The Asian Development Bank will extend $3.8 billion in loans and technical assistance to the Philippines from 2011 to 2016 under its new Country Partnership Strategy (CPS).
In a briefing on Friday, ADB officials said the bank may extend around $620 million in loans and about $5 million in technical assistance to the country every year until President Aquino ends his term.
The total amount for lending over the six-year period will target governance reforms and other measures needed to make the Philippines a more attractive investment destination.
The National Economic and Development Authority (Neda) said that the new strategy is aligned with the government’s Philippine Development Plan 2011-2016, which targets a 7 to 8 percent annual growth to curb poverty.
“This is another testament to the very strong relationship between ADB and the Philippine government which started when the country became a founding member in 1966. We laud the ADB for ensuring that the CPS 2011 to 2016 is aligned with and responsive to priorities of our own Philippine Development Plan,” Neda director general Cayetano W. Paderanga Jr. said.
“ADB’s Board of Director’s approved a new Country Partnership Strategy for the Philippines. This clearly demonstrates the partnership between ADB and Neda in pursuit of a common goal to achieve the objectives of the Philippines Development Plan (PDP),” ADB Country Director Neeraj Jain said.
The Philippines, where the ADB is headquartered, has grown at a slower pace than other developing economies in the region over the past 40 years.
This is partly as a result of weak investment climate, low spending in social sectors, and weak governance, according to Claudia Buentjen, principal country specialist in ADB’s Southeast Asia Department.
Buentjen pointed out that even though the Philippines has achieved an average of 5 percent growth in gross domestic product in past years, poverty in the country increased to 26.5 percent in 2009 from 24.9 percent in 2003, with persistent unemployment and underemployment.
“That is quite puzzling,” Buentjen said.
The CPS has several areas of cooperation. These include Public Sector Management, which takes up 48 percent of the total amount or about $1.2 billion; Education, 12 percent or $300 million for school rehabilitation, equipment and materials; Agriculture and Natural Resources, 11 percent or $275 million for land and water-based natural resource management; and Transportation, 10 percent or $262 million for national roads and maintenance works, as well as transportation policies.
The areas also include Energy, which makes up 8 percent of the total CPS or about $200 million, for which funding will focus on renewable energy and energy efficiency. The Water Supply and Other Municipal Infrastructure and Services will account for 8 percent or around $190 million and focus on improving access to water and sanitation facilities.
Under the Public Sector Management sector, projects aim to help raise the Philippines’ investment to Gross Domestic Product (GDP) ratio by 2016; have at least 5 major Public Private Partnership (PPP) reach contractual closure by 2016; increase real property tax collections by 20 percent in 2015; and improve tax to GDP ratio to 16 percent by 2016, among others.
Projects under the education sector aim to help improve access to basic education. This means raising the net enrollment rate for grades 7 to 10 to 93.3 percent; the completion rate for grades 7 to 10 up to 75.5 percent; and the mean national achievement test scores for secondary students to 75 percent by school year 2015 to 2016.
Under the Agriculture and Natural Resources sector, projects aim to improve conservation and protection in 63 million hectares of land degradation hot spots with developed sustainable land management practices in 2016, while those under the energy sector aim to help reduce transport sector emission by 230,000 tons in 2015.
For projects under the Water Supply and Other Municipal Infrastructure and Services sector, the aim is to increase access to potable water of 86.6 percent of the population; access to sanitation to 83.3 percent of the population; and the share of local government units served by sanitary landfills to 7.8 percent by 2016.
The Philippines is ADB’s fifth largest borrower in cumulative loan amount. The ADB’s previous CPS with the country was from 2005 to 2010.