Foreign grants plunge 94% to only P74M in ’04

Troubled by corruption and low utilization capacity, foreign grants plummeted by 94 percent in 2004, reaching only P74 million from a high of P1.198 billion in 2003.

The Bureau of Treasury (BTr) reported Thursday that total foreign grant assistance to the Philippines amounted to only P74 million, mostly coming from Japan and the International Bank for Reconstruction and Development (IBRD) of the World Bank.

The BTr data indicated that during the months leading up to the May elections, Japan approved grants amounting to only P13 million with small amounts also coming from the International Development Fund and the Global Environment Fund of the World Bank and the UN Development Program.

In contrast, the BTr report indicated that 2003 grants amounted to a total of P1.198 billion, with about P590 million coming from Japan and about P323 million from the annual US Farm Bill or Public Law 480 (PL480).

The 2003 data showed 16 different grant agencies pouring in over one-billion peso worth of grants but in 2004, the BTr recorded only five sources of grant money.

Japan has been the country’s biggest and most consistent source of grant and development assistance despite the government’s difficulties refunding the taxes that Japanese contractors have been paying.

Finance officials said it would take the Arroyo administration four years to refund some P366 million worth of value added taxes (VAT) to the Japan Bank for International Cooperation (JBIC) for various infrastructure projects in the country.

Finance department sour-ces told reporters that the government would have to refund JBIC’s VAT payments in slow trickles in order not to disturb its already precarious fiscal position.

The Department of Finance (DOF) already approved the refund last year before JBIC announced that it was canceling a significant number of projects in the Philippines.

The canceled loans included mostly projects that have not been moving due to the absence of local counterpart funds, "poor performance," and various legal tangles, usually right-of-way acquisition by the National Government.

Six projects have already been marked for cancellation and 11 more were marked for scaling down due to implementation problems.

Among those being eyed for cancellation are the Maritime Safety Improvement Project (Phase C), the Iloilo Flood Control Project (II), Improvement of the Maritime Disaster Response and Environmental Protection System Project and the Arterial Road Bypass Project.