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THE
World Bank (WB) Group may increase its lending
assistance to the Philippines to as much as $1.7 billion
if the government is able to continue its fiscal reforms
that have resulted in economic gains for the country.
Initially, the WB allotted $1.8 billion as indicative
funding for projects for the Philippines under the
Country Assistance Strategy (CAS) from 2005 to 2008.
World
Bank Philippines acting country director Jehan
Arulpragasam said that aiming to sustain the country’s
economic gains should be fueled by the payoffs from the
recent fiscal-reforms implemented by the government.
“The
challenge for the next few years will be to build on
recent fiscal-reform progress and extend the reform
commitment to areas where there has been less progress
in recent years,” Arulpragasam said in a statement.
“Decisive steps to strengthen tax administration will,
therefore, be one of the major challenges. This is why
efficient and fair tax administration requires
everyone’s full support,” he added.
In its
CAS Progress Report, the World Bank Group said that
maintaining sound fiscal policy remains vital to
achieving the twin development goals of economic growth
and social inclusion.
The bank
said fiscal reforms, particularly the positive efforts
of the government on the tax effort, will not only
reduce risks to macroeconomic stability but also
generate resources to deliver social and infrastructure
services.
“Over
the longer term, achieving good governance and
strengthening public institutions will be essential to
attaining the development goals,” the bank said.
The
possible increase will be used particularly for the
extension of the bank’s current CAS to June 2009 from
the initially planned end date of June 2008.
During
the extended period, the World Bank said overall CAS
lending amount would be determined by fiscal reform
progress, while the composition of lending will be
determined by progress in reforms in specific agencies.
“Two
years into the implementation of the CAS, the
Philippines has demonstrated a decisive turnaround of
its public finances,” the bank said.
The bank
cited the country’s improved fiscal policy during 2005
to 2006, which has substantially increased World Bank
support to $410 million and $395 million, respectively,
for Fiscal Years (FY) 2006 and 2007 from a previous
level of $100 million to $200 million per year.
The bank
said the FY 2007 amount included a Development Policy
Loan in the amount of $250 million, the first
policy-based lending in eight years.
The bank
also said that its private- sector arm, the
International Finance Corp. (IFC) transaction volumes
are expected to grow to $200 million. In FY 2007, IFC
poured in $130 million in the country.
“We
welcome the extension of the current CAS of the World
Bank Group until 2009. In light of the upcoming midterm
review of the 2004-2010 Medium-Term Philippine
Development Plan [MTPDP], we deem it more appropriate to
extend the current strategy instead of formulating a
successor strategy at this time,” National Economic and
Development Agency director general and Socioeconomic
Planning Secretary Romulo Neri said in the World Bank
statement.
Neri
added that the extension of the CAS would help the
country to continue its reform program to help deliver
the benefits of growth to more Filipinos. The CAS, he
said, has become relevant and responsive to the goals of
the MTPDP.
The CAS
is formulated to respond to the government’s development
agenda and its preference to rely more on official
development assistance over commercial borrowing,
because of lower costs and its potential to promote key
reforms. |
