP) prepared by the National Economic and Development Authority.

The MTPDP focuses on growth and job creation, energy, education, health, youth opportunity, anticorruption, and good governance.

The MTPDP also gives priority to protecting the poor through a host of social policy measures including shelter, health insurance, low-cost medicines, and cash transfers, Mr. Recto said. — MEIC

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