Philippines - Agrarian Reform Communities Development Project

Document of THE WORLD BANK FOR OFFICIAL USE ONLY Report No. P-6936-PH MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN OF US$50 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR AN AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT October 24, 1996 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wihout World Bank authonzation. CURRENCY EQUIVALENT ias of September 1996) Currency Unit - Peso (P) US$LOO0= P 26 P1.00 = US$0.038 ACRONYMS ARB - Agrarian Reform Beneficiaries ARC - Agrarian Reform Communities ARF - Aqrarian Reform Fund BLGF - Bureau of Local Government Finance CARL - Comprehensive Agrarian Reform Law CARP - Comprehensive Agrarian Reform Program CPO - Central Project Office DA Department of Agriculture DAR - Department of Agrarian Reform DENR - Department of Environment and Natural Resources DOF - Department of Finance DPWH - Department of Public Works and Highways DOST - Department of Science and Technology GFIs Government Financial Institutions IRA - Internal Revenue Allotment LBP - Land Bank of the Philippines LGU - Local Government Unit MDF - Municipal Development Fund NEDA - National Economic Development Authority NIA - National Irrigation Administration PARC Presidential Agrarian Reform Council PAROs - Provincial Agrarian Reform Officers PCIT - Provincial CARP Implementing Team PMB - Project Management Board POs - People's Organizations FISCAL YEAR ,Januarv 1 to December 31 FOR OFFICIAL USE ONLY Republic of the Philippines AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT Loan and Project Summary Borrower: Republic of the Philippines. Implementing Agency: The Department of Agrarian Reform (DAR) with the respective Local Government Unit (LGU) and the National Irrigation Administration (NIA). Beneficiaries: Rural Communities of which at least 50% of their members are Agrarian Reform Beneficiaries. Poverty Category: Program of Targeted Interventions. Amount: A US dollar Single Currency Loan of US$50 million. Terms: The Bank loan would be for 20 years, including five years of grace at the Bank standard LIBOR-based variable interest rate for US dollar. Commitment Fee: 0.75% on undisbursed loan balances, beginning 60 days after signing, less waiver. Onlending Terms: About US$27 million to finance the Infrastructure Component would be transferred by the Government of the Philippines (GOP) to the respective LGUs in the form of: (i) grants of up to 90% of the Agrarian Reform Communities (ARCs)' eligible investment which would represent the GOP portion in the cost-sharing arrangements with the local governments. The level of the grant element would vary depending on the type of investments; and (ii) subsidiary loans of about 10% of the ARCs' eligible infra- structure investment for 15 years maturity including a 5 year grace period. Interest rate would be fixed for several years and would be based on related market reference rates such as the prevailing weighted average of treasury bills rate for medium and long term maturity plus a premium. The foreign exchange risk would be borne by GOP. Vice President: Javad Khalilzadeh-Shirazi, Acting Vice President, EAP Director: Javad Khalilzadeh-Shirazi, EAl Division Chief: Jeffrey Gutman, EA1AE Task Manager: Arie Chupak, EA1AE 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. - 12. - Financing Plan: See Schedule A. Economic Rate of Return: 22% Man: IBRD No. 27553 Prolect Identification No : 37079 MEMORANDUM 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 AN AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed loan to the Republic of the Philippines for a US dollar single currency loan of US$50 million. The proposed loan would assist in empowering farmer beneficiaries in agrarian reform communities to plan and undertake development activities that raise farmers' incomes and provide opportunities for sustainable growth. The loan would carry the Bank's standard LIBOR-based variable interest rate for US dollar, and would have a fixed amortization schedule of 20 years including a grace period of five years. About US$27 million to finance the Infrastructure Component would be transferred by the Government of the Philippines (GOP) to the respective LGUs in the form of: (i) grants of up to 90% of the Agrarian Reform Communities (ARCs)' eligible investment which represents the GOP portion in the cost-sharing arrangements with the local governments. The level of the grant element would vary depending on the type of investments; and (ii) subsidiary loans of about 10% of the ARCs' eligible infrastructure investment for 15 years maturity including 5 years of grace. Country/Sector Background 2. The agricultural sector in the Philippines accounts for about 22 percent of the gross domestic product (GDP), 12 percent of export receipts, and with 11.1 million people employed in this sector agriculture represents the largest employer (43 percent). Nearly 60 percent of the population lives in the rural areas and is directly or indirectly dependent on agriculture for its livelihood. Philippine farms are characterized by small holdings; about 85 percent of the 3.42 million crop and livestock farms in 1990 were under 5 hectares (ha), accounting for 50 percent of the total farm area. 3. Only 60 percent of the total farm area is owned by the farmers themselves, large areas continue to be tenant farmed. An agrarian reform program has been underway for some 40 years in the country; however, it has only been a priority since 1988. With such a large number of tenant farmers, poverty remains a major concern in the rural areas. The latest estimate of the incidence of poverty indicates that about 36 percent of the population lives below the poverty line. 1994 estimates, made by the National Statistical Board, indicate that about 47 percent of rural families and 24 percent of urban families fall below the annual per capita poverty threshold of P8,035 and P9,910, respectively. Widespread poverty also has its impact on the market for food. According to the Bureau of Agricultural Statistics, approximately 18.2 percent of households in 1994 (25.7 percent in the rural areas and 10.6 percent in the urban areas) do not obtain sufficient food to avert malnutrition, while child malnutrition is estimated at up to one third of the children. 4. An important cause of poverty and under-development in the Philippines is the way in which the nation's primary resource - land - is used and controlled. Legislative efforts to change this situation trace back to 1936, with the most - 2 - recent being the 1988 Comprehensive Agrarian Reform Law (CARL). However the implementation of the law has been slow until recently, when significant achievements have been made by the Government. The present leadership in the Philippines is committed to pursue an even faster, fairer and more meaningful implementation of land and agrarian reform through the Comprehensive Agrarian Reform Program (CARP), to empower the farmers and increase agricultural productivity. The key implementing strategy of CARP is the Agrarian Reform Communities (ARCs) Development Program, which is basically an area-focused, resource-based, community-centered and impact-oriented approach to rural development. 