Philippines to draw $250-million loan from World Bank in Q1

MANILA, Philippines - The Philippines hopes to draw down a $250-million loan from the World Bank in the first quarter of 2011, Finance officials said during the weekend.

The Development Policy Loan will be used mainly for budgetary support given the government’s tight fiscal position for expenditures.

The aim is to use the loan for the “satisfaction of reform programs of government, the Bureau of Internal Revenue (BIR), the Bureau of Customs (BOC) and the health sector,” according to officials privy to the matter.

The BIR and the BOC both need funds to finance the reform it has been trying to implement.

The BIR, for instance, wants to make its system fully electronic and would need funds for it.

BIR Commissioner Kim Henares said that if the BIR system is fully automated, it could easily match and verify information that would help the agency determine if taxpayers are paying the right amount of taxes they owe the government.

However, the government does not have enough funds to spend as it is staring at a widening budget deficit that is projected to hit P325 billion this year or 3.9 percent of gross domestic product (GDP).

The World Bank, for its part, has lined up various projects for the Philippines from 2010 to 2012, mostly for development projects.

Last October, the World Bank’s board of executive directors approved additional financing of $59.1 million for the Philippines to expand a development project of the government.

The World Bank specifically wants to expand the so-called Kapitbisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS) Project.

The project aims to empower local communities in targeted areas to achieve improved access to basic public services and to participate in more inclusive planning and budgeting.

Implemented by the Department of Social Welfare and Development (DSWD) since December 2002, the original Kalahi-CIDSS project has benefitted 1.1 million households in 4,229 barangays (villages), covering 184 municipalities in the country’s 42 poorest provinces.

It has financed 5,326 community sub-projects, including basic social services facilities, such as water systems, school buildings, health and day care centers; access roads and small bridges; and environmental and disaster control infrastructure.

The additional financing from the World Bank will expand the project’s reach to a total of 220 municipalities that have a poverty incidence of 50 percent or greater, within the provinces already covered.

World Bank country director Bert Hofman has said that the proposed activities in the additional financing are fully consistent with the Washington-based multilateral agency’s assistance strategy for 2010 to 2012.