ODA PERFORMANCE IMPROVES IN 2006: NEDA
NEDA Press Release
7/18/2007 9:59:32 AM

The National Economic and Development Authority (NEDA) said that use of official development assistance (ODA) has improved in 2006 due largely to government’s conscious efforts to adhere to better project quality and greater fiscal discipline.

Data from the 2006 ODA Portfolio Review released by NEDA’s Project Monitoring Staff (PMS) revealed that ODA is steadily decreasing to around US$9.5 billion for 141 active loans in 2006 from a peak of US$13.3 billion in 2000. This is seven percent lower than the previous year (around US$10.2 billion) and 29 percent lower than the 2000 figure. The amount involves 141 active loans, comprising 135 project loans supporting 123 projects and six program loans. Project loans accounted for 86 percent (US$8.2 billion) while program loans total 14 percent (US$1.3 billion).

This also includes eight new loans worth US$1.3 billion or 14 percent of the total loans portfolio signed in 2006. The report also noted that in the same year, 25 loans amounting to $1.7 billion were closed and fully availed of.

Overall ODA disbursement level posted an increase of 61 percent from the previous year at US$1.9 billion compared to US$1.2 billion in 2005. For project loans, the government was able to disburse US$1.2 billion from US$1.0 billion, an increase of 15 percent. However, disbursement rate averaged 80 percent, compared to 83 percent the previous year.

Meanwhile, availment rate increased by 11 percent to 71 percent, from 60 percent the previous year, as disbursement ratio stood at 35 percent this year, compared to 19 percent in 2005.

“Based on these financial indicators, overall ODA performance improved in 2006, which can be attributed to the following factors: sustained focus and actions toward addressing implementation bottlenecks through improvements in the Investment Coordination Committee’s (ICC) business process, proactive Project Implementation Officers’ system, sustained project-level facilitation and effective coordination with funding institutions, and; project completion/loan closure of 25 projects amounting to US$1.7 billion or 18 percent of the total ODA loans portfolio,” the report said.

The Government of Japan through the Japan Bank for International Cooperation (GOJ-JBIC) continued to be the largest source of ODA loans, accounting for 49 percent (US$4.7 billion involving 59 loans), followed by the Asian Development Bank (ADB) with 19 percent (US$1.8 billion involving 25 loans), and the World Bank (WB) with 16 percent (US$1.5 billion involving 24 loans). Notable increases are loans from the United Kingdom with six percent (US$558 million involving 7 loans) and China with five percent (US$460 million involving 3 loans). The rest are from Other Sources with five percent (US$484 million involving 17 loans).

The infrastructure sector also continued to receive the bulk of donor aid, getting more than half of the total loans portfolio (57 percent or US$5.5 billion involving 71 loans), followed by the agriculture, natural resources and agrarian reform sector (18 percent or US$1.7 billion involving 33 loans). The social reform and community development sector got US$1.2 billion involving 25 loans; the industry, trade and services, US$1.1 billion; and the governance and institutional development, US$22 million.

Under the infrastructure sector, transportation obtained the biggest share of aid with US$4.0 billion involving 42 loans. The energy, power and electrification subsector got US$639 million involving five loans, the water resources subsector, US$615 million involving 15 loans, and the social infrastructure, US$199 million involving six loans.

According to the report, partial cancellations of US$222 million were made in 2006 for 25 loans: seven loans from ADB (US$39 million); 14 from GOJ-JBIC (US$166 million) and four loans from the WB (US$18 million). This was agreed upon because of unutilized balance at the close of the loans, excess financing as a result of foreign exchange movement, low demand for relending, reduction in scope of projects and budget constraints.

Meanwhile, 25 projects in the ODA loans portfolio were reported to involve cost increases amounting to an aggregate of around PhP30.34 billion, due to additional civil works, increase in right-of-way (ROW)/land acquisition/resettlement costs, increase in unit cost of labor, materials and equipment, high bids, currency exchange movement, increases in consultancy services and administrative costs and claims for price escalation.

Some implementation issues identified include the budget, procurement, ROW/land acquisition, LGU participation, poor performance of the contractor, low demand for credit, institutional/operational problems and sustainability. The report also identified measures that the ICC, the Department of Budget and Management, the Department of Finance and implementing agencies can do to ensure timely and efficient ODA implementation.

In a memorandum to Socioeconomic Planning Secretary and NEDA chief Romulo L. Neri, NEDA-PMS director Roderick M. Planta said that the robust performance of the economy in 2006 is expected to continue in 2007 that will create an enabling environment for ODA implementation.

“Some PhP53.7 billion has been allocated for the implementation of foreign-assisted projects under the 2007 Budget of Expenditures and Sources of Financing. Also, the issuance of Notices to Proceed (NTPs) construction in 26 civil works contracts in 2006 are expected to result in substantial disbursements that will continue to pull up the ODA performance indicators,” he said.

The NEDA is mandated under Republic Act (RA) 8182 (amended by RA 8555), better known as the ODA Act of 1996 to conduct annual review of the status of implementation of all projects financed through ODA and identify causes of delays, results for bottlenecks, cost overruns and continued project viability.