Friday, 11 December 2009

RP eligible to seek 2010 grant -- Millennium Challenge Corp.

Alexis Douglas B. Romero
BusinessWorld
http://www.bworldonline.com/main/content.php?id=3080

DESPITE posting low scores in addressing corruption and other socioeconomic indicators, the Philippines has gotten the go-signal to apply for development support by the United States, which will decide on the matter next year.

The Millennium Challenge Corp. (MCC) said in a statement yesterday that the decision was made by its board during a quarterly meeting held in Washington yesterday.

"The Board agreed that Jordan, Malawi, the Philippines, Indonesia, and Zambia are eligible to continue the process of developing compacts in fiscal year 2010," it said.

"In making its decision to reselect the Philippines and Indonesia, the Board took into consideration each country’s current indicator performance as an LMIC (lower middle income country category), as well as the information that the Philippines and Indonesia would have met the criteria as a low income country."

Philippine officials welcomed the decision.

"With the country’s reselection as compact eligible for fiscal year 2010, the Philippine Government reiterates its continuing commitment to good policy performance," Foreign Affairs Secretary Alberto G. Romulo said in a statement.

Rosalia V. de Leon, officer-in-charge of the Finance department international finance group said in a phone interview: "We hope to secure the approval of the MCC board when it meets in March. If our proposal is approved, the funds may be released in the third quarter of 2010."

She explained that the next step would be to present to the MCC a proposal that would outline the projects to be funded by the grant.

"Now that we are reselected as eligible, we will then submit to the MCC our project proposals. We are still preparing the compact proposal, but we are still on track," Ms. de Leon said.

The MCC is a US state firm formed to provide support to developing countries that exercise good governance. It assesses countries’ eligibility to secure a compact -- a multi-year agreement to fund specific development programs -- through 17 indicators grouped into three, namely: "ruling justly," "investing in people," and "encouraging economic freedom."

Consideration

Scores are based on third party information from groups which include the World Bank, United Nations, World Health Organization, International Monetary Fund, as well as think tanks The Heritage Foundation and Freedom House.

An MCC report released last month showed that the Philippines scored below the median of 35 lower middle income countries in terms of control of corruption, rule of law, immunization rates, health expenditures, primary education expenditures, girls’ primary education completion, and business start-up.

The country managed to score above the median in other indicators, namely: political rights, civil liberties, government effectiveness, voice and accountability, natural resource management, regulatory quality, land rights and access, trade policy, inflation, and fiscal policy.

Last year, the Philippines scored below median in just three categories, namley: control of corruption, health expenditures and primary education expenditures.

Officials, however, attributed the lower scores to the Philippines’ transfer to the "lower middle income group of countries" from "low income category," adding that, as a result, the country was subjected to "more stringent standards."

Low income countries refer to those with a per capita income equal to or less than $1,735, while middle income category countries are those with a per capita income greater than $1,735 but less than $3,595. Latest government figures show that the Philippines has a per capita income of $1,843.7.

MCC acknowledged that a country’s movement to a higher income bracket could affect its scores.

"Graduation to a higher income category, as well as other factors -- including higher medians and changes to the indicator system -- can impact a country’s indicator performance, while not necessarily reflecting a change in policy performance," it said.

"In making its decision to reselect the Philippines and Indonesia, the Board took into consideration each country’s current indicator performance as a lower middle income country, as well as the information that the Philippines and Indonesia would have met the criteria as a low income country."

MCC, however, underscored the need for countries to address corruption to boost their chances of securing a grant.

"The Board stressed that clear commitment to and progress on the fight against corruption are critical for any country that hopes to enter into a compact with MCC," it said.

The Finance department’s Ms. de Leon assured that the government is continuously undertaking reforms to promote transparency and to improve governance. "We are continuously coming up with reforms in governance. We hope to sustain them," she said.

The Philippines’ compact proposal for 2010-2014, which is in the final stages of development, focuses on three projects, namely: the Secondary National Roads Development, Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services, and Integrated Revenue Information System.

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