5. Agrarian Reform Beneficiaries (ARBs) are among some of the most disadvantaged communities in the Philippines. All types of physical infrastructure are lacking, including: irrigation, roads, bridges, potable water, health and education facilities, and post-harvest handling and processing centers. CARP has focused on the land acquisition and distribution priorities mandated by the Government. The beneficiaries, however, have been without much needed support services to address community building, agricultural extension, physical infrastructure, credit, and marketing support. Physical infrastructure is considered a priority among all ARBs. Government Policy 6. Economic growth is a platform underpinning the Government of the Philippines (GOP) Medium Term Development Plan (MTDP), which emphasizes the need for world competitiveness and people empowerment to achieve a per capita gross national product of US$1,000 by the year 20001, and an annual GNP growth rate of 6 to 8 percent. This plan also contains an unequivocal commitment to reduce poverty from 36 percent in 1994 to 30 percent by 1998. Economic growth and poverty reduction form the framework for all regional and sectoral policies, programs, and projects. 7. CARP has set out ambitious targets for land acquisition and delivery over the ten year period 1988 to 1998. The overall target is 10.3 million hectares, comprising 3.8 million ha for DAR and 6.5 million ha of public alienable and disposable lands to be disposed under the supervision of DENR (the DENR scope was later reduced to 5.9 million ha). In 1995, CARP's scope was revised from 10.3 million ha to 7.8 million ha. Of this revised scope, DAR was mandated to distribute 4.3 million ha of agricultural lands while DENR was assigned 3.5 million ha. In the early 1990s, land distribution accelerated and by March 1996 about 2.2 million ha or 51% of DAR's mandated area was acquired and distributed. Similarly, DENR distributed 1.6 million ha or 45% of its assigned area. This impressive accomplishment, however, is well behind CARP targets. Reasons for delays are many, however, they can be summarized as: (i) inadequate institutional capability and capacity, and (ii) financial resource limitations. At the current time, CARP is moving ahead rapidly. The past two years have seen a considerable This has already been obtained, the 1995 GNP per capita is US$1,134. - 3 - increase in accomplishments and this has brought about new questions about the sustainability of the program without more extensive support to the beneficiaries. Sector Issues 8. To advance the objectives of CARP, two main social groups have been identified who are facing major constraints: (a) farmer beneficiaries and their respective communities; and (b) NGOs/People's Organizations (POs). 9. Farmer beneficiaries and their communities are facing relatively poor economic conditions due to inter-related technical, financial and social constraints which include respectively: (i) low cropping intensity, little use of improved inputs, low productivity, limited technical knowledge among ARBs, limited exposure to alternative cropping options and lack of marketing infrastructure; (ii) inadequate financial resources for post harvest and processing facilities, limited access to formal credit, limited financial base/indebtedness of POs, inadequate savings, lack of management skills to plan and operate economic activities and lack of internal control in POs; and (iii) weak organizational base of POs, weak leadership within the ARCs and POs, poor social infrastructure, and limited education among ARBs. 10. Local NGOs and POs. The main constraints affecting the ability of local NGOs/POs to assist the ARCs development process are inadequate or lack (in some areas) of qualified staff to provide the necessary technical support to ARCs, insufficient funds for wider deployment of staff and delayed funding from DAR, inadequate or inappropriate training of staff, lack of prior relationship with ARCs and diversity or non-complementary objectives of NGOs/POs leading to differing opinions on the required interventions for ARCs. Lessons Learned 11. The broad lessons that emerged from the review of Bank experience in rural development projects' are: (i) ownership is vital, not just by government, but by implementing agencies and the rural people directly affected; (ii) project design must be flexible; (iii) goals must be realistic and precise; (iv) project design must be simple, without a large number of unrelated components; (v) credit and farm inputs are often critical to success; (vi) beneficiaries' participation is necessary; (vii) arrangements for infrastructure maintenance have to be in place from the start; and (viii) community organization and build up should precede infrastructure development. 12. Experiences with projects in the Philippines have paralleled the broader experiences described above. The Bank has supported numerous projects in 1/ World Bank Experience with Rural Development, Report No. 6883; OED Lessons and Practices (No. 3) Area Development Projects, September 1993; OED Precis No. 39 -Maintaining Rural Roads. - 4 - agricultural development, irrigation, and rural infrastructure with varying degree of success. The key issues/lessons which are relevant to this project relate to the planning, design, and implementation of rural infrastructure including roads, water supply, and small scale irrigation. The overriding finding is that centrally planned and executed investments in rural infrastructure tend to receive only secondary attention from the line ministries which are more focussed on larger scale infrastructure investments. As a result delays are endemic, monitoring of quality is limited, and sustainability in terms of maintenance and operation is uncertain at best (reference Second Rural Roads Improvement Project - Loan 2716-PH, and First Water Supply, Sewerage and Sanitation Project - Loan 3242-PH). The conclusion is that active local participation and responsibility from planning to design to implementation is essential. This approach is consistent with the Government's substantial fiscal decentralization effort. The Central Visayas Regional Project (Loan 2360-PH) represented a more locally oriented approach and was considered very successful although the cost of administration per dollar invested was high. Presently, the Environment and Natural Resources Adjustment Program (SECAL), Loan 3360-PH and Credit 2277-PH, is pursuing a locally oriented approach and the use of NGOs in project implementation, and is proceeding successfully. 