ADB set to cancel $50-M project loans to RP

The Asian Development Bank (ADB) is considering the cancellation of as much as $50 million in project loans to the Philippines by June due to the continued delays in their implementation.

Last year, the Manila-based multilateral funding agency scrapped 22 program and project loans, trimming down from 51 projects worth $1.8 billion at the start of the 2003.

ADB chief country officer for the Philippines Ric Ondrick said despite a higher disbursement ratio last year, the country’s absorptive and implementing capacity for the ADB-funded projects still fared low.

Ondrick explained that the country’s inability to raise counterpart funds could be linked to the huge fiscal deficit and the decentralization of the local governments.

The disbursement ratio last year was recorded at 33 percent, the second highest since 1997. In previous years, the disbursement ratio had sunk as low as eight percent.

"Government is not mobilizing or is unable to source internal- and externally-generated funds which is affecting its absorptive capacity," Ondrick added. "What should take five years for completion is taking the Philippines almost eight to 10 years."

Meanwhile, Shamsad Akhtar, ADB officer-in-charge for the Southeast Asia department, urged the National Government to accelerate its reform program.

"The ADB is concerned with the continued delay of the implementation timetable, the investment climate, the rule of law, and the delays in the update reports of the ongoing projects," Akhtar said in a press briefing yesterday.

Meanwhile, the 2004 to 2006 lending program for the Philippines should amount to $712 million. "In practical terms, an annual lending volume of $100- to $150 million during 2004-2006 is indicated on the basis of recent experiences."

The priority project areas for the next three years are in health, education, water, microfinance, small and medium enterprises, irrigation, agrarian reform, energy, transportation, environment and governance.