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PROBLEMS
affecting the use of Overseas Development Assistance
loans have led to a steady decline in the amount of ODA
in the past seven years as government struggled to
develop efficiency.
National
Economic and Development Authority (Neda) data showed
total ODA loans in 2006 were $9.5 billion, 7-percent
lower than in 2005 and 29-percent lower than the peak of
$13.3 billion in 2000.
Cancellations, closures and cost overruns have plagued
projects using such loans, and according to a Neda
report, some projects were not even ready for
implementation when the loan was approved.
Neda
reported that the Department of the Interior and Local
Government also sees the lack of capacity by local
government units, severely affecting use of the loans
and the lack of coordination between implementing
agencies and the failure of agencies to ensure the
sustainability of projects were also cited as factors
affecting loan use.
Neda
figures also revealed that total loan cancellations made
in 2006 amounted to $222 million for 25 loans, and
include 14 loans from the Japan Bank for International
Cooperation worth $166 million, seven loans from the
Asian Development Bank worth $39 million, and four loans
from the World Bank worth $18 million.
These
cancellations were made due to the unused balance at the
close of the loans, excess financing as a result of
foreign exchange movement, low demand for relending,
reduction in scope of projects, and budget constraints.
“In the
process, these cancellations will generate savings for
the government on the payment of commitment fees,
specifically for loans financed by the ADB and WB,” said
the Neda report.
Further,
the Neda said the government closed 25 loans totalling
$1.7 billion availed in 2006. Some of the loans were
closed due to incomplete project outputs as in the case
of the Third Elementary Education Project (Department of
Education), Northern Negros Geothermal Plant (PNOC-EDC),
Local Government Units Support Credit Program (Land Bank
of the Philippines), Fisheries Resource Management
Project (Department of Agriculture), and Metro Cebu
Development Project III (Department of Public Works and
Highways).
“Target
outputs of the projects were not fully attained upon
[the] loan closing date due to delayed release of funds
[DepEd], procurement delays due to flawed procurement
process [PNOC-EDC], limited technical capacity of
nongovernment organizations and research institutions
[DA], right of way and resettlement problems [Department
of Transportation and Communications], and changes in
project design [DPWH,” the Neda reported.
The Neda
said 25 ODA-funded projects were reported by
implementing agencies to have incurred cost overruns
worth P30.34 billion.
The DPWH
accounted for most of the cost increases at 42 percent
or P12.83 billion for 13 projects; followed by the DOTC
with 22 percent or P6.69 billion for four projects; the
National Irrigation Authority with 15 percent or P4.42
billion for four projects; and the LRTA with 14 percent
or P4.11 billion for one project. |
