Announcement of World Bank Development Aid Reaches New High in Fiscal 1976 of Two Hundred Sixty-Eight Million for Projects in the Philippines on September 23, 1976

. HOLD FOR . Rfll ASf . '.I ~. World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 For Publication Thursday, September 23, 1976 WORLD BANK DEVELOPMENT AID REACHES NEW HIGH IN FISCAL 1976 $268 MILLION FOR PROJECTS IN THE PHILIPPINES In fiscal 1976, the developing nations of the world received record commitments of development assistance from the World Bank and its affiliate, the International Development Association (IDA). According to the Bank's Annual Report covering the year ended June 30, 1976, which was published today, 141 Bank loans and 73 IDA credits were approved, totaling $6,632 million. This amount is $736 million more than the total lent in the previous year. Another Bank affiliate, the International Finance Corporation (IFC), made • investment commitments of $245 mill ion in fiscal 1976, also a record . Philippine Projects Assisted There were 8 high-priority development projects in the Phil ipplnes which received a total of $268 million in Bank loans in fiscal 1976. Five of these projects were in agriculture: $50 mill ion for upgrading and expansion of irrigation works by the Chico River in the potentially rich rice-growing Cagayan valley in northern Luzon. Provincial roads in the area will be improved. Some 8,000 farm families and 2,000 landless families will benefit from the tripling of land under dry season irrigation, and increases in paddy production to 147,000 tons a year will provide enough rice to feed 600,000 persons. Total cost: $84 mill ion. $42 million for the Magat multipurpose project. At full development in 1982, the part of Stage I of the project assisted by the Bank will produce enough rice to feed about 825,000 people, and some 12,000 paddy farmers will directly benefit. More than 12,000 hectares of existing irrigation systems in northern Luzon will be reha- bilitated, and 23,000 more will be included in the expansion of the system. Total cost: $84 mi 11 ion. $20.5 million to the Development Bank of the Philippines for on-lending to live- stock producers, particularly for smallholder pig and poultry operations. Technical assistance will be supplied to subborrowers, and municipal abattoirs will be upgraded. About 18,000 personswill directly bsnefit, and 5,800 full-time jobs will be created. •• Total cost: $41.3 million • Note: Money figures are expressed in U.S. dollar equivalents.  - 2 - ~ $12 mill ion to the Development Bank of the Philippines, which will provide long-term loans and technical assistance to the private sector for construction of fishing and carrier vessels, fish pond rehabilitation and construction, ice plants, and a marine s1 ipway. Fish production is expected to increase by 26,000 tons (value: $11 million) and 1,750 permanent jobs will be created. Total cost: $23.5 million. $11 .5 mill ion for a project providing milling, drying, storage, and transport facilities needed to support increased rice and corn production. Yearly post- harvest grain losses of about 17,000 tons will be eliminated and $11 mill ion annually in foreign exchange will be saved. About 135 rice mills (producing more than 200,000 tons of rice a year) and 20 corn mills (72,000 tons of milled corn) will be financed. Total cost: $28.5 million. Other Projects Aided The three other projects in the Philippines which received Bank assistance were in education, urbanization and development finance: $25 mill ion to help improve educational quality and redress imbalances in educational opportunities between urban and rural areas. The loan is on Third Window terms, which are intermediate between those of the Bank and IDA. Technical assistance, equipment, and facilities designed to increase the institutional capacity • for the continuous development of relevant textbooks will be provided. About 27 mill ion textbooks will be produced and distributed as a first phase of a program to introduce 98 mill ion new texts into public primary and secondary schools by 1984. Total cost: $51.6 mill ion. $32 mill ion to upgrade Tonda, one of Manila's worst slums. About 180,000 residents will benefit from an urban development project in which health, nutrition, and other social services improvements will be integrated with improvements in water supply, sewerage, and drainage facilities. In neighboring Dagat-Dagatan, the first phase of a "sites and services'' settlement will be developed. Technical assistance will also be provided the new National Housing Authority and the Manila Metropolitan Commission to help them develop urban programs. Some $10 mill ion c,f the loan is on Third Window terms. Total cost: $65 mill ion. $75 mill ion to the Government, which will re lend proceeds to the Government-owned Development Bank of the Philippines. These funds will help cover foreign exchange costs of capital goods imports for medium-scale and relatively large industrial subprojects. Enterprises eligible for subloans will include those engaged in manufacturing, agro-industries, mining, ocean shipping, and tourism. GDP Growth The Bank's Annual Report said the annual growth of gross domestic product (GDP) of developing nations, excluding oil-exporting countries, averaged 5.4 percent between 1973 and 1975. The annual average was 6 percent in the previous five years . •  - 3 - • Among the poorest countries, mostly in Asia and in Africa south of the Sahara, the annual growth rate was only 2.8 percent. As such, it was nearly offset by the increase in population. While these countries saw 1 ittle real growth in per capita terms, the better-off developing countries achieved an overall growth rate of more than 6.4 percent, strengthening their foundations for future expansion. In the past three years, the World Bank says, many of the poorer countries sought resolutely to face their economic problems, for ex~mple, by initiating tax reforms, adjusting the domestic prices of petroleum and of food, providing