Economic managers want more ODA for infrastructure funding

MANILA, Philippines — The Philippines should maximize the use of official development assistance (ODA) to fund in whole or in part big-ticket infrastructure projects under the government’s ambitious Build Build Build program, economic managers said.

As several developed countries compete for influence in Asia through the use of ODA – the Philippines included – economic managers said the country should take advantage of this new attention to the region while the country is still within the income bracket that would qualify for favorable terms.

 “We have to remember something: the Philippines is already on the verge of graduating to the level where it will not qualify anymore for ODA for some countries. Our income per capita is rising so while we are still here, I think it is best for us to take advantage of the long tenors and the relatively low interest rates,” said Finance Secretary Carlos Dominguez in a briefing Wednesday night at the conclusion of the 6th Meeting of the Philippine-Japan Joint Committee on Infrastructure Development and Economic Cooperation.

“Because after a few years, we will no longer be qualified for that and therefore we will have to pay higher interest rates. It makes sense for us to have these funded now than later,” he added.

This week saw the back-to-back signing of documents detailing loan commitments and discussions of other major projects for financing through ODA with China and Japan.

Socioeconomic Planning Secretary Ernesto Pernia earlier said that by next year, the Philippines is expected to meet the World Bank’s definition of an upper-middle income economy with a per capita income of between $3,900 and $12,000.

Using the same definition, the country would be joining the ranks of China, Malaysia and Thailand.

The Philippines is currently classified as a lower-middle income country along with Myanmar, India, Laos, Vietnam and Indonesia.

Dominguez said many countries have set their sights on the Philippines after the Duterte administration refocused its foreign policy.

“I think that many countries around the world are paying attention to the Philippines primarily because President Duterte has refocused our entire foreign policy. He has focused on our neighbors…so it makes total sense that we are receiving also their attention and their assistance,” he said.

Pernia said the US may also be interested in ramping up its development assistance to the country.

“I think the US is also interested. They used to provide ODA. They may be more keen now in also coming to this area,” he said.

Dominguez maintained that the government would be discerning in selecting projects that would be chosen for ODA financing.

“They go through a very rigorous process of evaluation and approvals here. So we are very careful about the projects we propose for financing, that they are always going to be economically viable,” he said.

The Philippines currently receives ODA in the form of grants and loans from countries such as Japan, US, Australia, Korea, Germany, Italy, Canada, Australia, Spain, China and New Zealand, and from institutions such as the World Bank, Asian Development Bank, United Nations System  and Asian Infrastructure Investment Bank.