NEDA expects better utilization of ODA loans

MANILA, Philippines - The National Economic and Development Authority (NEDA) expects better utilization of official development assistance (ODA) loans this year because of an improvement in the performance of agencies using the funds.

Data from NEDA showed that of the 87 ODA loans, seven were closed, while two loans worth $250 million became effective during the first semester of 2010.

The total ODA commitments as of June 2010 amounted to $8.8 billion, or $800 million higher than last year, data from the agency also showed.

NEDA reported that the government disbursed about $963.74 million for the first semester this year, or 17 percent higher that the $826.59 million disbursed in the same period last year.

NEDA attributed the significant increase in the disbursements to releases from three program loans worth $452.8 million.

These three loans are the French Development Agency’s Local Government Financing and Budget Reform Program which aims to strengthen financing of local government units to enhance delivery of environmental, health and social services; the Japan International Cooperation Agency’s (JICA) Emergency Budget Support Loan, which aims to encourage economic measures necessary to expand domestic demand amid the global financial and economic crisis; and

JICA’s Development Policy Support Program III which contributes to improving the investment climate through reforms in tax refund, customs services and procedures, systems for partnerships between the government and the private sector.

Loans are earmarked either for specific projects designed to achieve specific objectives within specified resources and implementation schedules, or for programs in the form of cash or budget support to the regular activities of the government.

Disbursement rate of ODA loans slightly increased to 86.68 percent as of June 2010, from 86.37 percent as of the same period last year. Excluding program loans, disbursement level and disbursement rate also improved.

In terms of disbursement ratio, or the proportion of actual disbursement against the total loan balance, the figure increased to 20 percent in the first half of 2010, from 17 percent in the same period last year.

In terms of availment, or the cumulative utilization of loan amount according to a multi-year schedule, the performance rate increased to 82 percent as of June 2010 from last year’s 81 percent.

Actual availment as of the first half of 2010 amounted to $3.899 billion of the scheduled $4.764 billion, NEDA also said.

Excluding program loans, availment rate also improved to 79 percent as of the first semester of 2010, from 77 percent during the same period in 2009.

ODA is extended to the Philippines by financial institutions either through loans or grants, for purposes of capital and technical assistance.