RP rejects ADB condition for release of $175-M loan

The government will not cave in to pressure from the Asian Development Bank (ADB) to lift quantitative restrictions (QRs) on rice, one of the conditions for the release of the second and third tranches of the $175-million Grains Sector Development Program (GSDP) loan.

Instead, newly-appointed Agriculture Undersecretary Arsenio Balisacan said government will insist on keeping the QRs until 2010 and only then will it consider imposing tariffs on the country’s staple food.

Under the ASEAN Free Trade Area-Common Effective Preferential Treatment (AFTA-CEPT), the Philippine government committed rice as one of commodities whose tariffs will be lowered to zero to five percent from the current 50-to 60-percent import tariff.

But with the local rice industry unprepared to open up the domestic market, rice producers have successfully convinced government to move rice to the highly sensitive list products, allowing the retention of existing tariffs until 2010.

"We are willing to resume talks with the ADB but we are firm in our position that existing quantitative restrictions should remain," Balisacan said.

If the ADB insists on the lifting of the QRs, "then we will be forced to reject the loan if the terms are disadvantageous to the government," he added.

Balisacan said the DA wants to resolve the other issues raised by the ADB, including the bank’s other major concern, that is – the privatization of the National Food Authority (NFA).

"That will take a longer time to discuss but we want to explore the possibility of resolving the issue at the soonest," Balisacan said.

Earlier, NFA Deputy Administrator Gregorio Tan said the state-agency had submitted to the ADB firm positions.

"If the ADB is unwilling to abide by these, we have no choice but to forego the loan," said NFA Deputy Administrator Gregorio Tan.

The GSDP consists of a $100-million program loan and a $75-million investment loan intended to bankroll government efforts to improve infrastructure and support services for the local rice and corn industry.