InTouch 2 (3)

A N e w s I e t t e r o F t h e W o r I d B a n k R e s i d e n t M i s s i o n i n t h e P h i I 'i pp i n e s M a r c h 1 9 9 8 V o I u m e 2 N u m b e r 3 WB President Visits the Philippines uring his first official visit to the Philippines last February, World Bank President James D. Wolfensohn said he was particularly concemed about the impact of the Asian financial crisis on the poor. "What I've been doing on this trip is to focus not just on the financial aspects but also on the social and human aspects, which are real," the President said. Mr. Wolfensohn said the crisis had created social tensions in varying degrees througheout the region. "That's a serious issuer," hee stressed, citing prob- lems like rising unemiploym-nent and food shortage. He observed that people who lost their jobs in the cities wcmere going back to the rural areas. "Labor migration Two Presidents. President James D. tholensohn pays a courtesy call to President Fidel from urban to niral areas usually disrupt Ramos in Malacaitang duiring his two-day visit to the Phiilippinies last February. MIr Wolfentsohn later met withf goverment economic and social sector niatagers, business leaders afd otlie repre- the existence of poor failies, especial- sentativesfirom civil societv, ly women and children," he explained. "Some of the children are being Development (ECD)^ $19M;forced to leave school and engage in fiB OKs 3 Pr1oiaets to Hdp the Poor activities that we hope our kids would not get into," he added. A month after WB President Community-Based Resource To help miral famiilies cope with the Wolfensohn visited the Management (CBRM), $50M. difficulties brought about by the crisis, Philippines and announced To respond to the Government's Mr. Wolfensohn said the Bank has been a $1-billion package for the efforts to refocus development providing support to the ral areas. Philippines in 1998, three new assistance in support of the Peace "We're fast-disbursing employment projects were approved by the Accord between the Philippine support to governunentprojects, particu- Bank's Board of Executive Government and the Moro Directors. National Liberation Front, the WB larly in infrastructure and enviromnment. These projects, worth $79 mil- approved a loan of $10M to help We want to send poor people to work," lion, aim to increase the incomes finance the SZOPAD Social Fund he said. of the poor and provide basic ser- project. Further, he said the Bank wants to vices to them. These are the The project will increase access ensure that people have enough food to Special Zone of Peace and of the poor and those affected by eat at affordable prices. Development (SZOPAD) Social the conflict to basic economic and Fund,$IOM; Early Childhood Development (ECD), $1 9M; and Please turn to Page 2 Please turn to Page 2 iyE The Club af 29 News 3 Small Grants Program 6 Global Dev't Finance '98 7 IN TI S ISSU The President's Visit 4-5 Dialogue witih Civil Socieiy 7 The Asia Developmeni Forum 8  WB President Visits RP Continuedfromii Page I1 71t.ii Discussin. hr. faltensioha shares light ainones wi ialih 'Inancc SeCCettiiai Salv ador nriquiez (left) cand f3angko Sentral ng Pilipinas (anv 0,ahnel .Sngson xnrght) aifier disctissing naIa finance ana ;nonelarvt,ssaes. meetings as "very enlhance the cnvironment. These projects Remarkable Democratic Spirit Mr. lolfensohn ineets Socio-economnic Planning usual This are Local Goverimeiit Water and Secretary Cielito Habiao and Social Welfare and Development Secretagy Line Laigo, is rare intenns of Sanitation, $60M, Solid Waste along with AiGO representati ves. my visit to 65 Environment Enhancemcnit. $100M. and countries. I think Local Govenmment Finance. $1 OOMNI. "Open, Democratic Society" that the Philippine model is a model that The Bank has also committed credit Mr. Wolfensohn also said he was marn could follow." he said. lines estimated at $15()M for agriculture dceplv impressed bv the Philippilies' deeply .mpressed by the Philippines and industrv. particularly for srnall and open. democratic societv. "I have to pay S-B Commitment m e - . .S . . ~~~~~~~~~~~mediumn enterprises arnd cxport-oriented enonnous tribute to what has been done in Mr. Wolfensohn announced during his activities. the last 10 vears in tcms of linking gov- visit thlat for 1998, the Bank is preparing a The Bks a emnment, civil society and trade unions $1-billion package of financial assistance Government a package of $S((M for together," he said. to various government projects. The first Aside from finance officials and busi- three of these projects will raise incomes of quick-disbursing