Announcement of Phlippines Seeks World Competitiveness on December 11, 1992

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 93/33 Asia Contact: P.B. Sison (202)458-0344 External Affairs - EAPVP PHILIPPINES SEEKS WORLD COMPETITIVENESS Washington, D.C., December 11 -- A World Bank loan of $200 million to the Philippines will support integration of the country's economy with the international system, signalling a major advance in the Government's economic reform program. The Philippines is poised to resume growth on a sustained path, after making considerable progress in macroeconomic stabilization over the past several years. Its economic reform program is being carried out in the context of a comprehensive restructuring of public commercial bank external debt, which has just been concluded. In order to obtain the full benefits of this agreement, the Government, aided by the World Bank in its policy dialogue, has developed a broad program of reform to complement debt reduction efforts. Earlier World Bank policy-based lending to the Philippines supported key structural reforms that focussed on the public investment program, as well as reform of government financial institutions and the financial sector. The program being supported by the new World Bank loan addresses current constraints to a sustainable growth path. These include macroeconomic management through improvement of Central Bank finances and appropriate energy pricing policies, as well as investment promotion through adoption of a new Foreign Investment Code. Other components are trade and transport liberalization; liberalization of the foreign currency market; privatization and encouragement of private participation in infrastructure projects; and rationalization of the tariff regime. The $200 million loan will be disbursed in two tranches of $120 million and $80 million respectively. It will finance general imports of goods to meet part of external financing requirements at a time when foreign reserves are being reduced by the needs of the debt and debt service reduction operation. The loan is for 20 years, including five years of grace and carries the standard variable interest rate, currently 7.60 percent. NOTE: Money figures are expressed in U.S. dollar equivalent.