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ADB Loans to Philippines to Help Disadvantaged Children

Half of the Philippines’ most disadvantaged and vulnerable children under six will benefit from an Early Childhood Development Project for which two loans totaling US$24.5 million were approved today by the Asian Development Bank.

The project will substantially lower infant and child mortality, malnutrition, and primary school dropout rates among 2.7 million children in the regions of Western Visayas, Central Visayas and Central Mindanao.

This is the first ADB project to develop the potential of children from poor families. It is the policy instrument of the Philippine Government’s ten-year investment program to provide integrated health, nutrition and psychosocial services for pre-schoolers.

Given its per capita income, the Philippines is lagging behind its neighbors in improving social indicators. Its infant mortality rate is 57 deaths per 1,000. Malnutrition continues to be a serious problem, along with iron-deficiency anemia, iodine deficiency (which is linked to mental retardation) and Vitamin A deficiency.

The project will provide technical and financial support for local government units to develop, manage and evaluate child care programs. It will also promote the participation of nongovernment organizations in these programs, establish an effective monitoring system at local and national levels, and strengthen national and local government partnerships in the field. Special attention will be given to links between operations research, monitoring and evaluation and the first year will be devoted to pilot-testing.

The objectives are for each region to achieve by 2003 a 30 percent reduction in the mortality rate and malnutrition rate among the under-fives. Other aims are to improve school readiness and the psychosocial ability of at least 50 percent of school entrants and to cut by half the Grade 1 dropout rate. Children with physical, mental and emotional handicaps will be given special attention.

The total project cost is estimated at US$65 million. The World Bank will provide US$22.4 million, local government units US$6.4 million and the Philippine Government US$11.7 million. Of the ADB loans, one of US$15.7 million will come from the Bank’s ordinary capital resources. It will be repayable over 25 years, including a grace period of five years, and the interest rate will be determined in accordance with the Bank's pool-based variable lending rate system for US dollar loans. The second loan of US$8.8 million will come from the Bank's concessionary Asian Development Fund (ADF). This loan is interest-free and carries a service charge of 1 percent per annum. It is repayable over 35 years, including a grace period of 10 years. Approval of the loan is subject to the condition that the loans shall be signed when sufficient resources are available from ADF.

The project’s executing agency is the Department of Social Welfare and Development.

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