MANILA, JULY 31, 2007
(STAR) By Iris C. Gonzales - The World Bank and its private sector investment arm, the International Finance Corp. (IFC) are planning to issue peso-denominated bonds to help raise funds for lending to the Philippine government, a ranking official said yesterday.

Finance Undersecretary and Acting National Treasurer Roberto Tan said these types of bonds are very attractive to investors.

“It’s a very attractive investment for investors. The market is good for an issuance,” Tan told reporters. World Bank and IFC, however, are still finalizing the amount as well as the final date of issuance.

The World Bank, officially known as the International Bank for Reconstruction and Development (IBRD), has been issuing debt securities in the international capital markets for 60 years.

These debt issues are the funding source for development loans and have provided financing for more than 4,000 development projects in over 130 countries.

This developed as the government and the World Bank agreed on Friday to implement new approaches to lending and address implementation bottlenecks of program loans.

In a statement yesterday, Maryse Gautier, World Bank portfolio and operations manager and acting country director for the Philippines, said that new lending approaches and innovations in projects are expected to continue to improve the quality of World Bank assistance to the Philippines.

She cited innovative approaches such as school-based management, wherein various stakeholders are deeply involved in improving schools and which contributed to enhancing student learning outcomes.

The World Bank said that at 15.2 percent, loan disbursement rate for fiscal year 2007 has been slower than in fiscal year 2006 and is below the 20 percent target for the year.

However, actual amounts disbursed at $137.2 million are almost the same as in fiscal year 2006 with $138.8 million, the bank said.

“The slow disbursement is attributed mainly to issues linked to insufficient level of readiness, complex project design, slow progress in policy reforms on which the release of loans is hinged, and delays in budget approval and/or release by the government. Loan disbursement is nonetheless expected to pick up for fiscal year 2008 with planned disbursement increasing by 31 percent, mostly from national program support operations meant to support government reform agenda in key sectors,” the World Bank also said.

Tan, for his part, emphasized the importance of working together to harmonize efforts among development partners and to strengthen and simplify business processes. He said that various donor programs are now increasingly coordinated in support of the reform programs of key agencies like the Departments of Education and Health, as well as the Bureau of Internal Revenue.

The Philippines has been a major beneficiary of these program loans. Last year, for instance, the World Bank extended a $250 million program loan to the government for budgetary support.

Similarly, the Asian Development Bank (ADB) has issued P2.5 billion worth of peso-denominated bonds last year as part of a P5-billion package. Proceeds of the debt issuance were also used to extend program loans to the Philippines.

The remaining P2.5 billion would be issued this year, officials have said.

Faced with a swelling budget deficit, the Philippines relies heavily on foreign and domestic borrowings to support its budgetary needs.

Chief News Editor: Sol Jose Vanzi

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