loans and technical assis- ness leaders, Mr. Wolfensohn met with the poor and provide them with basic ser- tance for structural refonns in the financial representatives from non-government vices. (Please see WE OKs 3 Prtjects ... ) and public managemicnt sectors. organiz6tions and trade tunions, along with Other projects scheduled for subtnission govenunent officials managing the coun- to the Bank's Board later this year wxill try's social services. He described these improve infrastructure and protect and WB OKs Projectsfor the Poor projectls. Since lQllf of thie cowjltrv's population of Continuedfiromn Page I needs could lead to serious negative effects 67.5 illioii livc in the rual areas wihere the on the child's overall development. Thc incidencc of povertv remains hiigh, this pro- social infrastructure, services and employ- project will also improve !tc parents' capaci- ject is expecled to create a positive impact on ment opportunities in the SZOPAD areas. ty to tmderstand and take action to meet the millions of Filipinos. Tlhmugh the Social Fund, grant financing needs of their children. The capacities of Thc project aims to enhiance the capacity xvill be provided through local governmnent local commnunities and community-based of low-incomc niral LGUs and commnunities units (LGUs). non-govermnent organiza- groups to plan, manage and finance child to plan implement and sustain priority nat- tions (NGOs). and community-based groups development interventions in an integrated ural resource management projects; strength- *vlhich xvii carry out sub-projects. Thlese sub- nmanner will also be enlhanced. en the higher levels of govemunent systems projects may include rural access roads, rural Similarly, tlh capacity of central govern- to transfer finance and etvirounental tech- water stupply and sanitation, small-scale irri- mient agencies responsible for child develop- nology and improve implementation of envi- gation sclhmes, and communal clinics and ment to support LGUs in planning, manag- ronmental policies: and provide resources to schools. The ptnjcct Nvill be implemenlted by ing. finanicing. monitoring, and evaluating LGUs to finanuce natural resource manage- a Social Fund Agency created under the ECD programis wvill also be improved. ienit projects. The project xvill be supervised Office of the President. Project implementationi xvill be carried out by the Department of Finance and imple- The ECD project xvill improve the lhealth, by the Departments of Social Welfare and inented by LGUs with assistance from nutritional, educational, and psyclhological Development. Health, and LGUs. national agencies. status of prc-school children from poor coin- The CBRM projcc! xvill address rural munities. The years, 0-6. are the formative poverty and degradation of natural resources y ears of the child, wvhere failure to meet throughl support for locally generated and D physical. mental. social. and psyxchologieal impleiimenited natural resource management 2  The Club of 29 News rT-Vr challenge for the Club of 29 and the World Bank during the second Gov't W V Intensify , half of fiscal year (FY) 1998 is to intensify the supervision of Bank-assisted projects and the implementation of mea- Supervision of Projects sures that will improve procurement, dis- bursement and financial management, accordig to the FY '98 fid-Yea Poitfoho Action Plan WB-Assisted Projects Review Repoit. From Januaiy to June tius year, the Club FY 1998 As of December 1997-the end of the of 29, Government oversight agencies, and Agrarian Reform Communities Development first half of FY 1998-the Bank's poilfolio the Bank have outlined a five-point action Coconut Farms Development in the Philippines comprising 26 projects plan: Communal Irrigation II had total commitments of US$2.4 billion. * Maintain rigorous approach to closing Conservation of Priority Protected Areas During the first half of FY 1998, actual dates for actual problem projects in the Engineering & Science disbursements amounted to $190 million, absence of iealislic action plans that could be Environment & Natural Resources Mgmt about 60% of the target of $323 million monitored First Water Supply, Sewerage & Sanitation However, this was 11% lower than the *Raisetheproportionofnewprojectswith Health Development $213 million disbursements during the satisfactoiy quality at entry- consistent 'with Highway Management same period in FY 1997. the Bank's country assistance strategy- to Irrigation Operations Support i1 Large disbursements flowed to five pro- 85% or higher. Leyte-Cebu Geothermal jects- Transmission Grid Reinforcement, - Meet