BSP okays $300-M ADB program loan

The Bangko Sentral ng Pilipinas (BSP) has approved a $300-million program loan from the Asian Development Bank (ADB) to finance a judicial reform program.

The BSP’s Monetary Board gave its final approval for the proposed program loan which would be used as general budget support for this year.

The ADB earlier said judicial reforms were exceptionally long-gestating, aiming to reform institutional culture and create new capabilities within the judiciary.

The ADB said there were “professionals skilled in managing court reforms” who could help institutionalize new practices and their recruitment, deployment and retention would need attention and investment.

The ADB called this “twinning arrangements” which would involve placing experts in implementing agencies.

Compared to standalone project teams, these experts would be more accessible to the courts and have the opportunity to obtain personal knowledge of the complex issues that stand in the way of reform. The ADB said they help preserve institutional memory.

The ADB sad judicial reforms, in the beginning, would consist of training judges, building court-related infrastructure, and introducing case management strategies and equipment.

Today, ADB said judicial reform programs include components on police reform, the public attorney’s office, and legal aid.

The ADB had set aside $300 million for the Governance and Justice Reform Program, which would cover skills training for employees of government agencies in the judiciary and programs enhancing the agencies’ technological capacity.

The ADB had also lined up about $924 million to the Philippines for 2009 and 2010 in part to finance projects that would mitigate the effects of rising inflation and overall economic slowdown.

The ADB said it is currently working with an indicative planning figure of about $624 million for 2009 and $300 million for 2010 for projects ranging from technical assistance and sector loans, to program loans and multi-tranche financing facilities.

The Arroyo administration, on the other hand, had planned to raise $1.1 billion from ODA sources this year, of which $600 million were project loans and $500 million were program loans.

Commercial borrowing had already been limited to $500 million but the government later announced it is considering the possibility of raising another $500 million from the commercial market to finance additional spending.

But since the government is having difficulties spending funds that it already had, it reduced the possibility that finance officials would actually foray into the market.

Faced with serious under-spending in its two critical line agencies, Finance officials said there might be no need for the government to continue its plan to issue $500 million worth of global bonds this year.

The original plan was for the government to balance its budget this year but skyrocketing oil and food prices compelled economic officials to undertake a targeted support program intended to cushion the impact on vulnerable sectors.

The program would have cost an additional P75 billion this year, putting the year-end budget deficit at P40 to P45 billion. This would also necessitate additional forays into the credit market to raise funds.