World Bank doubles loans to RP

PHILIPPINE NEWS SERVICE — The World Bank has committed to more than double the financial assistance to the Philippines to as much as $1.7 billion over the next two years from $805 million in 2006 and 2007.

The multilateral lending agency also extended its country assistance strategy to the Philippines by another year to June 2009 instead of June 2008.

The country’s improved fiscal performance resulted in a substantial increase in the bank’s support to $410 million in 2006 and $395 million this year from the previous level of $100 million to $200 million a year.

The bank’s investment arm International Finance Corp. has also committed to increase assistance to $200 million from the proposed $130 million for fiscal year 2007.

The extended assistance strategy for the Philippines focuses on economic and social growth as the bank acknowledges that the two aspects of the reform agenda are inseparable.

Jehan Arulpragasm, World Bank Philippines acting country director, said in a statement that maintaining sound fiscal policy remained vital in achieving the twin development goals of economic growth and social inclusion.

“Sustained economic stability is key to achieving the twin objectives of the extended CAS. The payoffs from recent fiscal reforms should serve as an inspiration for perseverance on this critical agenda. We have seen significant progress in the last two years in spite of the complex and dynamic political environment,” Arulpragasm said.

The Philippines experienced a fiscal slippage in the first half of the year after its budget deficit widened 30.1 percent to P41 billion from P31.5 billion a year ago due to weaker-than- expected revenue collections. The deficit was P9.7 billion more than the programmed shortfall of P31.3 billion.

Government revenues fell to P431.79 billion in the first semester this year, down 3.35 percent from P417.77 billion a year ago.

The tax take of the Bureau of Internal Revenue inched up 5.1 percent to P331.9 billion from P318.4 billion but P38.6 billion short of the programmed collection of P370.8 billion.

The Bureau of Customs collected P92.2 billion, down from P94.7 billion and P13.1 billion lower than the goal of P105.3 billion.

Arulpragasm said the need for fiscal reforms, particularly in regaining positive momentum on the tax effort, would reduce the risks to macroeconomic stability and generate the resources to deliver much-needed social and infrastructure services.

“The challenge for the next few years will be to build on recent fiscal reform progress and extend the reform commitment to areas where there has been less progress in recent years. Decisive steps to strengthen tax administration will, therefore, be one of the major challenges,” he said.