By ROSEMARIE FRANCISCO
The World Bank said plans to resume program loans to the Philippines, mostly aimed at funding reforms in specific sectors, due to Manila’s improved fiscal position.
"The World Bank is considering making use again of development policy lending which it has not used in the Philippines for some seven years," Country Director Joachim von Amsberg told reporters yesterday at the end of a two-day meeting between the government and donors at a mountain resort south of Manila.
"This is in a sense a seal of good economic housekeeping that the World Bank provides based on the assessment that the plan laid out to us in the last couple of days are convincing and are indeed allowing a fiscal turnaround."
The World Bank had stopped giving the Philippines program loans, which the government used to fund its budget deficit, because of delays and limited success in reforms promised.
Von Amsberg did not indicate how much the World Bank would allot to the Philippines. But it said last year it could extend more than $ 2 billion to the country in loans and investments over three fiscal years.
The Philippines’ programme loans from other multilateral agencies were $ 400 million in 2005, down 67 percent from $ 1.2 billion in 2001.
Official development aid commitments from various agencies and countries for ongoing projects have fallen to $ 10.1 billion in 2005 from $ 13.2 billion in 2001.
Finance Secretary Margarito Teves said the government wanted to include larger foreign ownership caps in the utilities, property and media sectors in proposed constitutional amendments to attract more investment and fasttrack economic growth.
The government also planned to pursue reforms in fiscal incentives and improve tax administration to reap the benefits from a broader sales tax imposed last year, he said.
"In the event that there’s discussion on charter change, we hope that economic provisions will be debated because this would help us be at par in terms of investment climate," Teves said.
Foreign ownership in public utilities is now limited to 40 percent, while foreigners are banned from owning property and media assets.
President Gloria Macapagal Arroyo wants to change the constitution to shift to a parliamentary system to end what she says is politicking by her critics that has slowed the economy.
But she faces opposition from the Senate and groups who fear she is using the move to postpone 2007 congressional elections.
The government expects this year’s budget deficit to fall to P125 billion or 2.1 percent of gross domestic product this year from a below-target shortfall of P146.5 billion or about 2.7 percent of GDP last year.
"If 2005 was the year of tax legislation, 2006 is the year of tax administration," von Amsberg said, adding the government’s tax agencies should build up their credibility and simplify procedures to improve collections.
The Philippines passed key fiscal reforms, including the broader and higher national sales tax, to boost revenues weighed down by corruption, evasion and lax implementation of tax laws.
Higher revenues would allow the government to spend more on infrastructure and social services and spur economic growth.
The World Bank expects the Philippine economy to grow 5.3 percent in 2006, compared with 5.1 percent last year, due to rising consumption fuelled by strong remittances from Filipinos working overseas.
Earlier this week, the government lowered its GDP growth target for 2006 to 5.5 to 6.2 percent from 5.7 to 6.3 percent.(Reuters)
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