ADB, WB Group ready to assist RP cope with global crisis

The Asian Development Bank (ADB) and the World Bank Group have expressed preparedness to assist the Philippines in coping with the global credit crisis.

ADB country director for the Philippines Neeraj Jain said in a briefing that they could adopt pragmatic measures to limit the impact of the global crisis on the Philippines.

“We can do so in a limited nature as the primary source of the Philippines’ problem is outside the country. Effective fiscal stimulus depends more on enhanced tax administration, rationalization of fiscal incentives and excise tax reforms,” Jain said.

The ADB said it is prepared to extend assistance through technical grants to help the government improve efficiencies, such as tax administration.

ADB assistance for 2006-2008 averaged $665 million per year, or roughly 0.5 percent of gross domestic product (GDP) and about 20 percent of total official development assistance (ODA) portfolio.

The most recent areas of program loan to the Philippines were in the areas of development policy support, financial market regulation, and local government financial and budget reform.

Meanwhile, the World Bank has been helping developing countries secure access to essential public services. Through its affiliates, it uses quick-disbursing emergency recovery operations, as well as standard investment operations, to accelerate and expand investment in basic healthcare and education.

“The financial crisis has its origins in developed world, but is quickly being transmitted to the financial systems of developing countries. Financial institutions in developing countries are beginning to suffer from a lack of short term liquidity, as retail deposits exit and non-deposit funding dries up,” World Bank officials said in a global teleconference.

As the effects of the global recession spreads, the impact will be felt on financial sector asset quality, leading to the need for recapitalization of financial institutions, they added.

Lack of liquidity will also reveal underlying weaknesses in regulatory frameworks and in the management of financial institutions, requiring regulatory reforms and capacity building. Tight credit markets in developing countries are rapidly affecting the real sector, especially sectors reliant on trade finance and working capital, the officials pointed out.