the disbursement target of $323 Leyte-Luzon Geothermal Leyte-Luzon Geothermal. Highway Ma- million bytheendofFY 1998. Manila Second Sewerage nagement, Coconut Farms Development * Continue to implement the procuement Municipal Development Ill and Rural Finance 11. and firocial naagemitientiniatives. Ozone Depleting Substances-MP The Report said 24 projects satisfactori- Progress in the action plans will be Power Transmission & Rehabilitation ly met development objectives while 22 assessed during the joint Government-Bank Rural Electrification projects had a satisfactory perfonnance FY 1998 Country Portfolio Perfonnance Rural Finance 11 during the period. Review (CPPR), which is scheduled in May Subic Bay Freeport I It also identified four projects in the thisyear. Subic Bay 11 portfolio that need improvement in perfor- Tax Computerization nance. These are Highway Management. Decentralization Third Elementary Education Rural Electrification and Revitalization and The role of the Bank's Resident Mission Transmission Grid Reinforcement Urban Health and Nutrition (which encoun- staff in overseeing projects will also be Urban Health & Nutrition tered persistent procurement problems) and strengthened. Vocational Training 11 Manila Second Sewerage, which has been With the decenralizaion of field offices, Water District Development delayed due to the privatization of the the Resident Mission now directly oversees Water Resources Development Metropolitan Waterworks and Sewerage five projects-Subic Bay Freeport projects I Women's Health S Safe Motherhood System. and II, Ueban Health and Nutrition, Health Developmenit and Third Elementary , ~~~EducationL Before decentralization in July 1997, only Subic Bay Metropolitan Authority projects were being directly supervised from the Resident Mission Office. The Report noted that "experience with decentPozatison has been positive with nlom collaborative and constant interaction between RNiP staff and the project man- agers. Further, it observed thiat the portfolio coni- tinued to beniefit from increased supervision The supervision budget for FY 1998, for sinsac, amounts to $1.7nmillion,2l%highr thanthe $1.4 billionbudlget in FY 1997. Project Visit. Counttryv Director VinaY Blhargava anid staff during last year's retreat visited ant irrigalion project under thte NVati Onal Irrigation Administration s Communal Irrigationi II Project. 3  A *,A ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~A ~~m * "It's been a very good visit. I don 't think anyone is immune from the problems of a financial turmoil but I really do feel that the team here is working very well together and got the right priorities." Good Listener. Ar. Wolfensohn listens intent- ly to queries fro7u the press. Face-to-face. lir. Wolfensohn meets Mr. Mitsuio Sato, President of Asian Defvelopent Bank. Looking on is Mr. Peter Suillivan, ADB's Vice President. 'Game. 'Mr. Wfolfensohn gamely answers questions thrown byAManila-based media, both print and broadcast 4  "*Wat I've been doing on this trip is tofocus not just on the finan- cial aspects but also on the social and human asPects, which are real." IrJh Civid Socioet. ihe President joins representtatiles fromn VGOs and trade Unions. AT.,. the Familyi 'Twas a Picture of dihe WB jain i/v hi Me Philippines with Ar'. ffolfctisohi anjd his wifi, Elaine-a a,riefleiio a] a aieyinorahle oced- Coekail. M .-._ ,- -P/ipie ihAr Wo?fensohn a for- hanker, chas with Filipino hankers Octavio lisp irita anxd Deogracmas 6  _1!|_~* WB's Small Grants Program As of March this year, the Resident WB's Small Grants Program NMissionimthePhihppmeshasfiillvapproved requests for funding from its $25.COM fund for Now Managed at Country Level tCfoaocviugactsofies * 10,000 for the Caucus of Devel- clients. opment NGOs for the conduct of its Second he World Bank- s Small Grants "The initiative will help improve National Congress and Forum Series dunng T aProgram (SGP) is now being Bank-NGO communication at the coun- the SocialDevelopment WeekfromFebrmar < managed at the country level, try level and grant decision-making 2-8, 1998; At least 20 of the Bank's Resident based on a country level assessment of $3,750 for the hiolding of the National Missions in developing countries now priority needs and NGO professional- Confederation of Cooperatives' Think administer the program. They respond to ism," said Gloria Davis, director of the TankMeeting inquiries, accept and evaluate applica- Bank's Social Development Departnent. $2,700 for the capacitv-building ttaining tions, and award and monitor grants. She added that the move also aimis to activity