RP plans to tap $854M in ODAs
Combination of program loans, technical assistance
By Michele V. Remo
(Philippine Daily Inquirer, January 25, 2006)

THE COUNTRY IS PLANNING TO borrow $854 million worth of Official Development assistance (ODA) from foreign creditors this year to finance projects and programs that cannot be covered by the expected revenue collection.

ODAs are usually provided by multilateral agencies- such as the World Bank- and bilateral institutions like the Japan Bank for International Cooperation (JBIC) and foreign governments.

JBIC is the Philippines’ biggest ODA source.

Data from the Department of Finance showed that the $854 million programmed ODA borrowing for this year (or P221.4 billion using the government’s foreign exchange assumption of P56:$1) will be about 9 percent lower than the $937 million borrowed in 2005. The drop in the requirement was attributed to the country’s improving fiscal position. The government expect it’s budget deficit to decline to only P125 billion this year from the P146.5 billion in 2005.

Of the $854 million, $604 million is expected to come in the form of project loans, or technical assistance.

Finance Undersecretary Roberto Tan earlier said the country’s finance officials were set to meet with JBIC representatives in March to discuss the bank’s ODA program for the Philippines for this year.

Among the projects to be proposed by the government for funding by JBIC are the Cebu South Coastal Road, the Environmental Development Project and the Infrastructure Logistics Assistance Facility.

The government wants the ODA for the Environmental Development Project and the Infrastructure Assistance Facility to come in the form of credit facilities. This means the amount of loans would be coursed through a government financial institutions that will, in turn, lend out to private and public sector entities that will undertake infrastructure and environmental-related projects.

Projects proposed for financing under the Environment Development Project include those related with sewerage-system enhancements and solid-waste management, Tan said.

In the meantime, the government is planning to sell this year $3.1 billion worth of RP bonds to help plug the deficit and pay maturing obligations.

Last January 5, the Philippines sold $2.2 billion worth of dollar- and euro-dominated bonds in the international market. This means the government needs to raise only $900 million more from foreign commercial sources.