13. These lessons have been incorporated in the design of the proposed project, by applying the following elements: (i) a community development plans would be designed and implemented by the community. This would allow adequate flexibility to support Agrarian Reform Communities (ARCs) in different stages of development and need, thus enabling more ARCs to benefit from project activities; (ii) appropriate development targets for each ARC would be set by the community; (iii) cost sharing arrangements between beneficiaries and government (local and national) concerning the implementation of the respective community development would be the basis for project support; (iv) a minimum level of community maturity (determined by agreed criteria) would be a pre-requisite for project support; and (v) credit and financial services would be provided by an existing financial institution with a wide network of branches and field offices in the rural areas. Rationale for Bank Involvement 14. The proposed project is consistent with the Country Assistance Strategy (CAS) which was presented to the Board on April 4, 1996. The main objective of the Bank assistance strategy in the Philippines, as defined in the CAS document, is to promote sustainable development and help achieve a more rapid reduction in poverty. Within this framework, four specific objectives have been identified: (a) supporting the Government's efforts to convert the current economic recovery into a period of sustained growth, which is vital for poverty reduction; (b) strengthening the country's infrastructure to enable such growth; (c) assisting in the design and implementation of more effective and efficient mechanisms for poverty alleviation while upgrading the quality of social services available to the poor; and (d) supporting sustainable management of natural resources and protecting the environment. Bank involvement in this project is essential based on the following considerations: the proposed project would address the problems - 5 - of rural poverty through support to: (i) rural infrastructure development including farm-to-market roads and post-harvest facilities; (ii) irrigation development and rehabilitation; (iii) intensification and diversification of farm production and other income-generating activities; and (iv) community development and self-help approach which are seen as essential to improve ARBs' standard of living. Thus the project would have a direct impact on poverty alleviation through the increase of ARBs' farm production, productivity, and incomes. Proiect Scope and Objectives 15. The project would assist the Government in strengthening farmer organizations in Agrarian Reform Communities (ARCs) to plan and undertake development activities which would raise farmers' incomes and provide further opportunities for sustainable growth. In particular, the project would: (i) assist Agrarian Reform Beneficiaries (ARBs) and other farm families in the selected ARCs2 to gain access to productive resources, social and physical infrastructure; and (ii) support CARP line agencies, Local Government Units (LGUs), NGOs, People Organizations (POs) and coordinate their activities. 16. Considering presently available financial resources, the project would support the development activities of about 100 ARCs in ten suitable provinces, selected on the basis of: (i) land distribution accomplishment; (ii) LGU commitment and financial capability to participate; (iii) overall maturity of farmer organizations and, (iv) presence of relevant support agencies. On this basis, the preliminary list of selected provinces is as follows: Isabela, Leyte, Davao Del Norte, Albay, Ilocos Norte, Surigao Del Norte, Southern Leyte, Misamis Oriental, Davao Oriental, and Quezon. 17. Key Performance Indicators would be centered on: i) the increase in beneficiary household income attributable to the project; and (ii) sustainability. Sustainability would include (a) increased capability and independence of POs, (b) increased support for the ARCs from the LGU and corresponding improvement in the civic responsibility shouldered by the beneficiaries, and (c) continuing maintenance of infrastructure and enterprises assisted under the project. Some of these indicators are difficult to measure directly, or cannot be easily assessed as part of a regular reporting system and so proxy indicators need to be tracked. These would include: (i) number of participating ARCs; (ii) length of rehabilitated and reconstructed roads; (iii) new and rehabilitated irrigation areas; (iv) change in cropping intensity; and (v) level of business assets in ARCs. 2/ Under the project, 'beneficiaries' refers to the total population of an ARC; this includes (i) the Agrarian Reform Beneficiaries of CARP and previous land reform programs; and (ii) other people living in the area. -6- Project Description 18. The project would be implemented over six years, and would comprise three components: (i) Community Development and Technical Support; (ii) Rural Infrastructure; and (iii) Agriculture and Enterprise Development. 19. Community Development and Technical Support (US$7.6 million). This component would enable ARCs to achieve community-determined objectives through more detailed and realistic planning, development of organizational capability and more effective management of human, physical and financial resources, (especially in support of initiatives in the Agriculture and Enterprise Development component) . The two sub-components would address these aims. Community Development would concentrate on (i) increasing community participation in barangay planning processes, in implementation of development activities, in addressing social issues such as the role of women in the community, and in maximizing the sustainability of project interventions; and, (ii) organizational development which would strengthen the operations and activities of community groups within the ARCs, such as cooperatives, associations, farmers groups, women's groups, auto-savings groups and clubs. Support provided would include cooperative management training, financial management and enterprise development training and assistance in improving coordination with other agencies. Technical Assistance would focus on providing (i) technical advisory services to the beneficiaries and marketing support and technical consultancy services to the ARC organizations; and (ii) the necessary staff development in terms of training and support for effective project operations. 20. Rural Infrastructure (US$59.0 million). This component would support infrastructure requirements within selected ARCs, based on a community's assessment of its needs during the above planning process. It would comprise three sub-components: (i) rural access would improve vehicle and pedestrian links from ARC barangays to existing all-weather roads. Works would include reconstruction or rehabilitation of about 600-900 km of existing roads, associated bridges, causeways and culverts, and additional materials and technical assistance would be provided for spot improvements on about 300-500 km of farm access tracks; (ii) irrigation would include rehabilitation or extension of existing irrigation structure and, to a lesser extent, construction of new schemes on a total area of about 10,000 - 15,000 ha. Irrigation would support diversification into non-traditional crops and activities would include headworks3, intake structures, water conveyance canals, drainage channels, access roads and flood protection measures. Support would be restricted to irrigation managed by farmers on a communal basis where beneficiaries would repay development costs and take responsibility for operation and maintenance of completed works; and (iii) community infrastructure would include rehabilitation or construction of drinking water supply schemes, both point sources and piped systems; and development of multi-purpose buildings for community use, such as meeting halls. Investment priority would be given to rural access and communal 3/ Mainly run-of-river diversion weirs, but also Small Water Impounding Projects (SWIPs) in upland areas (small dams and reservoirs). - 7 - irrigation, with rehabilitation of existing facilities given preference over new construction. All investments would be technically sound and environmentally acceptable, with rural access and irrigation also being economically viable. Proven, labor-based technology would be adopted wherever possible, through local employment. 