Philippines - Second Urban Development Project

Document of FILE CP The World Bank COPY FOR OFFICIAL USE ONLY Report No. P-2431-PH REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF THE PHILIPPINES FOR A SECOND URBAN DEVELOPMENT PROJECT December 7, 1978 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit = Peso (P) US$1 P 7.4 p 1.00 = $0.135 PRINCIPAL ABBREVIATIONS AND ACRONYMS BPW - Bureau of Public Works MASICAP - Medium and Small Industries Coordinated Action Program MHS - Ministry of Human Settlements MMA - Metro Manila Area MMC - Metro Manila Commission MPWTC - Ministry of Public Works, Transportation and Communications NEDA - National Economic and Development Authority NHA - National Housing Authority SIR - Slum Improvement and Resettlement Program ZIP - Zonal Improvement Program FISCAL YEAR January 1 - December 31  FUR OFFICL&L Ub- iNLY PHILIPPINES SECOND URBAN DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of the Philippines Beneficiary: National Housing Authority Amount: $32 million equivalent Terms: The loan would be for a term of 20 years, including 5 years of grace, with an interest rate at 7.35% per annum. Relending Terms: The Government would relend $26.24 million of the proceeds of the proposed loan to the National Housing Authority (NHA) on the same terms and conditions as those for the proposed Bank loan to finance project construction work, technical assistance and loans for building materials and for small business ventures. The Government would bear the foreign exchange risk on the Bank loan. The Ministry of Public Works, Transport and Communications (MPWTC) would use $4.57 million of the proceeds for procuring flood control equipment, related infrastructure and training. The National Economic and Development Authority (NEDA), Metro Manila Commission (MMC), and Ministry of Human Settlement (MHS) would receive $1.19 million for technical assistance and training. Proliect Description: The project would support the Government's program of slum upgrading and the provision of serviced lots for low income households in the Metro Manila Area and in the three secondary cities of Davao, Cebu, and Cagayan de Oro. The project would also provide funds for: (a) employment promotion through the development of commercial and industrial sites, business loans, and technical assistance to small entrepreneurs, and (b) assistance to the National Housing Authority (NHA), the Ministry of Human Settlements (MHS) and the Mletro Manila Commission (MMC) in institutional development and training. The project is expected to benefit directly approximately 110,000 people in the urban poverty group in Metro Manila, and 78,000 in the three secondary cities. The primary risks are related to the fact that the Government's program has only recently been established. The project units in the regional cities were created only recently, and have not yet been tested. In addition, existing programs of NHA have strained NHA's financial and staff resouirces, and the local governments responsible for This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - implementation are only now beginning to develop an effective working relationship with NHA on financial and technical matters. The use of advisory consultants in NHA and the regional cities is expected to reduce significantly this risk. Other risks involve cost recovery; the finan- cial viability of these programs will depend in large part on efficient collection procedures. It is believed that the proposed land tenure arrangements involving an option to purchase freehold title will provide strong incentives on the part of beneficiaries to meet scheduled payments. Estimated Cost: Local Foreign Total