With the Philippines located along the path of strong typhoons and the earthquake-prone “Ring of Fire,” the government is seeking a $400-million loan from the World Bank to partly boost resilience to natural calamities.
World Bank documents showed the Washington-based multilateral lender’s board was expected to tackle in November the proposed Promoting Competitiveness and Enhancing Resilience to Natural Disasters Development Policy Loan, which, if approved, would be implemented by the Department of Finance.
“The development policy loan series aims to support the government of the Philippines in promoting competitiveness, enhancing fiscal sustainability, and improving resilience to natural disasters,” the World Bank said.
In giving the Philippines a head start, the World Bank took note of the country’s strong macrofundamentals thanks to its “track-record of prudent macroeconomic management and structural reforms which led to strong economic growth and solid fiscal and external balances.”
However, the World Bank said “more needs to be done to improve the inclusiveness of growth and enhance resilience to natural disaster.”
“The country’s economic prospects are also constrained by risks from natural disasters. The Philippines is the fourth most at-risk country in the world in terms of climate-related natural disasters, and they tend to affect the poor more as they are less resilient,” it said.
“Physical and financial preparedness as well as mitigation measures are currently weak in the Philippines, thus the need to take appropriate policy measures while securing the fiscal sustainability of the country. This calls for continued efforts in revenue mobilization and expenditure rationalization as the government continues to boost public investment in physical and human capital,” it added.
The proposed loan will help reduce contingent fiscal risks from natural disasters while also optimizing the cost and timing of postdisaster response, the World Bank said.
“The development policy loan supports the strengthening of financial resilience to natural disasters through: reducing contingent liabilities by creating a public asset registry, increasing efficiency on postdisaster response by expanding government’s risk layering strategy, and ensuring a sustainable disaster risk insurance market by improving regulatory capacity of the Insurance Commission,” it said.
The loan also intended to promote competitiveness, which the World Bank said included “ensuring food security and stable prices by liberalizing the importation of rice, simplifying ease of doing business by streamlining government procedures, improving service delivery and increasing financial inclusion through the creation of a single official ID (identification card), and attracting more FDI (foreign direct investment) in key backbone services by removing regulatory constraints.”
The proposed World Bank loan would also cover efforts to improve fiscal sustainability by improving budget planning and financial management, increasing revenue mobilization, and improving the efficiency of government-owned and/or -controlled corporations, it said.
“The government’s reforms in the areas of competitiveness and resilience to natural disasters are fundamental as they address areas that have been identified as bottlenecks in increasing shared prosperity while fiscal management is needed to ensure reform continuity and sustain high inclusive growth,” the World Bank said.