of Kapunungan Alang sa Formed in 1983, the SGP supports create simple, systemiic and low-cost tool KuwgnsKsda-ub,n;n activities of non-profit, non-government for improved Bank-NGO relationships * $8,550 for NGO participation in the organizations (NGOs) through grants. It and provide better service to the Bank's Regional Consultation for the UN promotes dialogue and disseminaton of clients. Commission on Sustainable Development information on international develop- For FY 1998 (July 1997 to June (UNCSD) in Bangkokn an the Otl Sessionof ment in foruns outside the Bank's oper- 1998), the Bank's Small Grants dte UNCSD in New York, organizedby the ations. Committee has approved a fund of PhilippineInsfituteofAlternativeFtttures. The initiative is part of the Bank's $25,000 for each of the 20 Resident decentralization efforts to bring the Missions all over the world, including the m Bank's products and services closer to Pilippines.ii About the Progrmm ~ ~ ii. n i't the applying organization? The Small Grants Program was cre- T he Sm all G rants Program (Organizations are not eligible for two ated in 1983 to provide a way for the T grants in one fiscal year.) Bank to promote dialogue and dissemi- Phnmpplnes 1998y nation of information on intemational faiance the whole activity but should cover only a Which Grant Activities Are development in forums outside its operations. portion of it. A cash or in-kind counterpart from the Given Priority? Starting fiscal year 1998, the management and grantee of less than 25% of total cost required and * Activities which focus on lessons from other administration of the SGP has been decentralized to should be reflected in the proposed budget. countries relevant to Philippine setting. country offices. A total of $25,000 has been alloted Contributions from other donors or sources will be - Activities that promote regional representation for the Philippines' Resident Mission. highly encouraged. or the participation of people from the provinces or regions. Who Can Apply? HowAre Grants Awarded? * Activities whichi promote Iinkages with and Any single or a coalition of non-stock, non-prof- Applications will be screened, reviewed and cooperation aniong diverse groups of stakeholders it, non-governmental, voluntary organizations estab- evaluated by a committee of Resident Mission Staff such as NGOs, govenument, donors, business com- lished primarily to work for development. Examples appointed by the Country Director. Short-listed pro- munity, private sector, local people, women and are cooperatives or a broad coalition of cooperatives, posals will be recommended to the Country children. NGOs, foundations and people's organizations Director who will make the final decision. Leters Activities which focus not only on identifying which are based in the Philippines and managed by will be sent out to applying organizations to infonm a problem but also on finding an indigenous solution Filipinos. The organization should be registered with them ofthe Bank's decision. to the problem. the Securities and Exchange Consmission or any * Activities which can show that early World accrediting institution by the Philippine How Are Applications Evaluated? Bank support will help Menerate additional support Govenitnent. * Will the grant promote relevant development from other donors. issues and concems among non-govemmental insti- VAiat Sat of Activities Are Supported? tutions, the World Bank, Government and other Howto Apply fora Grant TIse Program supports activities that promote members of civil society? Applicant organizations should apply at least six networking, dialogue and dissemination of informa- * Will the grant contribute to the creation of months before the date of the grant activity, tion about local, regional and international develop- enabling environment for civil society participa- Competition for grants is intense, and with a limited menit among various stakeholders. These may tion? budget the Program cannot support all of the many include conferences, seminars,special editions or * Is the grant intended for a specific activity? worthwhile activities for which applications are start-up costs of publications, audio-video materials, * Will the activity be completed within one year? received. Applications should be brief and concise, or other innovative networking efforts that non-prof- * Does the proposal have clearly stated objec- no more than four (4) pages. it organizations find difficult to ftund through their tives, expected activities and outputs? regular program budgets. The focus could be on * Could the grant generate additional support