Regions and Countries

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p. 3 of 9 BACK | NEXT Executive Summary Map I. Introduction II. The ADB-Philippines Partnership Experience III. The Development Context IV. ADB’s Strategy and Assistance Program V. Risks and Assumptions VI. Resourcing the Strategy and Program Appendixes

Country Strategy and Program Update 2005-2007: Philippines

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I. Introduction

A. The Rationale for the Country Strategy and Program

1. The Asian Development Bank (ADB) Country Strategy and Program (CSP) for the Philippines benefits from longer term considerations of the Government’s Medium-Term Philippine Development Plan, 2005-2010 (MTPDP) and its commitment to the Millennium Development Goals (MDGs). The CSP’s three-year horizon responds to the economic and political uncertainties facing the country but does not limit the long term perspective on the ADBPhilippines partnership. The CSP, expected to be flexibly implemented, aims to help the country reinforce its fiscal consolidation program, while reducing poverty and regional imbalances. The three-year CSP is a phase in the calibrated, continuous engagement to enhance ADB’s client responsiveness and increase flexibility in the face of uncertain and unfolding circumstances. The deepening fiscal consolidation will enable smooth transition to a medium-term CSP once circumstances are assessed as conducive for more detailed prescription of our partnership.
2. To enhance effectiveness and impact of the ADB-Philippines partnership, the CSP introduces sharper focus, greater selectivity, and incorporates a tailored level of results-based design.
3. First, the CSP 2005-2007 ensures pertinent focus. Six thematic constraints impair the Philippines capacity to reduce poverty more rapidly: (i) fiscal imbalance; (ii) weak investment climate; (iii) inadequate infrastructure; (iv) poor management of assets, land, and resources; (v) low institutional capacity; and (vi) geographical inequalities. Although each is relevant to longer term prospects, in view of the present economic distress, over the next three years the CSP concentrates on addressing two principal constraints i.e. uncertainty of the budget outlook, and the investment climate. Tighter focus in these two areas will eventually help the Government reduce poverty as well as support faster achievement of the MDGs. Appendix 1 assesses progress and prospects for the MDGs in the Philippines.
4. Second, the CSP incorporates enhanced relevancy and greater selectivity by supporting activities likely to have most impact on the two pre-eminent constraints. To effectively address these constraints, the CSP will intensify its policy engagement in three broad areas: power sector, financial markets, and governance including reforms of local government and the judicial system. High policy engagement in these areas would manifest itself in program loans, while supporting the Government’s fiscal responsibility program. At the project level, the CSP advocates withdrawal from a number of sectors in which ADB has traditionally been involved, such as livestock, agro-processing/agro-business, secondary ports, rail construction/operations, non-formal education, solid waste management, and tertiary education among others, and confining support for MDGs through either support for SME and microfinance development, rural infrastructure development and water supply services to the extent that government corporations are able to directly borrow and have capacities to deliver the services.
5. Third, for managing for development results (MfDR), the CSP marks a clear shift from the focus of past strategies on inputs, activities and outputs to considering outcomes and impact. However, due to its 3-year span, the CSP’s shift to MfDR is necessarily less dramatic than will be the case for a medium-term CSP. The CSP provides (i) a set of metrics to monitor Government’s and ADB’s progress; (ii) mechanisms to determine what types, the size, and timing of ADB’s interventions; and (iii) a mechanism for moving to a medium-term CSP. These three items aid decision-making related to “doing the right things”. At a greater level of specificity, ensuring that “things are done right” is also a critical element of MfDR: for this, the CSP establishes results-based guidelines at the project level.

B. The Process of Formulation: Thematic Assessments and Stakeholder Participation

6. The CSP benefits from five comprehensive thematic assessments: poverty, governance and institutional capacity, private sector, gender, and environment, as well as a study on the investment climate conducted jointly with the World Bank. The analytical work was undertaken and validated through participatory consultations. Appendix 2 summarizes the key findings relevant to strategy formulation; the assessments are posted at the PhCO web site: www.adb.org/phco. The CSP preparation entailed extensive and intensive dialogue with a wide range of stakeholders to ensure effective involvement of representatives of national and local governments; non-government organizations and civil society; academic institutions; private sector associations and chambers of commerce; beneficiary communities; and other official development partners, including multilateral and bilateral agencies. Workshops were held with stakeholders to validate the diagnosis and conclusions of the thematic assessments. A parallel review by ADB of its governance and anti-corruption policies provided additional opportunity for stakeholder feedback from a country-specific workshop. Several development partners, including World Bank and bilaterals, were preparing revised strategies on similar timetables, allowing synchronized efforts in several areas, including assessment of the fiscal consolidation program, the Government’s planning process, decentralization and forging partnerships with selected local government units (LGUs), and the results-based framework. Dialogue with Government counterparts covered technical-level meetings, as well as policy discussions with the oversight departments. Preparation of the CSP benefited from an informal Board seminar in December 2004.

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