World Bank urges okay of changes in New Central Banking Act

MANILA, Philippines – The World Bank is urging for the immediate approval of the proposed amendments to the New Central Banking Act, and at the same time, called on the Philippine government to form a performance evaluating system for government-owned and controlled corporations (GOCCs).

In its 2009 Philippine Development Report released recently, the World Bank likewise recommended that government form a fiscal risk unit, use remittances for development and poverty reduction, and improve micro-, small and medium enterprises (mSME) access to finance, and develop electronic banking services.

The report is structured around the Philippine government’s 2004-2010 Medium-Term Philippine Development Plan (MTPDP).

“Key pillars of the MTPDP are fiscal stability and consolidation, increased competitiveness through improved governance, better infrastructure, and improved human capital,” the World Bank said.

Aside from the changes to the New Central Banking Act, the World Bank strongly suggested that the Philippines create a strong revenue base while rationalizing expenditure, including off-budget spending.

It said the government should establish a dedicated fiscal risk unit and publish a fiscal risk statement as well as budget reporting. A debt management office should be created, including a debt management strategy followed closely by published public debt data.

The World Bank report also suggested that the Philippines re-institute a performance evaluation system and subject GOCCs to performance targets and regularly publish these evaluation.

“Establish a dedicated public-private partnership (PPP) unit must be formed with the technical, legal and financial role of assessing, negotiation and writing all PPP projects and contracts of the Republic,” it said.

And since remittance from overseas Filipinos already comprise 10 percent of gross domestic product (GDP), government should, among others, improve access to formal financial services to poor migrants and their families. Likewise, policies should be formulated to use remittances for development activities and for poverty deduction.

For social protection, government should develop an operational social protection strategy and work-plan for the national Social Welfare Program cluster.

To be able to support employment and earnings, a cost-effective public works program should follow best practices, including improving its training content to enhance its employment potentials.