Applications should be sent by mail or faxed to: development issues such as poverty reduction, envi- from other donors and sources? Ms. Leonora A. Gonzales ronmental protection, human resource development * Were previous grants (from the Bank or other Extemal Relations Officer and private sector development. donors) to the organization well used? The World Bank Is the organization suitable for World Bank Resident Mission in the Phcilippines 23/F The Taipan Place What Size of Grants Are Awarded? support? , Emerald Ave., Ortigas Center Most grants are in the raiige of $5,000 to * Was the'application received six to twelve Pasig City 510,000. Smaller grants are possible, but larger nsontls in advance oftlhe proposed activity? Tel. 637-5855 to 64 grants are rare.The grant should not be used to * Has there been a recent grant from the Program Fax. 917-3050/914-2835 6  WB Bulletin GDF '98 Focuses On East Asian Crisis "Can Asian Societies Be orld Bank's latest publication. Caring and Competitive? \5tGIobal Development Finance (GDF) 1998. is now avail- able, m ~~~~~~his was the main focus of GDF focuses on the causes and discussion in a dialogue implications of the East Asian financial TLforum initiated by the World crisis, as well its evolution and Bank's Resident Mission in the prspct. the mostcomprehensiveand Philippines with representatives from GDF. te mos comprhensie and civil society in Westin Philippine Plaza detailed publication on developing ManilalastMarch 13. countries' external debt and financial Th ilgefrm a teddb flows, explores the following East representatives from non-govermnent Asian issues: ~~~organizations (NGOs). trade unions, * Problems that led to the financial academe and the media. crisis, including large current account The discussions wcre led bv CountnV Ishac Diwan Michael Walton deficits. real exchange rate. misalloca- Director for the Philippines Vinay thonofinvestment Bhargava and two World Bank econo- this issue was prompted by the * Severity of the crisis, which was mists-Ishac Diwan. Manager of Ma- recent visit of WB President James exacerbated by hesitant policy respons- croeconomic Management Network of D. Wolfensohn to the Philippines. es andipolitical uncerta rities the Bank's Economic Development During his visit. Mr. Wolfensohn D Difficulties mainly arising from Institute. and Michael Walton, Director expressed the Bank's support to the private sector financial decisions and of the Bank's Poverty Reduction and adoption by East Asian governments the small sector of public sector bor- Economic Management Network. of wide-ranging reforms in the cor- rowimg Mr. Bhargava said the dialogue was porate and financial sector, improve- r Impact of the crisis beyond East an opportunity for the Bank and repre- ment of quality and transparency of Asia and the intemational conuntmutt's sentatives from civil societv to interact key government institutions and With insu olated sthaffected countnes on important socio-economic issues. strengthening of social protection for With consolidated statistics for all The holding of the dialogue on the poor. developing countries. GDF continues to be an indispensable reference guide for economists, bankers, country risk ana- cross-country comparison of key statis- lysts, financial consultants, and others tics, including summary statistical involved in investment lending and cap- tables for income and regional groups. GDF '98 is the most ital flows worldwide. Further, the country tables present a GDF consists of two volumes. The wealthofdetailoneachcountr's exter- comprehensive publica- first volume. Analyvsis and Stunimmarv nal debt, including total external debt tion on developing Tables, examines recent development stocks and flows, major economic countries' external debt flows from international capital markets aggregates, and key debt ratios. and financial flows to developing countries. The kev data are debt service paid, It also provides expert commentary average terms of newZ commitments, For orders, you can contact the on trends in net official finance and aid currency composition of long-teni debt, Bank's distributor in the Philippines, allocation, efforts to assist the heavily debt restructuring. and scheduled debt Booksource Inc., 8964501. indebted developing countries, and the service projections. increasing volume and scope of guaran- GDF is also available on diskette and Prices: tee activities. a Windows-based CD-ROM. The CD- Further, it has appendices which ROM presents the data and text from Analysis & cover debt burden indicators, country the two volumes and gives users the Summary Tables $40 classification, official and commercial ability to map and graph data sets. Country Tables, debt restructuring. privatization. and You can read the publication at the Analysis & Summary $300 external financing and debt of the geo- World Bank Public Infonnation Center Tables Set graphic regions. (PIC) in Manila, 23/F, The Taipan Place. The second volume, Country Tables, Emerald Ave., Ortigas Center, Pasig Citv. CD-ROM provides statistical data from the 138 The PIC is open Monday to Friday. 