RP stands to lose $500-M WB, ADB loans

Four program loans of government worth about $500 million from the World Bank (WB) and the Asian Development Bank (ADB) are in danger of being cancelled.

A Department of Finance (DOF) official said these program loans are now being reviewed to determine if the projects supposed to be funded by the loans will be abandoned.

The review is an offshoot of an earlier policy directive adopted by the government to cancel development projects funded through official development assistance (ODA) that are delayed for at least one-and-a-half years.

These loans are on top of project loans of $250 million to $375 million committed by the World Bank in the next three years.

The loans under review are the $100-million Social Sector Expenditure Management Loan with the World Bank; the $30-million earmarked for the Special Zone of Peace and Development (SZOPAD) Program in the Muslim secessionist provinces; the $100-million Grains Sector Development program funded by the ADB, and the $100-million Pasig River Rehabilitation Program, also funded by the ADB and the Metro Manila Air Quality Program with the World Bank.

The DOF official said government has not yet given up on the possibility of drawing on the loans.

These programs could not take off for a number of reasons, primarily because they lacked the required counterpart funding, he said.

Other stumbling blocks include government’s low absorptive capacity, implementation delays and weak implementation capacity of government agencies.

The bureaucracy was also cited as a major factor for the programs’ failure to get going, especially with strong resistance to recommended structural reforms by creditors.

To speed up the utilization of ODAs, Finance Secretary Jose Isidro Camacho, who is concurrent chairman of the Investment Coordinating Council (ICC), earlier this year signed a circular that cancels slow-moving projects or those that have not progressed in 18 months since approval.

Camacho said that within an 18-month period, implementing agencies should firm up or incorporate project requirements such as environmental clearance certificate and regional development council endorsement, provision for right-of-way/resettlement action plans, as well as inclusion of the project’s budgetary requirements in the agency budget ceiling.

The circular also stated projects approved by the ICC prior to December 1999 which have not started, will be subjected to a re-evaluation by the ICC.

Because of the low untilization of ODA funds, the government has so far, cancelled about $600 million in ODA loans to save P23 million in commitment fees.

The finance department, however, has already committed to improve the utilization of soft loans or concessional loans and will double the release of ODA counterpart funds to P50 billion from P26 billion this year. – Rocel Felix