HALF a century ago, the “forces working for cooperation and fraternity between nations” were never underestimated. Fifty-one years later, they remain so, as the Asian Development Bank’s (ADB) unique engagement with the Philippines didn’t stop at the location of the multilateral bank’s headquarters.
It was in 1966, during the inauguration of the bank’s headquarters, that the late President Ferdinand E. Marcos saw “the beginning of a new era in the solidarity of the region.” Local experts believe that solidarity between the ADB and the Philippines helped the Southeast Asian nation become the “economic tiger” it is now by financing major projects.
Since the 1970s, ADB’s financing was mainly for infrastructure projects, former dean of the University of the Philippines School of Labor and Industrial Relations (Solair) Rene E. Ofreneo said.
“The tradition of the World Bank and the ADB in the 1970s onward was [financing] infrastructure projects,” Ofreneo said. “They financed dams, major national facilities, airports and then they also experimented on the original PPP [public-private partnership]; they introduced, in the 1970s and the 1980s, the term cofinancing.”
THE ADB said the Philippines has been one of its largest borrowers. The Philippines has received a cumulative $16.85 billion worth of loans that covered 213 public projects and $82.6 million in grants covering 28 projects.
In the past 10 years, the ADB’s annual lending to the Philippines reached $767 million. In 2017 the country was ranked as the seventh-largest borrower of the bank.
“ADB’s support to the Philippines focuses on three main pillars: accelerating infrastructure investments, promoting local economic development, and increasing social investments,” the ADB said.
However, while it may seem that ADB’s financing has been geared toward hard infrastructure projects, some believe the support of the bank in the Philippines has changed to include also financing soft projects. Former Finance Undersecretary Romeo L. Bernardo said one such project is the bank’s support for the Philippines’s conditional-cash transfer (CCT) program that, government officials believe, has helped the country close gaps in access to health and education services.
The country’s CCT program, known locally as the Pantawid Pamilyang Pilipino Program (4Ps), started with 284,000 beneficiary households in 2008. By 2015, beneficiaries reached 4.1 million households.
In terms of population, the number of beneficiaries rose from 662,000 children aged 0-18 years old in 2008 to 10.2 million in 2015.
Today, the program covers about 79 percent of poor households whose income is less than the amount needed to basic necessities.
THE CCT extends a health grant amounting to P500 monthly year-round and an education grant of P300 per child for 10 months each year to each participating household.
To receive these cash grants, pregnant women must avail themselves of pre- and postnatal care, and be attended during childbirth by a trained professional and parents or guardians must attend the family development sessions, which include topics on responsible parenting, health and nutrition.
Other conditions include children aged 0-5 must receive regular preventive health check-ups and vaccines; those aged 6-14 must receive deworming pills twice a year; and children between 3-18 must enroll in school, and maintain an attendance of at least 85 percent of class days every month.
“The CCT program is already showing good early results in keeping kids in school and whittling down poverty rates,” Bernardo said. “[It] has been successful in several countries ahead of us.” Apart from the CCT, Bernardo also said the ADB is also now funding projects that support government efforts to respond to disasters, such as Supertyphoon Yolanda.
The ADB extended $500 million as budgetary support to the Philippine government for Yolanda rehabilitation efforts and funded the $376-million Kalahi-Cidds project of the Department of Social Welfare and Development (DSWD). The Manila-based multilateral development bank also managed the $20-million Yolanda fund extended by the Japan Fund for Poverty Reduction (JFPR). The ADB also extended another $150 million worth of support for Yolanda efforts.
APART from these, the Manila-based multilateral development bank has extended its infrastructure financing to project preparation for both private and public infrastructure projects.
For public private partnerships (PPPs), the ADB helped create the Project Development Monitoring Fund (PDMF), the revolving fund supported by the ADB and the Australian and Canadian governments, only covers the procurement of transactional advisers, consultants and pre-feasibility studies.
Recently, the bank also extended funding for the preparation of public projects through the $100-million Infrastructure Preparation and Innovation Facility (Ipif).
The total cost of the facility is $164.06 million, with the government of the Philippines contributing $64.06 million. The project is expected to be completed in the second quarter of 2021.
The list of projects that the facility can finance is about $3.8 billion. However, the indicative list from the national government includes seven roads and bridges; six water projects; and six transportation projects.
