World Bank extends $300-M loan to Phl

Financing program seen to accelerate inclusive growth, create more jobs

MANILA, Philippines - The World Bank is extending a $300-million development policy loan (DPL) to the Philippines to help the country enact its reforms in accelerating inclusive growth and creating more jobs.

A DPL provides quick-disbursing assistance to countries undertaking reforms. The loan supports policy and institutional changes needed to create an environment for sustainable and equitable growth, as defined by borrower-countries’ own development agenda.

World Bank country director Motoo Konishi said the Philippines can now implement a comprehensive reform agenda centered on restoring people’s trust in government through improved governance and empowering them to rise above poverty, with the approval and subsequent release of the policy loan.

“We are pleased to support the program through the DPL as well as through our broader engagement under the bank’s country assistance strategy,” Konishi said in a statement.

Under the DPL, the government expects to increase tax-to-GDP (gross domestic product) ratio by two percentage points from 12.1 in 2012 to 14.1 to generate more resources for financing important economic and social programs.

Some of the key results accomplished under earlier DPL are improved transparency and accountability in government budgeting and spending; increased and better spending for basic education, targeting low-income families; and enrolment of the beneficiaries of conditional cash transfer program in the country’s universal health care program, thus providing these poor families better access to basic health care services.

Commenting on the grant of the DPL, Finance Secretary Cesar V. Purisima said that the game plan for putting the Philippine economy on solid ground amidst a tough global environment is producing good results.

“This new financing, coupled with the support of other sectors of society, will boost our efforts for making sure that more of our countrymen, particularly the poor and the most vulnerable, are contributing to and benefitting from economic growth,” Purisima added.

The Philippine economy has emerged as one of the fastest-growing economies in East Asia in recent years. Growth accelerated to 6.6 percent last year, a significant improvement over 3.9 percent in 2011.

Economists attribute this growth trend to the country’s strong macroeconomic fundamentals, improved government finances and execution of public investments, expansion of the construction sector, buoyant private consumption, and high confidence in the Aquino government’s commitment to reform.

Purisima said that the policy loan would allow the Philippine to become more competitive in the international market.

He said that the Philippines would also boost investments in infrastructure to make the country more conducive to doing business.