incentives to stimulate agricultural production and adjusting exchange rates. In Kenya, for instance, the Government adopted a wage and pr~~~ policy to limit growth in private consumption for all but the lowest-incon,e groups. Prices paid to farmers for food were raised and export incentives introduced. Project preparation for public investments was improved; and the currency devalued. In Burma, procurement prices for paddy were greatly raised so that the area under rice increased by 6 percent in 1976. State economic enterprises began to be reorganized; and a drastic tax reform for mobilizing resources was enacted in early 1976. The Report notes that the record of reforms initiated by developing countries in recent years abounds with such examples. They include attempts to reduce oil consumption and improve oil and coal production (India), encouragement of additional private savings (Pakistan), alignment of domestic prices with international prices • through cutbacks in consumer subsidies (Senegal, Brazil), increases in public investment (Morocco), adoption of conservative monetary and credit policies to reduce inflation (Indonesia, Malaysia, the Philippines), adoption of fiscal reforms to improve social equity (Colombia), increases in prices paid to agricultural producers (Zambia), and increases in taxes (Mexico, Costa Rica). Aid Flows Total flows of resources to developing countries from the industrial nations rose 40 percent and reached a record $37,461 mill ion in 1975. The Report says that if grants by private agencies of $1,371 mill ion are included, the total net flow of $38,832 million was equal to l .02 percent of t~e combined gross national product (GNP) of those industrial countries which are members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development. This is the first time, the Report notes, that the 1 percent target adopted by the United Nations for all flows of development assistance, official and private, has been reached. Official aid amounted to $13,606 million in 1975 -- 20 percent above the 1974 !igure in dollar terms but only 10 percent higher in real terms. Thus, the fall in ''real aid" in 1972 and 1973 was reversed.. As a proportion of the combined GNP of DAC members, official development assistance rose from 0.33 percent in 1974 to • 0.36 percent in 1975. ·  - 3 - • Among the poorest countries, mostly in Asia and in Africa south of the Sahara, the annual growth rate was only 2.8 percent. As such, it was nearly offset by the increase in population. While these countries saw 1 ittle real growth in per capita terms, the better-off developing countries achieved an overall growth rate of more than 6.4 percent, strengthening their foundations for future expansion. In the past three years, the World Bank says, many of the poorer countries sought resolutely to face their economic problems, fnr example, by initiating tax reforms, adjusting th~ domestic prices of petroleum and of food, providing incentives to stimulate agricultural production and adjusting exchange rates. In Kenya, for instance, the Government adopted a wage and price policy to 1 imit growth in private consumption for all but the lowest-income groups. Prices paid to farmers for food were raised and export incentives introduced. Project preparation for public investments was improved; and the currency devalued. In Burma, procurement prices for paddy were greatly raised so that the area under rice increased by 6 percent in 1976. State economic enterprises began to be reorganized; and a drastic tax reform for mobilizing resources was enacted in early 1976. The Report notes that the record of reforms initiated by developing countries in recent years abounds with such examples. They include attempts to reduce oil consumption and improve oil and coal production (India), encouragement of additional private savings (Pakistan), alignment of domestic prices with international prices • through cutbacks in consumer subsidies (Senegal, Brazil), increases in public investment (Morocco), adoption of conservative monetary and credit policies to reduce inflation (Indonesia, Malaysia, the Philippines), adoption of fiscal reforms to improve social equity (Colombia), increases in prices paid to agricultural producers (Zambia), and increases in taxes (Mexico, Costa Rica). Aid Flows Total flows of resources to developing countries from the industrial nations rose 40 percent and reached a record $37,461 mill ion in 1975. The Report says that if grants by private agencies of $1,371 mill ion are included, the total net flow of $38,832 mill ion was equal to l .02 percent of the combined gross national product (GNP) of those industrial countries which are members of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development. This is the first time, the Report notes, that the 1 percent target adopted by the United Nations for all flows of development assistance, official and private, has been reached. Official aid amounted to $13,606 mill ion in 1975 -- 20 percent above the 1974 figure in dollar terms but only 10 percent higher in real terms. Thus, the fall in 11 real aid" in 1972 and 1973 was reversed. As a proportion of the combined GNP of OAC members, official development assistance rose from 0.33 percent in 1974 to 0.36 percent in i975. · ·---·  - 4- • Estimated commitments by members of the Organization of Petroleum Exporting Countries rose to $9,033 mill ion in 1975, against $8,575 million in the previous year. In 1973, the amount had b,~en only $1,469 mi 11 ion. About 46 pe,·cent of extimated net disbursements by OPEC countries in 1975 were on concessionary terms. For the poorer countries, the avaii3bil ity of external resources on concessional terms continues to be vital if they are to achieve their long-term development goals. The World Bank's Annual Report for the fiscal year 1976 is publi~hed in English, French, German, Japanese, Spanish, and Arabic~ The joint annual meetings of the Bank and the International Monetary Fund will open in Manila on October 4 . • • ,,,,.,.