Philippines - Livestock Development Project

Whowr- RESTRICTED tO RETURNgEDYD Report No. P-1042 To REPORTS DESK L c2 my This report is for official use only by thc Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF THE PHILIPPINES FOR A LIVESTOCK PROJECT April 27, 1972   INTERNATIOIAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE FEJCUTIVE DIRECTORS ON A PROPOSED LOAN TO THE PHILIPPINES FOR A FIRST LIVESTOCK PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of the Philippines for the equivalent of US $7.5 million to help finance the Government's livestock development program. The loan would have a term of 14 years including 6-1/2 years of grace, with interest at 7,1/4 percent per annum. PART I - THE ECONOMY 2. A report entitled "Philippines: Prospects and Problems of the Economy" (EAP-21 dated March 31, 1971) was circulated to the Executive Directors on April 5, 1971. An economic mission visited the Philippines in October-November 1971 and again in March 1972. Its report will be distributed to the Executive Directors in the next few days. It will also be distributed to the participants of the Consultative Group for the Philippines as a basis for discussion at the Group's second meeting to be held in Tokyo in late June. Basic data on the country are given in Annex II. 3. The Philippines is endowed with favorable potential for economic growth. The country's principal economic assets are good natural resources, a literate labor force and a dynamic and well-developed private sector. The political system has remained democratic, and despite intermittent and widely publicized outbreaks of violence, relatively stable. A nationwide two- party system has existed since independence and an equal number of Presidential elections have been won by the Liberal and Nacionalista Parties. Public administration still remains uneven in quality, but the influx into the top levels of public service of a highly able class of administrators has contributed to an improvement in the implementation of public sector programs during the last several years. 4. The Philippine economy has grown at an average rate of about 6 percent during the past decade. The ratio of gross fixed capital formation to GNP rose from an average of about 13 percent during 1960-62 to about 20 percent during 1968-70 and the marginal saving rate was around 20 percent. However, notwithstanding the impressive growth in total investment, there was a relative neglect of infrastructure and agricultural investments reflecting mainly t