NEWSFLASH

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WORLD BANK DEFERS TO NEW PRES, DELAYS $500 LOAN

Manila, May 12, 1998 - The World Bank is awaiting the next President's commitment to banking reforms before releasing a $500 million loan package.

Vinay Bhargava, director for the World Bank's operations in the Philippines, said the WB board "will need to be assured that the new president elect is committed to the banking sector reform program.

Two of the controversial reforms are the lifting of the bank secrecy law and the imposition of a reserve requirement on foreign currency deposits. The Bangko Sentral ng Pilipinas has opposed these conditionalities of the WB loan.

The World Bank believes the lifting of the bank secrecy law will promote greater accountability and transparency in the conduct of banking.

Last month, the World Bank warned the Philippines that its request for a $1.25-billion financial assistance for calendar year 1998 would be cut if it failed to make banking sector reforms.

Economic officials of the Ramos administration have said they may skip the World Bank loan package because they could not commit themselves to the banking reforms tied to the approval of the loans.

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