(Next ADB assistance program more of the same) Poverty in RP still ‘daunting’
Darwin G. Amojelar
Manila Times
THE Asian Development Bank (ADB) said the Philippines’ next assistance program remains “daunting” owing to high poverty levels and weak investments.
In its Country Assistance Program Evaluation Report, the Manila-based lender said its assistance program over the past five years, or from 2003 to 2007, has been successful in meeting its more selective objectives, despite the need for improvements.
“However, the larger context for the next country strategy continues to be daunting. Poverty is high. Progress toward Millennium Development Goals is slow and lagging in key areas, and government expenditures for related social and economic services are still low compared to needs,” the ADB said.
“Private capital formation is low compared to neighbors,” it added.
The regional lender said the country’s export base is narrow and its value-added low. Furthermore, the private sector perceives the need to control corruption, raise infrastructure spending, and education outcomes to improve the country’s competitiveness, the ADB said, adding this should be financed by a strengthened revenue effort.
The reforming energy sector has yet to achieve wider competition and lower electricity rates, while investment rates are low and governance concerns continue to influence investor confidence.
Adding to these constraints are global factors such as slowing growth, a credit squeeze, high oil and food prices, and rising inflation. Hence, in the coming years, the Philippines will face significant development challenges, the ADB said.
“To address the constraints to growth and poverty reduction, the Philippines will need to continue to exercise fiscal discipline and further expand its fiscal space; more widely institute good governance; accelerate infrastructure, education, and other social service development; support expansion and diversification of the economic base; and make access to development opportunities more equitable,” the lender said.
Earlier, the ADB had said that it extended its existing Philippine funding program by two years to support the country’s medium-term development plan.
The regional lender said it has committed $924 million in loans until 2010. Of this amount, $624 million is earmarked for next year and $300 million at the end of the term.
The country’s new strategy would focus on fiscal consolidation, improved investment climate, and accelerated attainment of the Millennium Development Goals.
As of last year, the lender had approved $9.8 billion in public loans and $148.8 million in technical assistance to the Philippines. Through its private sector operations for the same period, ADB had approved $275 million in loans and $37 million in equity investments.