21. Agriculture and Enterprise Development (US$33.6 million). This component would be directed towards the promotion and development of farm production and other income generating activities of the beneficiaries, their cooperatives, and the ARCs. Agricultural and enterprise development activities would be market- oriented and would involve government agencies and private enterprises for technology transfer, input supply, and processing and marketing of farm products. It would consist of four sub-components: (i) technical advisory services to assist in the preparation of feasibility reports and provide business consultancy services to beneficiaries as they undertake individual and community enterprises; (ii) marketing assistance to equip beneficiaries with accurate and timely market information and help establish sustainable market linkages and viable outlets for their products and services; (iii) farm extension services to upgrade the technical skills of local farm extension workers and effectively disseminate modern and appropriate technology to beneficiaries; and (iv) credit services to co-finance production, processing, and marketing activities of the beneficiaries and their cooperatives. Project Costs and Financing 22. Total project costs including contingencies are estimated at US$105.7 million, of which US$32 million (30%) would be foreign exchange and US$5 million would be taxes and duties (mainly VAT). Project costs include costs incurred by both GOP and by beneficiaries (including funds received as credit for the economic development of the ARCs). The proposed Bank loan of US$50 million would finance about 47% of total project costs, US$46 million of which would be to finance part (about 75%) of the cost of rural infrastructure, and US$4 million for part (about 70%) of the project management cost. Project beneficiaries would provide about US$20.1 million (19%), including part of the cost of infrastructure as well as a significant portion of the incremental investment in agriculture and enterprise activities, both directly as individuals and through their cooperatives and other local organizations. About US$20.4 million (19%) would be extended by the Land Bank of the Philippines (LBP) or other financing institution such as QUEDANCOR, who would channel funds to beneficiaries largely through ARC based cooperatives for agricultural and enterprise investments. Local Government Units (LGUs) would provide US$4.6 million (4%) from their own resources, and US$10.7 million (10%) would be provided through DAR mainly for community organization assistance. The Bank loan would be made available to GOP and would have a term of 20 years with 5 years of grace. The loan would carry the Bank's standard LIBOR-based variable interest rate for US dollar. A breakdown of costs and financing plan are shown in Schedule A. Procurement arrangements and disbursement schedule are presented in Schedule B. Retroactive financing of up to US$1 million equivalent is proposed for eligible expenditures associated with the Central Project Office, to fund the contracting of professional staff - 8 - training, and incremental operating costs incurred after August 1, 1996. A timetable of key project processing events and the status of Bank Group operations in the Philippines are given in Schedules C and D, respectively. Schedule E provides data on the Country at a glance. A map is also attached. The Staff Appraisal Report No. 15624-PH, dated October 24, 1996 is being distributed separately. Prolect Implementation 23. Organization and Management. Oversight responsibility for the project would rest with DAR. A high-level Project Management Board (PMB) chaired by DAR would be established and would comprise representatives of DOF, NEDA, DBM, DA, NIA and LBP. PMB would provide policy guidance for the implementation of the project and approve the annual plan for the various components. It would be assisted by a Central Project Office (CPO) which would be set up at DAR. The CPO, reporting directly to DAR through the PMB, would manage, monitor, evaluate and coordinate all project activities and components. It would be responsible for sub-project approval and supervision, budget preparation, consolidation of accounts, procurement and disbursement. It would liaise with BLGF on MDF matters; LBP for credit operations; and with relevant GOP agencies such as DBM, DOF, DTI, NIA, DPWH, DA, BSWM, LGUs and others as required. To effectively undertake its task, the CPO would maintain high level professional staff with competence in sub-project investment appraisal, planning, budgeting and financial processing, monitoring and evaluation and rural infrastructure engineering. 24. Operations Manual. Project implementation would be governed by an Operations Manual covering eligibility criteria, cost sharing arrangements, approval procedures, fund flows, and organizational arrangements. The Manual would be jointly approved by PMB and the Bank, and its adoption and implementation would be a condition of loan effectiveness. Subject to agreement by DAR and the Bank, the Manual would be periodically updated to reflect necessary policy and operational changes. 