Announcement of World Bank Financing of 175.1 Million Dollars to Assist Key Philippine Sectors on November 9, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. S90/12 Contact: P.B. Sison (202) 477-4347 L.V. Coronel (202) 477-3641 WORLD BANK FINANCING OF $175.1 MILLION TO ASSIST KEY PHILIPPINE SECTORS WASHINGTON, November 9, 1989--World Bank support for economic growth and social improvement in the Philippines was underscored today by the signing of three loan agreements providing $175.1 million for projects in health, water supply, and private industrial investment. Vicente R. Jayme, the Philippines' secretary of finance, and Attila Karaosmanoglu, the Bank's vice president, Asia Region, signed the loan documents at the Bank's headquarters today. Also participating in the signing was the Philippine ambassador to the United States, Emmanuel N. Pelaez. "The loans address priority areas for development, and will help move the Philippines from recovery to a period of sustainable growth," Karaosmanoglu remarked. "Together, they demonstrate the Government's commitment to poverty alleviation and to strengthening the private sector's role in furthering economic growth," he noted. In the first project, the Philippine government's efforts to control malaria, tuberculosis and schistosomiasis and to improve maternal and child health will benefit from a Bank loan of $70.1 million. The central government will collaborate with local governments and non- governmental organizations (NGOs) to expand primary health care at the community level, concentrating on "high-risk" households and communities. Also, the capacities of the Department of Health for planning, management, communication and evaluation will be enhanced. Under the water supply project, an additional three million people in Manila, the capital city, and neighboring municipalities will be provided access to piped water. The project, which is being assis.ted with a $40 million World Bank loan, is designed to maximize the use of water resources from the Angat Multipurpose Dam and expand distribution facilities. It supports the government's efforts to promote the living conditions of the urban poor, eliminate major water shortages, and improve environmental conditions by providing safe water in the service area, which covers some 150,000 hectares with a population of nine million. NOTE: Money figures are expressed in U.S. dollar equivalents. - 2 - The six-year project is estimated to cost $362 million. Other financing will be provided by the Asian Development Bank, with $130 million; the Overseas Economic Cooperation Fund of Japan, $80 million; the Manila Metropolitan Waterworks and Sewerage System, $35 million; and local loans and Philippine government contributions, $77 million. Unde- the industrial investment credit project, a World Bank loan of $65 million will help to provide long-term finance for medium-and large- sized private enterprises through the Development Bank of the Philippines (DBP). DBP will relend the World Bank loan to accredited participating financial institutions which will then on-lend the funds to enterprises at market rates. The World Bank's financial support will help the Philippines' industrial sector to exploit the opportunities and meet the challenges provided by the trade liberalization and incentive reforms already undertaken. The industrial sector has led the Philippines' economic recovery in the last two years, accounting for one-third of gross domestic product (GDP), two-thirds of merchandise exports and 15 percent of total employment. Despite its size, the industrial sector still provides scope for expansion. Japan will provide a grant equivalent to $3.5 million to finance technical assistance for DBP and the Department of Trade and Industry, which will undertake industrial subsector studies. Each of the World Bank loans is for 20 years, including five years' grace period, with a variable interest rate linked to the cost of the Bank's borrowings.