Government works to speed up release of $175-M ADB loan

The Asian Developmen Bank (ADB) will not release the second and third tranches of a $175-million loan for the development of the country’s grains sector unless the Philippine government fulfills two critical conditions — a reduction in the National Food Authority’s palay support price and the liberalization of the country’s rice market.

In a letter to ADB president Tadao Chino, Finance Sec. Jose Isidro Camacho said the government is doing its best to meet these conditions.

The ADB wants the NFA to reduce its paddy support price from P9.50 to P9 per kilo during the wet season and from P10.50 to P10 during the dry season.

The difference of P0.50 is actually an incentive for rice farmers to sell their produce to the NFA. Private traders buy at P8 per kilo during the wet season and at P8.50 during the dry season.

The ADB is also asking the government to liberalize the rice market.

Specifically the ADB wants the NFA, the exclusive importer of grains in the Philippines, to be transformed into a regulatory body similar to the Metropolitan Water and Sewerage System (MWSS) today.

"We want to remove the monopoly of the NFA in terms of rice importations," the ADB stressed. "Ultimately, we want the NFA to be a regulatory body similar to what happened to the water sector."

Camacho urged Chino or any of his representatives to sit with Philippine government officials to renegotiate the release of the second and third tranches.

The ADB released $40 million when the loan program was approved last year. The second tranche is set at $30 million thus leaving P105 million for the third and final release.

Of the total amount, $100 million will go to policy and budgetary requirements while the remaining $75 million will go to infrastructure and irrigation of the grains sector.

ADB director for the Philippines Dr. Gunther Hecker earlier said "we can now study the combined position of the finance department and the agriculture department to find out if they have complied with our conditions." Hecker added that the second tranche would likely be released next year.