25. Arrangements for the flow of funds under the project would adopt the normal government, MDF and LBP systems for disbursements and reimbursements. The community development component would utilize the ARF and would be implemented through a Memorandum Of Agreement between DAR and entities providing the services of community development workers, training and specialist advice. Arrangements for baseline and evaluation surveys would be similar. Credit for agricultural and enterprise development would be provided by LBP and would be extended to beneficiaries using its existing lending policies and procedures. Cooperatives would borrow funds both for their business activities and also for relending to their qualified members. The MDF scheme was selected for the infrastructure fund as it provides an efficient mechanism for relending to LGUs as well as automatic collection system from their Internal Revenue Allotment. The flow of funds from MDF would follow existing MDF rules and regulations as well as the provisions of the Operational Manual which would be used for the administration of the infrastructure fund. -9- Environmental Impact 26. Rural infrastructure activities are not expected to have any significant adverse environmental impact as works would be small-scale in nature and not require forest clearing. Road improvements would largely follow existing alignments, and irrigation works would usually benefit areas where rice is already grown. Water rights would be observed and pollution minimized through environmentally sound management practices. In the case of new roads and irrigation sites (on a sub-project basis), an environmental impact assessment with mitigation plans would be submitted for review and clearance by the Department of Environment and Natural Resources (DENR). The responsibility of ensuring that no sub-projects with undesirable environmental and social impact would be financed by the project would rest with the CPO and the respective LGUs. Each sub-project would be appraised, approved, and supervised by the CPO. This process would ensure, among other things, that adequate environmental screening, mitigation measures, if required, and monitoring compliance would be in place. The CPO will specify that LGUs for sub-projects carried out in their jurisdiction areas would be responsible for compliance with all laws and regulations of the Philippines related to environmental protection. The responsibility for the preparation of environmental impact assessment, if needed, and the related mitigation planning and activities would rest with the LGU who would initiate the sub-project preparation and the contractor who will implement it. The CPO would be in charge of supervising compliance. Agreement Reached 27. During negotiations, the main actions on which commitments were obtained from Government are the following: (a) the establishment of the PMB and the CPO; Cb) incorporation of environmental protection mechanisms into the project; and (c) adoption of the Operations Manual, of which the main points are: (i) project funding and funds flow; (ii) cost-sharing arrangements between National Government and LGUs for financing of the project infrastructure component; and (iii) mechanism and organizational structure to ensure an efficient approval process of ARC development plans and timely flow of funds to finance them. Participation Approach 28. The main design alternatives considered for the project were a pre- determined area-based intervention or a demand-driven fund concept. The latter alternative was chosen as it would allow adequate flexibility to support Agrarian Reform Communities (ARCs) in different stages of development and needs thus allowing more ARCs to benefit from project activities. A demand-driven approach with cost sharing among project beneficiaries, local and national governments, would positively respond to beneficiaries' self identified needs, maximize available local resources, and thus ensure ownership and sustainability of community sub-projects. This is also in line with Government policy to focus its intervention on the ARCs in providing community development assistance, - 10 - agricultural and enterprise development support, and basic infrastructure investments. Economic Benefits 29. The project would benefit about 100 ARCs, comprising some 80,000 households, with a total number of beneficiaries of about 0.5 million. Infrastructure works (roads) would also benefit an additional 40,000 households (approximately 250,000 people),living outside the ARCs, but using the roads improved under the project. The effect of better access roads and social infrastructure would be to raise the quality of rural life and improve linkages/reduce costs with local and regional markets, allowing ARCs to move from a subsistence-based economy towards a more commercial operation. Agricultural productivity and farm level profitability would rise due to: (a) enhancing the resource base through additional irrigation; (b) facilitation of the use of inputs resulting from improved access, hence lower transport costs, extension and training support, and better access to credit; and (c) the introduction of higher value crops and livestock enterprises to add value. The lower transport costs and shorter journey times which make marketing easier together with better access to credit and technical and management support for non agricultural business investments would also contribute towards income diversification and employment creation. 30. Another major benefit of the project would be the enhancement of devolution of planning, operation and maintenance responsibilities to LGUs and community organizations (i.e. POs), both with respect to infrastructure facilities and economic activities. Improvements in roads and irrigation, together with increased rural trade would have a substantial positive effect on the tax and other revenues collected by LGUs. The project is estimated to yield an overall economic rate of return of between 20% to 25%, depending on the detailed sub- component mix. Proiect Financial Impact 31. Beneficiaries. ARBs and other families living in the project area would generally benefit from the project through improved training, better organization, greater linkages with the outside world, and more productive agricultural resources. Some beneficiaries, those getting irrigation, would find the project to have a substantial impact on their family incomes - a two hectare farmer would more than double his income under the project - but for most4, the impact would be largely indirect in that as transport becomes cheaper and easier and community and other enterprises are strengthened, opportunities for 4/ Due to water, soil and topography limitations to economic expansion of irrigated areas, the scope for irrigation under the project would be limited. Consequently over 75% of all beneficiaries would not receive incremental irrigation. - 11 - developing other skills and doing more productive work would improve. For these people, it is estimated that increases in real income resulting from the project might average 20%-30% by project year 6. 32. Local Government Units. On average, the contribution towards roads and community infrastructure by LGUs would be about R1.6 million (US$60,000) per ARC, at 1995/96 prices, part of which is likely to be borrowed under the project. Additionally, municipalities would also bear the cost of road maintenance, likely to amount to about P0.4 million annually per ARC. Incremental income resulting from improved roads would be indirect. It would come from improved trade within the municipal area and, therefore, increased revenues from licenses, together with increased revenues from higher real estate taxes. 