RP stands to lose $2.5 B in loans from funding agencies

The government may again be in danger of losing some $2.5 billion worth of loans from the World Bank (WB), the Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC) due to its inability to quickly disburse these loans.

The three funding institutions and even the International Monetary Fund (IMF) expressed their concern about the slow disbursement during a meeting with President Estrada and the Economic Coordinating Council (ECC) last night.

Sources said visiting WB president James Wolfenson, IMF deputy managing director Shigetsu Sugiyaki, IMF resident representative Sean Nolan and representatives of the ADB and JBIC discussed the matter with President Estrada and the ECC.

The various ongoing program and project loans are being held up due to various reasons which include the government's inability to meet some of the conditionalities attached to the loans.

One WB loan, the Banking Sector Reform Loan (BSRL), is being held up due to the delay in the privatization of the Philippine National Bank.

Other project loans are being held up due to counterpart funding or project specific problems.

Government had lost about $950 million in various loans from multilateral sources due to its slow disbursement.

Loans from multilateral sources are concessional funds that carry low interest rates and have long maturity. Most of the loans have cross conditionality with the IMF.

Unfortunately, even the country's IMF program is regularly breached due to the government's failure to meet performance criteria or other conditionalities such as structural reforms in the banking sector, public sector and others.