EDITORIAL - Aid utilization

At least two of the biggest corruption scandals in the previous administration were linked to the utilization of official development assistance — specifically, soft loans from the Chinese government. The Arroyo administration used the international nature of ODA in defending executive privilege when it was invoked by Romulo Neri during the Senate’s inquiry into the $329-million broadband network deal between China’s ZTE Corp. and the Department of Transportation and Communications.

In the final months of the Arroyo administration, the government received a loan of 150 million euros or about P10.5 billion from Paris’ aid arm, Agence Française de Développement, co-financed by the Asian Development Bank. AFD has just opened an office in Manila and signed the loan last February with the Philippine government. The loan, which was fully disbursed before the May elections, was supposed to promote, among other things, AFD objectives including climate change mitigation. But the head of the Climate Change Commission, Heherson Alvarez, said the first time he heard of the loan was on June 23 in a meeting held with two AFD officials upon their request, and he has not seen a single centavo of the money.

With former finance chief Margarito Teves saying the loan was used to plug the budget deficit rather than for environmental protection, French diplomats have since clarified that the loan was for budget support and was not project-specific. Perhaps the AFD should ask the World Bank why it has provided no budget support loan to the Philippine government for about three years now.

This story should remind the new administration of the need to improve the system of utilizing foreign aid. The Chinese, smarting from the corruption scandals and with their loan facility now largely untouched by Manila, said they wanted to play by the rules in this country and were ready to require their companies to bid openly for projects in the Philippines. Those rules need streamlining if the new administration wants to promote transparency and reduce opportunities for corruption.

The Philippines remains heavily dependent on foreign aid and owes it to generous allies to utilize their assistance properly. Donors do not relish having their aid tainted with scandal. The controversies in the previous administration should provide enough lessons for the new one on the reforms that need to be done.