33. National Government. The project would impose additional costs on the national government. These would include: (i) the incremental costs of DAR's project management; (ii) the incremental costs of the community development aspects of the project to the extent they are not able to find grant funding for these; and (iii) servicing borrowing from the Bank in order to finance at least 90% of the irrigation costs and 70-90% of other infrastructure costs. Incremental direct income would result from collections from IAs by NIA. In the aggregate the project would impose a net direct budgetary cost to Government, estimated to average about US$3 million per year, including both Government's own contribution and loan interest during the implementation phase, and about US$5 million per year in debt service thereafter. To partly offset this, Government would receive additional income from higher tax revenues from businesses within the project area which make additional profit. Risks 34. Based on past experience, potential risks associated with the implementation and realization of the project's objectives include (i) difficulties in GOP making available timely counterpart funding; (ii) possible inadequate capacity within NIA, LGUs, NGOs and POs to (a) successfully undertake the required feasibility studies for infrastructure facilities and economic activities and (b) to adhere to technical and environmental standards during construction of physical infrastructure; and (iii) lack of commitment by LGUs and local community organizations to operate and maintain infrastructure after project completion. By using DAR, which has access to the Agrarian Reform Fund as the lead agency, and ensuring that adequate budget provision is made for the project, the first of these risks will be minimized. Careful selection by the CPO of ARCs to be supported and project implementing staff, in line with the Operational Manual would help insure that programs are properly designed. For certain types of investment, e.g. irrigation schemes or community warehouses, successful development of appropriately funded community organizations would be a precondition for the investment itself, thereby mitigating the risk of lack of future commitment. For roads, the MOA between the CPO, MDF and the LGU to be signed as a condition of grant would provide for significant penalties should LGUs fail in their maintenance provision, thereby substantially lowering but not eliminating the risk of poor road maintenance. - 12 - Recommendation 35. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve it. James D. Wolfensohn President by Gautam S. Kaji Washington, D.C. October 24, 1996 Attachments - 13 - Schedule A Republic of the Philippines AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT Estimated Costs and Financing (US$ million) Estimated Project Costs 1j ....US$ Million.... Local FX Total Community Development 5.1 1.3 6.4 Infrastructure 31.3 16.9 48.2 Agr/Enterprise 20.8 6.9 27.7 Project Management 3.7 1.2 4.9 Base Costs 60.9 26.3 87.2 Physical Contingencies 5.8 2.5 8.3 Price Contingencies 7.1 3.1 10.2 Total Costs 73.8 31.9 105.7 Financing Plan Component - With Contingencies (US$ Million) ARCs LGU GOP LBP IBRD Total Percent DAR Community Development 1.5 - 6.0 - - 7.5 7.2% Infrastructure 6.2 4.6 1.8 0.2 46.0 58.8 55.6% Agr/Livelihood 12.4 - 1.0 20.2 - 33.6 31.7% Project Management - - 1.8 - 4.0 5.8 5.5% Total Costs 20.1 4.6 10.6 20.4 50.0 105.7 100.0% Percent Financing 19.0% 4.3% 10.1% 19.3% 47.3% 100.0% 1/ Including taxes - 14 - Schedule B Page 1 of 2 Republic of the Philippines AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT Procurement and Disbursement A. Summary of Proposed Procurement Arrangements (US$ million)1 Amounts and Methods of Procurement (US$ million) Procurement Methods Total Project Element NCB Others a/ NBF Cost Civil Works 31.6 27.2 58.8 (28.4) (17.6) (46.0) Vehicles and equipment for CPO 0.5 - 0.5 (0.4) - (0.4) Consultancy/Prof. Staff (CPO) - 3.0 3.0 (3.0) (3.0) Other Costs (CPO) 2.3 2.3 (0.6) (0.6) Farm Inputs/Livestock/ Equipment/Minor Works - 33.6 33.6 & Working Capital Items Community Development & TS Training & Support Services - 3.7 3.7 - Travel, Subsistence & Others - 3.8 3.8 Total 32.1 32.5 41.1 105.7 (28.8) (21.2) (50.0) a/ Includes force account, national shopping, simplified procurement procedures for small works, and consulting services, training, and other services. It also includes commercial practices by beneficiaries. 1/ Figures in parentheses are the respective amounts to be financed by the Bank loan. - 15 - Schedule B Page 2 of 2 B. Allocation of Proceeds (US$ million) Amount of the Loan % of Allocated (US$ million Expenditures Category Equivalent) to be Financed 1. Civil Works 90% of cost la. Farm to market Roads 22.4 excluding lb. Irrigation 15.3 beneficiaries' contributions Total Civil Works 37.7 2. Vehicles, Equipment, 100% of foreign and office furnitures 0.4 expenditures and 100% of local expenditures (ex- factory) and 90% of local expenditures for other items procured locally 3. CPO Operating Costs 0.5 100% 4. Consultants' Services 2.5 100% 5. Unallocated 8.9 Total 50.0 Estimated Disbursements (US$ million) Bank FY 1997 1998 1999 2000 2001 2002 2003 2004 Annual 0.9 3.7 8.7 10.8 9.9 7.3 6.0 2.7 Cumulative 0.9 4.6 13.3 24.1 34.0 41.3 47.3 50.0 - 16 - Schedule C Republic of the Philippines AGRARIAN REFORM COMMUNITIES DEVELOPMENT PROJECT Timetable and Key Project Processing Events (a) Time taken to prepare: 16 months (b) Prepared by: DAR with close Bank assistance (c) First Bank Mission: October 1994 (d) Appraisal Mission Departure: June 1996 (e) Negotiations: October 1996 (f) Planned date of Effectiveness: December 30, 1996 (g) List of Relevant PCRs and PPARs: None This report is based on the findings of appraisal and preappraisal missions comprising Messrs/Ms. A. Chupak (mission leader), P. Harrison, T. Jackson, D. Lucks, J. Mercader, R. Montemayor, and R. Ravanera (consultants), who visited the Philippines in October 1995, February 1996, and June/July 1996. Task Manager: A. Chupak; Peer Reviewers: Messrs. Jaime Roman, and Thomas Wiens. Documents clearance was provided by Messrs. Javad Khalilzadeh-Shirazi, Director, EA1 and J. Gutman, Chief, EA1AE. Assistance in preparing the documents was given by Ms. Brenda Phillips. - 17 - Schedule D Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN PHILIPPINES A. STATEMENT OF BANK LOANS AND IDA CREDITS la (As of September 30, 1996) Amount (USS million) Loan or (less cancellations) Credit Fiscal Undis- Number Year Borrower Purpose IBRD IDA& bursed One hundred and sixty-two Loans and seven Credits closed. 