WB worried about RP political developments
During 1986, the Philippines’s chief economic priority, according to the World Bank report, has been “to extend and consolidate the gains of stabilization policy while launching a program of economic recovery.”
“The goals of stabilization had been achieved,” the report said, adding that inflation was curbed and the current account swung to a surplus equal to 3% of GNP.
“By the beginning of 1987, gross foreign exchange reserve had risen to $2.5 billion, or about four months of imports. For the last quarter of 1986, GDP growth was 3% accelerating to 5.5% for the first quarter of 1987,” the World Bank report said.
The Philippine concerns of the bank “go beyond economic issues” said Dr. Karaosmanoglu, adding that the bank’s mandate is: “We repair, we reconstruct, we undertake projects to increase the ability of a member country to cope, to readjust to changing economic conditions.”
When asked by BusinessWorld to comment on the fate of the Aquino government and the Philippine economic recovery program, the soft-spoken WB official said: “We hope the signs of recovery could be sustained. We hope there will be no relapse to stagnation which the Filipino people have suffered for so long.”
“We hope the political difficulty which is capturing much of the attention of the (Aquino) government now, could be resolved and we hope that differences could be put aside so that energies are given to the country‘s development.”
SUPPORT
During fiscal year ’87, the World Bank supported Philippine economic recovery with a $342-million package of quick-disbursing loans to open up macroeconomic and sectoral policy reforms.
The financial package included $300 million to help the Philippine
Government launch reforms in taxation, trade policy, public restructuring of investments and rationalization of government financial institutions. For technical assistance to begin the financial restructuring of public sector institutions, $ 10 million was lent. A third loan of a $32 million was provided to help finance the expansion and rehabilitation of Philippine ports.
In fiscal year ’ 87, furthermore, the Philippines is the third largest recipient of World Bank loans with China ranking first ($ 1,423.6 million) and Indonesia second ($ 1,057.5 million). A total of $3,349.4 million in loans was invested by the World Bank and the International Development Agency ( IDA) — the bank’s soft loan window in the East Asia Pacific region where, according to the annual report, overall economic performance was “impressive” but has remained vulnerable “to external demand for balanced trade and other protectionist pressures.”
WEAK POINTS
To be sure, the Aquino administration has requested this fiscal year WB assistance in its land reform project and equity conversion plan. But it is in these two areas where the bank’s Philippine watchers find a measure of “weak points” in the administration’s management style, such as tardiness and indecisiveness.
For instance, BusinessWorld sources said, the bank has yet to hear from the Aquino administration regarding a study presented by a group of World Bank experts on possible actions on agrarian reform.
In a meeting last winter of the Paris Club, the Philippine government approached the consultative group of aid donors to the Philippines chaired by the World Bank for financial support in President Aquino’s land reform project.
The Reagan administration was also specifically requested by Manila to provide sources of assistance to the project. The US Agency for International Development was assigned to look into this request.
A mini- consultative group ( MCG) on the Philippines was immediately set up after the Paris Club meeting in Washington DC with the special task of looking for ways and means of supporting the land reform project.
But World Bank and Reagan administration officials say that to date, the Aquino administration has not provided any substantive reaction or response to these efforts.
WB officials are also cautious in viewing the work of the new Legislature concerning the land reform project.
The MCG can be convened only as soon as “the Aquino government can provide substantive agenda for action,” a USAID official told BusinessWorld.
Dr. Karaosmanoglu said that if the Philippines has a land reform program in place, the World Bank “can help in providing the necessary inputs in areas affected by land reform action, but we do not and cannot finance the transfer of lands. That is to be done by the Philippine government itself.”
The bank is also unhappy that in the reorganization of public
Sector, enterprises, the government has yet to put the project in place.
DEBT RELIEF
Furthermore, in the area of foreign debt relief, a $250-million capital market investment project approved for the Philippines in FY ’87 by the International Finance Corp. — the World Bank’s private sector development arm — lies inert on the negotiation table as three similar but less costly projects in the Asia Pacific region have already become operational.
IFC officials told BusinessWorld, the “First Philippine Capital Fund” project still remains “in the process of being created.” A closed-end fund, the project was envisioned to “assist” the Philippine government in implementing its debt- equity conversion program.
A major US investment firm, Shearson Lehman Brothers of the American experts group, was to act as manager of the fund, into which IFC was to invest $ 12.50 million in primary underwriting.
IFC officials have generally been tight-lipped about the project’s status but when it was raised during a recent press briefing to release the IFC’s 1987 annual