The loan has been pending for approval for almost two years now but budget officials said the bank has not been satisfied with the government’s revenue performance.
In total, the government is expecting to get $400 million to finance its Public Finance Strengthening program. About $200 million is to come from the WB while another $200 million will come from the Japan Bank for International Cooperation (JBIC) as co-financing.
Budget Secretary Emilia Boncodin said over the weekend that the government has met all but one of the preconditions set by the WB.
Boncodin said the WB had been pleased with the implementation of key civil service reforms that would pave the way for the loan package.
According to Boncodin, however, this is not enough and there will have to be significant and sustainable improvement in revenues for the loan to be granted in full.
Since the government entered into negotiations for the approval of the loan, Boncodin said several measures have been passed by congress, such as the e-procurement bill which laid out the legal framework for the use of the Internet in government procurement operations.
Boncodin said the streamlining of the government bureaucracy was also part of the preconditions listed by the WB, including the realignment of eight government agencies under the Office of the President and the integration of about 16 agencies with duplicating functions.
Boncodin expressed confidence that the government’s revenue situation "could not be worse", saying that the president has personally taken over the monitoring of the Bureau of Internal Revenue and the Bureau of Customs.
Boncodin revealed that Malacanang had begun to conduct monthly "command meetings" where the specifics of the government’s revenue agencies were discussed and evaluated at length.
"From this point on, I think our revenue situation could only improve," Boncodin said. "If the president herself is breathing down your neck, what else can you do."
Although the Bureau of Internal Revenue (BIR) managed to surpass its performance in 2001, it still fell short of its 2002 targets and the Department of Finance earlier admitted that the actual 2002 numbers would affect the 2003 targets.
For 2003, the Arroyo administration projected to collect P640.7 billion in revenues and spend at least P782.8 billion. This fiscal program would result in a deficit of P142.1 billion.
However, with the 2002 deficit expected to hit P183 billion, even the most optimistic projections for 2003 yielded a budget deficit of P160.5 billion, equivalent to 3.8 percent of gross domestic product (GDP), assuming a 5.3 percent growth for next year.
Still the DBM said government is expected to save as much as P2.4 billion from its annual budget for common-use supplies as it implements its electronic procurement system (EPS).
According to the Department of Budget and Management, prices in the EPS marketplace were at least 40 percent lower than commercially available goods simply by short-circuiting the marketing and distribution chain.
At present, the government is spending some P6 billion every year for common-use supplies, said Estanislao Granados, director of DBM's procurement service.
These common-use supplies cover some 350 items of goods and services that are needed in the transaction of public businesses. These include office supplies, office furniture and services like trucking, hauling, janitorial, security and related services.