The World Bank is planning to ramp up support to programs and projects related to peace-building in Mindanao as well as strengthening resilience to natural disasters.
“The period under review saw strong economic performance in the Philippines. Growth has been sustained at higher levels than before and poverty has been reduced. Strong global demand resulted in growing remittances and income from a booming services sector. The Philippines is on track to achieve upper middle-income status in the near future. These achievements are impressive in the context of recurring severe natural disasters and conflict in Mindanao,” the Washington-based lender said its report titled “The World Bank Group Partnership with the Philippines, 2009-2018 Country Program Evaluation,” which was published on Dec. 27.
Economic managers had been optimistic that the Philippines would become an upper middle-income country—defined by the World Bank as having a per capita income above $3,956—next year, even as the country would lose by 2022 the access to preferential interest rates it is currently enjoying whenever it borrows from its bilateral partners and multilateral institutions.
“However, higher growth has not resolved many fundamental structural problems. The Philippines still has one of the world’s highest rates of inequality, and productivity in agriculture and manufacturing lags most regional competitors. Despite some improvements in human development, serious gaps remain in family planning, nutrition, maternal mortality and education quality. Infrastructure, particularly in transport and municipal services, is inadequate to meet the needs of the rapidly growing and urbanizing population,” the World Bank said.
While the World Bank has made a “substantial contribution” to the Philippines’ development in recent years, the lender admitted that it had a “dilemma” during the Duterte administration—“these long-running [World Bank-supported] programs, although in line with the objectives of the previous two administrations, may be less central to the objectives of the current administration,” it noted.
“The central theme of the administration of President Duterte is addressing the huge gap in national-level infrastructure. There is no question of the importance of this for enhancing the Philippines’ competitiveness and improving the quality of life in Metro Manila and beyond. But other development partners are better placed to support this agenda; the government sees them as less costly sources of funding, and these partners have been more active in this area in the past,” it said, referring to the Duterte administration’s ambitious “Build, Build, Build” program.
But given that, in general, World Bank support was still “underused” in the Philippines, the lender said it wanted to “do more with its comparative advantage in disaster risk management and climate change; support for the peace process in Mindanao; enhancing the capacity of subnational governments to provide better services, nutrition and education quality; supporting private sector development and SME [small and medium enterprise] development, and good governance.”
“There is alignment between the World Bank’s comparative advantage and the government’s goal for the country to achieve upper middle-income country status by the end of the current administration. Reaching upper middle-income country status is feasible if the country continues to grow rapidly, but it is necessary to look at more than just the growth numbers. Rapid growth has contributed to greater poverty reduction, but the Philippines still has some fundamental structural issues that need to be addressed. These include a high rate of inequality; still-high levels of poverty and vulnerability, which leads many of the nonpoor to periodically fall back into poverty; a dependence on the service sector; underperformance of the agriculture and manufacturing sectors; lack of medium-size enterprises (the ‘missing middle’); inadequate quality of education, which limits the access of the poor to better jobs, and gaps in the health care system. The capture of the political system by a dominant elite is both a cause of many of these problems and a constraint in addressing them,” according to the World Bank.
In the case of Mindanao, the World Bank said it was considering to make the newly formed Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) as a focal area for World Bank Group support, and potentially a model for in-depth regional engagement and local capacity building.
“Mindanao has the largest concentration of poor in the Philippines and has considerable economic potential. Here is where the World Bank has a comparative advantage, given continued engagement on peace and reconciliation, experience with Mindanao Rural Development Project (MRDP), capacity building at the Bangsamoro Development Agency (BDA), ongoing Marawi reconstruction and high-quality analytical work such as the Mindanao Jobs Report. Mindanao could be a showcase of effective development assistance in a specific region, which can be scaled up to other regions,” it said.
In its “Philippines Mindanao Jobs Report: A Strategy for Mindanao Regional Development” published in 2017, the World Bank said initiatives supporting the agriculture sector as well as human development were expected to create more jobs in the war-torn island.
For the World Bank, economic progress in the Philippines will depend on the success of development in Mindanao.