WB lauds RP fiscal reforms

A senior World Bank official yesterday lauded the Philippines for its fiscal reforms but said it needs to do more to strengthen its fight against corruption.

Juan Jose Daboub, one of the bank’s managing directors, said corruption remains a major hindrance to foreign investment and the government needs to be more transparent in the use of public funds.

"Now that the Philippines is implementing several reforms for macroeconomic and fiscal stability, there is the breathing space for addressing some of the difficult structural issues of governance, including more effective and transparent collection of taxes and better quality of public spending," Daboub said.

The government’s move to expand the base of its value-added tax and increase the rate to 12 percent from 10 percent has boosted public revenue and put the country on target to achieve a balanced budget by 2008.

But a recent WB report ranked the Philippines 126th out of 175 countries in terms of investor-friendliness. Vietnam, for instance, which 15 years ago was a relatively closed society with an underdeveloped economy, was 104th.

"It seems very clear that there is real urgency if the Philippines is to gain a larger share of the investments now coming into" Southeast Asia, he said.

He said WB plans to intensify its efforts against corruption, an issue that will be addressed at length during next week’s annual meeting in Singapore.

Possible measures include suspending WB programs or demanding repayment of grants in extreme cases, he said.

He added WB will include any agency or company in "corruption blacklist," but that no Philippine company or individual has appeared on its blacklist.

Daboub said WB has investigated over 2,000 cases of alleged fraud and corruption globally over the past five years, resulting in the blacklisting of more than 300 companies and individuals.

"We will share it with other multilateral lending agencies," Daboub said, adding that they have also been talking and sharing information with other global players like the United States Agency for International Development (USAID), the Australian AID and the Asian Development Bank.

The sanctions the WB will impose include government payments for the grants or technical assistance (TA) it extended; suspension of the loan; or withdrawal of the specific loan in question.

The suspension or withdrawal of loans can paralyze the country’s development programs and projects especially in infrastructure, utilities, power and social concerns.

Likewise, the WB urged government agencies, civil society and non-government organizations (NGOs) to join their efforts on good governance, transparency and fight against corruption.

WB country director for the Philippines Joachim von Amsberg said that they are coordinating with the Makati Business Club, Code NGO Network and other NGOs as well as some government agencies, to help curb corruption especially in government-led but foreign funded projects.

The Philippines was ranked 120th among the 180 most corrupt- ridden countries by Transparency International, a global watchdog.

Meanwhile, Daboub lauded the Philippine government for significant improvement in the country’s economic fundamentals, citing gains in the gross domestic product (GDP) during the first six months of this year.

He said the fiscal reforms could bring the country back to a balanced budget by 2008.

"The successful fiscal reforms have significantly reduced the macroeconomic uncertainties the country faced two years ago," Daboub said.

But the WB official said that the Philippines still had to do more "homework" like most developing nations in the region.

"The Philippines must consolidate its macro-economic gains. And it must improve on the rule of law, increasing the participation of the private sector in development, it must ensure personal and legal security, and bring education to a level of quality to answer the needs of society and economic development," Daboub stressed.

He added that "the groundwork is not fertile to address issues of governance, including transparent and equitable collection of taxes and more transparent use of public funds." — AP, Ted Torres