PH fails to get US grant due to low mark in corruption fight

MANILA, Philippines — The Philippines again failed to qualify for a grant from the American aid agency Millennium Challenge Corp. (MCC) due to its failing mark in the “control of corruption” requirement.

However, two other multilateral lenders have agreed to provide $500 million to the Philippines to add to the government’s budget to buy boosters and additional COVID-19 shots for children under its expanded vaccination program for 2022.

The country’s red mark in the must-pass control of corruption requirement disqualified the country from grants to be extended by MCC next year.

The Philippine scorecard for fiscal year 2022 showed that, similar to its 2021 results released last year, the country passed 12 of the 20 indicators: fiscal policy, inflation, regulatory quality, trade policy, gender in the economy, and land rights and access (in the area of “economic freedom”); political rights, civil liberties and government effectiveness (in “ruling justly”); and natural resource protection, girls’ secondary education enrollment rate and child health (in “investing in people”).

However, the Philippines’ scores in access to credit and business startup (in economic freedom), control of corruption, rule of law, and freedom of information (in ruling justly), as well as health expenditures, primary education expenditures, and immunization rates (in investing in people) remained in the red.

‘Hard hurdles’

The scores in control of corruption and rule of law were based on the World Bank and Brookings Institution’s latest Worldwide Governance Indicators.

“To be eligible to receive MCC funding, countries must pass at least 10 of our 20 indicators, as well as both categories that MCC considers ‘hard hurdles’ for eligibility—the political rights or civil liberties indicator, and the control of corruption indicator,” the MCC said in a Nov. 9 statement.

The MCC noted in its Philippines scorecard that while the country failed in the control of corruption category, it passed more than half of the indicators and got a green mark in democratic rights (political rights and civil liberties).

Out of the 81 countries that the MCC shortlisted for a possible 2022 grant, only 28 eventually hurdled the scorecard.

The Philippines’ first MCC grant of $434 million was extended in 2011 and covered three projects that built roads, reformed revenue administration, and supported the delivery of social services to the poor.

But in 2016, MCC deferred a new grant for the Philippines after the country became “subject to a further review of concerns around rule of law and civil liberties” under then US President Barack Obama, who had been critical of President Duterte’s war on drugs.

Pandemic response

Meanwhile, a document from the Asian Infrastructure Investment Bank (AIIB) released on Wednesday showed that the Beijing-based lender would lend $250 million and the Manila-based Asian Development Bank (ADB) would co-finance $250 million of the $500-million loan to the Philippines.

The government will shoulder the balance of $53.66 million of the $553.66-million total cost of the project called Health System Enhancement to Address and Limit COVID-19.

“The project will provide critically needed vaccines to assist the government of the Philippines in mitigating (through vaccination) the adverse health, social and economic impacts caused by the COVID-19 pandemic,” AIIB said.

AIIB’s financing is expected to be approved this fourth quarter of 2021.

The forthcoming AIIB and ADB loans will add to the $300-million World Bank loan also for additional vaccines and boosters that is expected to be approved by the Washington-based lender next month.

The government plans to borrow a total of $900 million to buy booster and pediatric shots.

The Department of Health (DOH) will implement the project.

AIIB said the newest loan would be supported by its COVID-19 crisis recovery facility, which was also the source of the $300-million credit extended to the Philippines in March, the bank’s first-ever loan for vaccine procurement among its member-countries.

AIIB and ADB lent $700 million early this year to the Philippines to buy COVID-19 vaccines. The lenders directly paid manufacturers for the shots that the government ordered.