6,264.95 171.18 10.45 Of which SALs, SECALs and Program Loans 1903 1981 Republic of the Philippines SAL I 199.96 2266 1983 Republic of the Philippines SAL II 302.25 2277 1991 Republic of the Philippines Environment & Natural Res. Mgt. 66.00 2469 1985 Republic of the Philippines Agriculture Sector Inputs 150.00 2787 1987 Republic of the Philippines Economic Recovery Program 300.00 2956 1988 Republic of the Philippines Program for Govt. Reform 200.00 3049 1989 Republic of the Philippines Financial Sector 300.00 3149 1990 Republic of the Philippines Debt Management Loan 200.00 3539 1993 Republic of the Philippines Economic Integration Loan 200.00 1L82.21 0.00 3099 1989 Republic of the Philippines Health Development 70.10 3.85 3146 1990 Republic of the Philippines Municipal Development II 40.00 3.86 3204 1990 Republic of the Philippines Coconut Farms Development 120.95 67.52 3242 1990 Republic of the Philippines WS/Sewer/Sanitation I 58.00 21.78 3261 1991 Republic of the Philippines Communal Irrigation II 46.20 26.95 3263 1991 Republic of the Philippines Earthquake Reconstruction 125.00 18.62 *3360 1991 Republic of the Philippines Env. & Natural Res. Mgt. 158.00 30.08 3430 1992 Republic of the Philippines Highway Management 150.00 112.65 3435 1992 Republic of the Philippines Engineering & Science Educ. 61.00 23.72 3439 1992 National Electrif. Adm. Rural Electrification 91.30 71.62 3455 1992 Republic of the Philippines Municipal Development ill 68.00 53.19 2392 1992 Republic of the Philippines Second Vocational Training 36.00 19.75 2506 1993 Republic of the Philippines Urban Health & Nutrition 70.00 65.68 3523 1993 Dev. Bank of the Philippines Telephone System Expansion 134.00 96.98 3603 1993 Republic of the Philippines Tax Computerization 63.00 45.08 3607 1993 Republic of the Philippines Irrigation Operation Support II 51.30 37.28 3626 1993 Philippines National Power Corp. Power Transmission & Rehab. 54.55 11.68 3700 1994 National Power Corporation Leyte Cebu Geothermal 147.00 40.73 3702 1994 Philippines National Oil Co. Leyte Cebu Geothermal 64.00 20.49 3745 1994 Subic Bay Metropolitan Authority Subic Bay Freeport 40.00 11.65 3746 1994 National Power Corporation Leyte Luzon Geothermal 113.00 61.72 3747 1994 Philippine National Oil Co. Leyte Luzon Geothermal 114.00 87.33 3852 1995 Republic of the Philippines Womens Health & Safety 18.00 17.68 3938 1996 Land Bank of the Philippines Rural Finance 11 50.00 32.64 3939 1996 Land Bank of the Philippines Rural Finance II 50.00 36.00 3940 1996 Land Bank of the Philippines Rural Finance II 50.00 32.90 "3996 1996 National Power Corporation Transmission Grid Reinforcement 100.00 100.00 *3997 1996 National Power Corporation Transmission Grid Reinforcement 150.00 150.00 *4019 1996 Metro. Water Works & Sewerage Sys. Manila 2nd Sewerage 57.00 57.00 Total 8,511.76 277.18 1,368.88 of which has been repaid 2,921.21 11.76 Total now held by Bank and IDA 559058 2018- Amount sold 31.35 Of which repaid aim Total Undisbursed 123. 83 1,368.88 /a The status of the projects listed in Part A is described in a separate report on all IBRD/IDA-financed projects in execution, which is updated twice yearly and circulated to the Executive Directors on April 30 and October 31. Amounts are presented net of cancellations. 1h Principal amounts in USS equivalent at date of negotiations, and undisbursed amounts in equivalent are valued at exchange rate applicable on the date of this statement. Indicates SAL/SECAL Loan and Credits. Not yet effective. - 18-Schedule D Page 2 of 2 B. STATEMENT OF 1FC INVESTMENTS (As of September 30, 1996) Undisbursed Oriainal Gross Commitments Including IFC IFC Parti- Held pici- Fiscal Loan Equity cipant Total by pment Year Obligor Type of Business ---- USS million - - IFC potion 1963/73 Private Dev. Corp. of the Philippines a/ Financial Services 6.52 4.36 8.48 19.36 - 1967/89 Manila Electric Company Infrastructure 30.64 3.64 2.96 37.24 16.30 - 1970 Paper Industries Corporation a/ Timber, Pulp & Paper - 0.81 1.40 2.21 - - 1970/72 Mariwasa Manufacturing Company g/ Cement & Construction Mat. 0.38 0.26 0.55 1.19 - 1970/87/ Philippine Long Distance Telelephone Co. Infrastructure 88.50 0.03 40.00 128.53 41.55 7.80 88/90 1971/77 Philippine Petroleum a] Mining and Extraction 6.20 2.07 - 8.27 - - 1972 Marinduque Mining & Ind. Corporation s/ Mining and Extraction 15.00 - - 15.00 - - 1973 Victorias Chemical Corporation a/ Chemical & Petrochemicals 1.85 0.35 - 2.20 - - 1974 Filipinas Synthetic Fiber Corporation a/ Textiles 1.50 - - 1.50 - - 1974 RFM Corporation a1 Food & Agribusiness 1.20 - - 1.20 - - 1974179 Maria Cristina Chemical Industry Mining and Extraction 1.55 0.64 - 2.19 0.44 - 1975 Philippines Polyamide Ind. Corporation at Textiles 7.00 - - 7.00 - - 1976 Philagro Edible Oils, Inc. a/ Food & Agribusiness 2.65 0.19 - 2.84 - - 1977 Sarmiento Industries _W Timber, Pulp & Paper 3.50 - - 3.50 - - 1977/85 Acoje Mining Co. Inc. a/ Mining and Extraction 2.50 1.22 - 3.72 - - 1978 Cebu Shipyard & Engineering Works at Manufacturing 2.10 - - 2.10 - - 1979/90 General Milling Corporation Food & Agribusiness 4.00 1.73 - 5.73 1.73 - 1980 Consolidated Ind. Gas, Inc. a/ Chemicals & Petrochemicals 4.50 - - 4.50 - - 1980 Philippines Associated Smelting Mining and Extraction - 5.00 - 5.00 - and Refining Corporation (PASAR) a' 1980 Ventures in Industry & Business Financial Services - 0.24 - 0.24 - - Enterprise, Inc. (VIBES) g1 1980/831 All Asia Capital Trust Financial Services 30.16 2.77 6.00 38.93 27.73 10.00 89/90/95 1981 Loans to Small & Medium Scale Financial Services 18.50 0.64 - 19.14 - - Enterprises (SMSE) i/ 1981/92 Davao Union Cement Corporation Cement & Construction Mat. 16.00 0.85 - 18.85 - 1982 NOC-Guthrie Plantations, Inc. a/ Food & Agribusiness 11.00 - - 11.00 - 1986/91/92 Pure Foods Corporation a/ Food & Agribusiness - 4.46 - 4.46 - - 1987 BPI Agribank Financial Services - 0.98 - 0.98 - - 1988 First Philippine Capital a/ Financial Services - 4.20 - 4.20 - - 1989 Hambrecht & Quist Financial Services - 2.28 - 2.28 2.28 1990 First Philippine Fund at Financial Services - 29.73 - 29.73 - - 1990 The Manila Fund (Cayman) g/ Financial Services - 7.00 - 7.00 - - 1991 Automated Microelectronics a/ Manufacturing 9.00 2.80 - 11.80 - 1991 Avantex Mill Corporation Textiles 11.25 2.33 - 13.58 8.31 - 1991 Best Chemicals Chemicals & Petrochemicals 6.50 2.30 8.80 2.03 - 1991 Hopewell Energy Infrastructure 10.00 1.10 - 11.10 0.95 - 1991 Makati Shangri-La Hotel Hotels and Tourism 29.50 - 29.50 59.00 4.57 - 1993 Bacnotan Cement Corp. Cement & Construction Mat. 18.00 9.24 - 27.24 12.63 1993 Hopewell Power Infrastructure 60.00 10.00 40.00 110.00 70.00 - 1993 Mactan Shangri-La Hotel Hotels and Tourism 12.00 - 12.00 24.00 - 1993 Northern Mindanao Power Infrastructure 12.50 450 21.00 38.00 13.96 0.24 1993 Pilipinas Shell Petroleum Oil Refining 50.00 - 85.00 135.00 11.63 - 1994 Hambrechl & Quist Financial Services - 2.50 - 2.50 2.50 0.10 1995 Walden AB Ayala Management Financial Services - 0.05 - 0.05 0.05 0.02 1995 Walden AB Ayala Ventures Financial Services - 3.75 - 3.76 3.75 1.85 1996 All Asia Capital Growth Financial Services - 4.00 - 4.00 4.00 - 1996 All Asia Capital Managers Financial Services - 0.04 - 0.04 0.04 - 1996 Asian Ventures Limited Financial Services - 0.01 - 0.01 0.01 - 1996 Pangasinan Electric Corporation Infrastructure 30.00 - 196.00 226.00 30.00 226.00 Total Gross Commitments b/ 504.00 116.07 442.89 1062.96 Less Cancellations, Terminations, Repayments & Sales 292.16 73.45 181.38 546.99 Total Commitments Now Held c/ 211.84 4= 261.51 §.1.W 21161 2410 Pending Commitments A. Magsaysay 8.00 3.00 26.50 37.50 Total Commitments Held & Pending Commitments 219.84 45.62 288.01 563.47 Total Undisbursed Commitments d3JA .2.21 2.d 2d.01 a/ Investments which have been fully cancelled, terminated, written off, sold redeemed or repaid. b/ Gross commitments consist of approved and signed projects. c/ Held commitments consist of disbursed and undisbursed investments. - 19 - Schedule E Page 