9-12 (individual version) $300 countries that report public and puiblicly a.m. and 1-3 p.m. Or write to The World guaranteed debt under the World Bank Bank, Office of the Publisher. 1818 H Debt Reporting System. Street, N.W., Washington, D.C. 20433. The tables are designed to facilitate You can also visit www.worldbank.org.  The Asia Development Forum The Poor Worst Hit By East Asian Crisis T he crisis in East Asia poses risks "Thefinancial crisis was the result of a num- to the poorest in societv, accord- T ing to two economists who spoke ber offactors which have made these econo- at the recent Asia Development Forum mies especially vulnerable to a sudden with- @ on East Asian economnies in Mainila.d Michael Walton, a senior World drawal of confi'dence. Restoring growthi in Bank poverty specialist, said the most East Asia requires restoring confidence. This : affected by the crisis are the poor and means establishing an effective regulatory sys- the workers in the informal sector, who now suffer from job losses, risingprices ter, improving corporate governance and . and cuts in public services. enhancing transparency more broadly." Mr. Walton said the crisis could sig- Joseph E. Stighitz nificantly derail social progress in the WB's SVP & ChiefEconomist region. "If distribution patterns in East Asian economies worsen, poverty fishing for livelihood, adding to overfish- lishing an effective regu- increases would be magnified," he ingpressures to coastal waters." he said. latory system is one way to restore and warned. sustain the growth of East Asian He suggested that Asian govern- Reforms economies. ments continue support for small-farm Despite the crisis, President Fidel Mr. Stiglitz, the lead author of the production and adopt a policy of V. Ramos said during the opening of Bank's Rethinking the East Asian "greater transparency to reduce unfair the four-day conference that Asian Miracle study, also pointed to the need wealth acquisition." economies should pursue financial to improve corporate governance and refonrs and liberalization. enhance transparency. Hardships Mr. Ramos noted some "glaring Philippine Socioeconomic Planning weaknesses" in the financial systems Organizers Secretary Cielito Habito said the cost of of East Asian countries, among them, The Asia Development Forum was the crisis to poor Filipino families is crony capitalism, which contributed to organized by the World Bank's exacting, pointing to layoffs, budget cuts "questionnable government contracts, Economic Development Institute and and increasing food prices. corruption and cost overruns." the Asian Development Bank, in coop- He said the Philippine government He said the Philippines was partly eration with the National Economic and alone had received notices of 19,000 "buffered from the storm" because of Development Authority. layoffs. "Spending constraints will the financial reforms it had undertak- The conference (March 9-12) was affect health budgets, and budget pres- en in the past. attended by over 350 people from gov- sures will hit schools, teacher training He said, for example, that only emments, universities, think tanks, the and education programs," he added. 11.6% of the Philippine commercial private sector and the media in Asia. Mr. Habito also feared a worsening banks' loan portfolio went to the risky of environmental problems due to the real estate sector compared with crisis. "There would be more pressure to Thailand's 94%. chop local forests to generate export World Bank's Chief Economist earnings. Laid-off workers would turn to Joseph Stiglitz emphasized that estab- The World Bank Resident Mission in the Philippines P. .ACE 23/F, The Taipan Place STMP Emerald Ave., Ortigas Center hIERE | Pasig City InTouch is a quarterly newsletter of the World Bank Resident Mission in the Philippines. All correspondence may be addressed to The World Bank Resident Mission in the Philippines 23/F, The Taipan Place Emerald Ave., Ortigas Center Pasig City Tel. 637-58-55 to 64 Editorial Staff: Vinay K. Bhargava, Editorial Adviser; Leonora A. Gonzales, Editor; Charito Cabalang, Production Asst.| 8