Initially, the loan for the facility is good for five years but the Ipif can receive additional loans from ADB depending on the implementation of the projects and the need for additional resources by the national government. “The TA on infrastructure [is] most needed as this administration ramps up spending, to ensure quality at entry. Address problems of thin pipeline, supplier-driven projects, poor FS [feasibility studies] [and] weak implementing agencies,” Bernardo said.
THESE hopes and dreams are encapsulated in ADB’s new Country Operations Business Plan (COBP) covering the three-year period of 2018 to 2020, which will extend $3.68 billion worth of lending to the Philippines.
The finance department said the available funding for the Philippines’s infrastructure-related investments from 34 percent of actual lending approvals covering the 2011-2016 period to 48 percent over the next three years.
It added it will also provide $1.9 billion for sustainable infrastructure and development, $1.2 billion for regional development and finance and $900 million for human development. ADB officials also assured the Philippine government of its support for the quick recovery and reconstruction efforts in Marawi City through its $225,000 technical assistance grant and another $5 million from the Bank’s Urban Resilience Fund. However, this COBP is being extended to 2022.
PRESIDENT Duterte has thanked the ADB for its continued assistance to the Philippines, pointing out that the country has received around $16 billion from the bank in the form of loans and grants.
Four Philippine projects in the financial sector were earlier completed with the help of Japanese funding from the ADB. These projects are: “Developing Microinsurance” (DM), “Capacity Development of Financial Regulators” (CDFR), “Capacity Building for Microinsurance” (CBM) and “Strengthening Treasury Operations and Capital Market Reform” (STOCMR).
The DM project for the Philippines was approved by the ADB in February 2008 and was closed in July 2013.
Sourced from the Japan Fund for Poverty Reduction, the $1-million project aimed to support a sound development of microinsurance as part of microfinance services to protect the poor from numerous contingencies and reduce severe poverty incidence. It had three components: review of the current insurance regulations and recommendation to make it more conducive to microinsurance development; enhance capacity of regulators and microinsurance providers through training and mentoring; and, formulation and conduct of a financial literacy program to increase access to microinsurance for the poor.
Strong Treasury ops
THE ADB approved in September 2014 the Philippines’s proposal for Strengthening Treasury Operations and Capital Market Reform and provided technical assistance for the project. The total project cost was at $500,000 and also under cofinancing with the counterpart funding from the Philippine government at $100,000.
The project aims to enhance the Bureau of the Treasury’s (BTr’s) debt and cash management functions, to strengthen its primary dealer system and enhance the development of the country’s capital market.
In the 1990s ADB’s work in the Philippines focused on reform of the country’s public finances. The Philippines’s efforts in this area were rewarded with investment upgrades from international rating agencies.
RECENTLY, Finance Secretary Carlos G. Dominguez III and ADB President Takehiko Nakao signed a $380-million loan agreement for the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP).
The two also led the official exchange of documents on the $300-million “Encouraging Investment through Capital Market Reforms” (EICMR) program-Subprogram 2.
The first loan program involved the construction of about 280 kilometers of national primary, secondary and tertiary roads and bridges in the Zamboanga Peninsula and Tawi-Tawi in Mindanao. Subprogram 2 is expected to accelerate investments in infrastructure by establishing a framework to diversify and broaden available funding sources, particularly private sector financing.
Dominguez has said the loan would fund continuing capital market reforms in the country, which are “vital to encouraging investments in the economy and broadening public participation in the capital market.”
The finance chief said implementing reforms in the country’s capital markets is expected to open new avenues for private investments in infrastructure.
ADB Philippines Office Country Specialist Joven Balbosa earlier told the BusinessMirror that the Manila-based multilateral development bank would launch the Regional Development Project for South Central Mindanao and the upcoming COBP.
Balbosa said the new COBP will focus on regional development, consistent with the aim of the national government to pursue federalism. He said ADB is working together with local governments, particularly lagging regions, to help match them with leading regions which can help them increase investments in their locale.
Indeed, the evolving engagement of the ADB and the Philippines mirrored the twists and turns of the country’s development in the past 51 years. One can only hope that the partnership between the Philippines and ADB will help even more Filipinos leave poverty in their past and make prosperity a reality in the present.
By Cai Ordinario with Rea Cu