NEDA inks aid agreement with French agency

The Philippines, through the National Economic and Development Authority (NEDA), on Wednesday signed a memorandum of understanding with the French government’s donor arm for an official development assistance program involving 150 million to 200 million euros.

NEDA Deputy Director-General Rolando G. Tungpalan said the Agence Francaise de Developpement (AFD) program for the Philippines, which covered fiscal year 2012-2013, was aligned with the priorities of the Philippine Development Plan 2010-2016 for “inclusive” and “green” growth.

Tungpalan said the AFD assistance would be in the form of untied loans, which was not traditional for implementing agencies of donor countries, and would follow local procurement rules. He said he was hoping this would be the benchmark for future bilateral agreements.

“For stand-alone loans, we will follow local procurement rules and for co-financed loans, we are willing to work with whoever is the development partner,” said AFD country director Luc Le Cabellec.

Le Cabellec said the French agency was keen on having a medium-term (two to three years) program for the Philippines that would support, among others, agriculture efficiency to help curb poverty in an environmentally sustainable way.

“This is an important milestone not only for AFD and the government of the Philippines but also, in a broader way, between France and the Philippines,” Le Cabellec said.

AFD is offering long-term loans (15 years with a five-year grace period) with possible technical assistance grants for certain components of concerned projects.

Transport, water supply, sanitation, and forestry are among the sectors covered by the current country program.

As a general rule, Le Cabellec said, the programs must support government priorities, particularly “green” and “inclusive” sustainable development. AFD’s “motto,” he said, was to foster a “low-carbon growth path” for the countries it was supporting.

In 2011, AFD worked with the Aquino administration to identify projects that the French aid agency could finance, he said.

In December 2009, the AFD board approved its first loan to the government of the Philippines (150 million euros), which was used to co-finance with the Asian Development Bank the implementation of the second phase of a national program for local government units.

This program aims to support the government in its efforts to strengthen LGUs’ capacities to plan and budget for the general welfare of their constituent communities in a transparent and accountable way. It contributes to improve efficiency and effectiveness in the delivery of basic public services, including environmental services, to residents by increasing fiscal resources and financing options for LGUs.