1 of 2 Philippines at a glance Lower- POVERTY and SOCIAL East middle- Philippines Asia Income Development diamond* Population mid-1995 (millions) 67.5 1,709 1,154 GNP per capita 1995 (USS) 1,134 840 1,700 Life expectancy GNP 1995 (billions US$) 76.5 1,436 1,962 Average annual growth, 1990-95 Population (%) 1.9 1.3 1.4 Labor force (%) 2.6 1.4 1.7 GNP per Most recent estimate (latest year available since 1989) capita Poverty. headcount index (% of population) 41 Urban population (% oftotal population) 54 32 56 Life expectancy at birth (years) 65 68 67 Infant mortality (per 1,000 live births) 40 35 36 Access to safe water Child malnutrition (% of children under 5) 30 17 Access to safe water (% of population) 81 67 73 Illiteracy (% of population age 15+) 10 16 -Philippines Gross primary enrollment (% of school-age population) 112 116 104 - Lower-middle-income group Male 113 119 105Loe-id0inregou Female 111 115 101 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1994 1998 Economic ratios* GDP (billions US$) 15.0 30.7 64.2 74.1 Gross domestic investment/GDP 30.9 14.8 23.5 21.8 Openness of economy Exports of goods and non-factor services/GDP 21.0 24.7 33.0 35.1 Gross domestic savings/GDP 24.8 16.5 17.8 14.7 Gross national savings/GDP 24.7 14.9 19.0 19.3 Current account balance/GDP -6.2 -0.1 -4.4 -2.5 Savings Investment Interest payments/GDP 0.8 3.1 2.5 2.5 Total debt/GDP 28.0 86.7 60.0 54.9 Total debt service/exports 14.4 31.6 20.4 14.0 Present value of debt/GDP .. .. 54.6 Present value of debt/exports .. .. 143.1 .. Indebtedness 1975-84 1985-95 1994 1995 1996-04 (average annual growth) Philippines GDP 3.9 3.2 4.4 4.8 5.5 pi GNP per capita 1.3 1.7 2.9 3.8 3.5 -Lower-middle-income group Exports of goods and nfs 9.5 8.7 19.8 11.9 10.6 STRUCTURE of the ECONOMY (% of GDP) 1975 1986 1994 1995 Growth rates of output and Investment (%) Agriculture 30.3 24.6 22.0 21.7 30 Industry 34.6 35.1 32.5 32.1 20 Manufacturing 25.7 25.2 23.3 23.0 10 Services 35.0 40.4 45.5 46.2 o 10 0 91 92 93 4 S Private consumption 64.5 75.0 74.2 74.0 -20 General government consumption 10.7 7.6 10.7 11.2 Imports of goods and non-factor services 271 21.9 40.1 44.0 -GDI +GDP (average annual growth) 197584 1985-95 1994 1995 Growth rates of exports and Imports (%) Agriculture 2.7 2.0 2.6 0.9 20 Industry 4.2 3.1 5.8 7.2 Manufacturing 2.9 3.1 5.0 6.8 15 Services 4.4 4.0 4.2 4.9 1o Private con3umption 3.8 3.5 3.7 3.8 General government consumption 1.0 3.2 6.1 3.6 Gross domestic investment 2.8 8.0 5.5 4.4 5 0 92 93 Sd 95 Imports of goods and non-factor services 6.1 12.3 13.6 16.6 Gross national product 3.7 4.0 5.3 5.5 -Exports -0-Imports Note: 1995 data are preliminary estimates. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. - 20 - Schedule E Page 2 of 2 Philippines PRICES and GOVERNMENT FINANCE 1975 1985 1994 1995 Inflation(%) Domestic prices (% change) 20 Consumer prices 6.8 23.1 9.1 8.1 Implicit GDP deflator 9.4 17.6 10.0 7.4 'D Government finance (% of GDP) 0 Current revenue . 12.1 20.6 19.6 g 91 92 93 94 95 Current budget balance 2-4 3.2 3.1 -GDPdef -o-CPI Overall surplus/deficit -1.9 -0.5 -0.5 TRADE 1975 1985 1994 1995 Export and Import levels (mill. US$) (millions US$) Total exports (fob) .. 4,629 13,483 17,370 30090 Coconut oil .. 347 639 989 2s000 Sugar .. 185 77 74 Manufactures .. 2,539 10,615 13,868 20 000 Total imports (cif) .. 5,111 21,333 26,333 1sO0O Food .. 256 815 1,060 10000 Fuel and energy .. 1,452 2,040 2,461 Capital goods .. 769 6,868 8,029 1000 Export price index (1987=100) .. 81 120 132 89 0 91 92 93 94 9s Import price index (1987=100) .. 63 117 126 IExports il Imports Terms of trade (1987=100) .. 127 103 105 BALANCE of PAYMENTS 1975 1985 1994 1995 (millions US$) Current account balance to GDP ratio (%) Exports of goods and non-factor services 3,000 6,864 20,044 26,532 a - Impoit of goods and non-factorservices 4,116 5,961 25,712 32,804 8 s0 91 92 93 94 95 RIes rcc balance -1,116 903 -5,668 -6,272 Net factot income -126 -1,317 1,782 3,493 .2 Net current transfers 318 379 936 880 ,3 Current account balance, 4 before official transfers -923 -35 -2,950 -1,899 Financing items (net) 912 867 4,752 2,544 Changes in net reserves 11 -832 -1,802 -645 e Memo: Reserves including gold (mill. US$) 1,463 1,098 7,121 7,775 Conversion rate (local/US$) 7.2 18.6 26.4 25.7 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millions US$) Composition of total debt, 1995 (mill. US$) Total debt outstanding and disbursed 4,171 26,640 40,006 39,433 IBRD 238 2,420 4,855 5,002 G A IDA 17 84 174 183 5300 5002 8 Total debt service 457 2,534 4,637 5,294 183c lBRD 26 285 717 790 728 D IDA 0 1 3 3 3303 Composition of net resource flows Official grants 72 139 284 290 Official creditors 185 382 214 -631 F Private creditors 348 776 1,755 819 11095 Foreign direct investment 98 12 1,289 1,189 Portfolio equity 0 0 269 1,201E World Bank program 13822 Commitments 114 104 578 168 A - IBRD E - Bilateral Disbursements 94 278 305 403 B - IDA D - Other multilateral F - Pnvate Principal repayments 12 110 359 415 C-IMF G - Short-term Net flows 82 166 -55 -12 Interest payments 14 176 360 378 Net transfers 68 -10 -415 -390 International Economics Department 10/24/96 MAP SECTION  IBRD 27553 fl 10 2412 e CLASSIFICATION OF PROVINCES BY ADMINISTRATIVE REGIONS ILOCOS VI WESENVISAYAS1 . PHILIPPINES 20. 1 Iloco, Norte 38 Aklan 2_ 2 Ilocos Sux 39 C.pi. * La Union 40 Anfque AAE 4 ungcminan 41 I^I o @ NATIONAL CAPITAL CORDILLERA ADMNISTRATVE 42 Negros Occilo REGION ICAR 43 Gima PROVINCE BOUNDARES 5 Am VII CENTRAL VISAYAS 6 KoIinga-Apooo 44 CebU - - REGION BOUNDARIES 7 Mouftain Province 45 Negroc Oriental a Kftg>, 46 Bohol___ 9 Benut 47 Siqor INTERNATIONAL BOUNDARIES 1 CGAYAN VALLEY Vill EASTERN VISAYAS 10 Batonee 48 Nohem Somor NOTE: m of on¡ thismap 11 cagaya 49 estem Srnor .om fewer than the ctual total Ho~ee, data on these bowndry 12 Ieabe6 50 Eastern Sarnr 5 R chmnge/oddhns was unavokWf t thon of Mg. 13 NuevaVIny. 51 Leyt. 14 Quirn 52 SouthemLMyte 12 1I1 CENTRAL WZON 53 Siliran 2 15 Nuv Ecija IX WESTERN MNUDANAO 16 Tarloc 54 Zangodele a 17 Zambolaro 55 Zamboonga del Sur 18 Pampongo 56 Bsilian 19 BuIacan X NORTHERNMJNDANAO 214 E1mTls 0 l00 200 300 19t suaon1 . 20 B CoAn 57 Surigoo del Nor*. _' REGION (NCR) 58 CamiguÅn 4 0 50 100 150 200 IV SOUTHERN TAGALOG 60 Mi..5. Orient1 2 21 Qu.o 61 MworånOccidental L11 0 N 22 RiezI 62 B.k;d.a 17 19 23 Rizal 63 Aq~an del Sur i 24 Cahk X1 SOUTHERN MINDANAO i 25 Lgun PHILPPINE SEA 26 BtnaeO 64 S~4godel Sur 223HLPPN E B7aMring." 65 Davoa Orientkl 2 c 27 Mor.06ue66 Dvao del Norte 24 29 M n om Occident al 67 2 CAdelTSurAN 29 Mrolro Oddetol 68 S"ut Cotobtoa8 222 30 Roron 69 So ~on3on V BICOL XII CENTRAI MINDANAO 32 cmnd. N 70 Lanco del Nort 33 Camdns Sur 71 ubn Kdomt 34 Cmonaduones AUTONOMOUS REGION OF 35 Alby MUSUM MINDANAO (ARMM)g 29 36 Sg 72 Lonoo del Sur- 37 M 73 Mguindan MIN OR 74 North Cotabuoo4 75 S.1. 76 Towits; 49 12- Vrso an 39 SOUTH CHINA v 40 41 51 SE A PANA PALAW e 31 Min anco Sca 9.9 Sulu Sea s4 70 t, PAClFIG% ÅuK. OCEAN PORT7 6 67 sourH 68 EA CES b BetUNEI $ULLU CcIebes Sca I N 0 N i A 11M/81995 I 23 3 T R F   IMAGING Report No: P- 6936 PH Type: MOP