MANILA, Philippines – Climate Change Commission vice chairman Heherson Alvarez said he was unaware of the disbursement of the 150-million euro (roughly P10.5-billion) French loan that was originally intended to enhance the Philippines’ capability to deal with climate change but was used instead to plug the yawning budget deficit.
Alvarez, a former senator, said he never received any information about the loan and he only learned of its existence on June 23 in a meeting with officials of the Agence Française de Développement (AFD), which facilitated the loan.
Alvarez was reacting to a report by The STAR on the Arroyo administration’s using up the entire AFD loan during the election season from February to May for plugging the budget deficit.
Under the law creating it, the commission is chaired by the President, with the vice chairman actually overseeing it.
“At the very least 20 percent of the loan should have been earmarked for its intended purpose, especially at this time when the country is beginning to experience another season of violent typhoons and storm surges,” Alvarez said.
He said that if he had been part of the decision process in the disbursement of the loan or at least had been told about it, he would have recommended the use of part of the loan to modernize the facilities of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa).
He said diverting funds intended for the environment could undermine the country’s overall effort to cushion the effects of climate change.
Alvarez said the AFD was represented during the meeting at the Makati Shangri-La Hotel by Alexis Bonnel, deputy to the director of the Operational Department, and Isabelle Vincent, a manager in the Environment and Infrastructure Division.
During the meeting, Alvarez said he informed the AFD officials that the Philippines was ready with a climate change framework strategy.
The meeting, called by AFD, was intended to provide Alvarez with an overview of the nature and functions of the institution as the main facilitator of French bilateral Official Development Assistance.
Clarification
The French embassy, meanwhile, clarified that the 150-million euro loan was for “budget support” and not exclusively for mitigating the effects of climate change.
In a statement, the French embassy said the first AFD loan was a counterpart financing with the Asian Development Bank (ADB) for the budget reform program and local government financing.
“In a ‘budget support’ operation, the Department of Finance and the development bank agree on a reform program. When the program is put in place, the development bank provides funds to DOF: it is a global support for the national budget, not the financing of a specific measure or project,” the embassy said.
“This first loan was a co-financing with AFD and ADB: it was a second phase of an ADB program. AFD participation was discussed and negotiated since 2009,” it added.
“Technically there were two loans (one from AFD and one from ADB), but the schedule was very similar. This first AFD loan in the Philippines followed this ‘budget support’ process: our objectives were reached and we didn’t notice any irregularity in this very standardized process,” the embassy said.
Former finance secretary Margarito Teves signed the loan agreement for the Philippines on Feb.15 this year.
Teves on Friday also said the loan was not exclusively for climate change-related projects and defended its use for “budget support.”
He said the loan allowed the government to diversify its sources of funds.
Finance Undersecretary Rosalia de Leon also explained on Friday that when a loan is used for budgetary support, it helps fund all projects of the government, including those related to environment protection.
Meanwhile, Transparency International is urging governments to thresh out the mechanism for safer and more effective handling of climate change funds as disbursement of some $30-billion “fast-start” climate change financing - forged in Copenhagen last December - begins.
The Copenhagen Accord calls on developed countries to provide $30 billion in additional funding for developing countries from 2010-2012, and $100 billion a year up to 2020.
Climate financing and climate governance revolve around mitigation and adaptation. Mitigation projects aim to reduce greenhouse gas emissions globally, and these include forest development and carbon trading aimed at providing incentives to the private sector for any effort to reduce emission. The World Bank estimates that the carbon trading market is already worth $144 billion.
Adaptation, on the other hand, involves the implementation of projects designed to protect the population from effects of climate change, such as “climate-proofing” of public infrastructure, or constructing barriers to protect communities from flooding and rising sea levels.
The Group of 20, composed of the richest nations in the world, is continuously working to ensure greater transparency, accountability, and public participation in the disbursement of climate financing.
The United Nations Framework Convention on Climate Change will oversee the so-called fast-start financing. - With Pia Lee-Brago