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Joint 2001 GOP-ADB-WB Country Programming Exercise (2002-2004)
8 June 2001

Opening Remarks by
Günter Hecker, Country Director
Philippines Country Office
Asian Development Bank

Thank you Secretary Canlas and my best regards to the other members of this tripartite Wrap-up Meeting for the Country Programming exercise for the 2002-2004 period. This followed the agreement on our 2001 program discussion, which just recently has been completed also. I know that a lot of hard work has gone into the advance preparation and detailed sectoral discussions of the past two weeks to ensure a well sequenced and achievable lending and technical assistance program over the period upto 2004. The resulting investment projects, program support and technical assistance will promote key sectoral outcomes and development objectives of the revised Medium Term Philippine Development Program. I am doubly pleased at the success of the Country Programming Mission, as it is not only the first country programming exercise of the new administration under President Gloria Macapagal-Arroyo, but also the first CPM undertaken by the newly established Philippine Country Office of the ADB. I would also like to point to the successful effort of donor coordination especially with the Worldbank to avoid duplication and to strengthen complementarity of the various donor interventions which is documented by the fact that this is a tri-partite wrap-up meeting between the Government, the Worldbank and ADB.

The agreed 2002-2004 program clearly aligns with the ADB's overarching objective of poverty reduction and incorporates the main elements of our Poverty Partnership Agreement (PPA), scheduled to be signed with the Government later this month. Even prior to commencement of the operational framework of the PPA, the bulk of our assistance over the period contributes directly to improvements in the quality-of-life, access to basic infrastructure, income and living conditions of the poorer segment of Philippine society - both rural and urban. The programmed policy interventions address governance issues, more efficient provision of public goods and services, and the promotion of a more vibrant securities market and private sector that can both mobilize investment and undertake the provision of key infrastructure and services and is also focused on Mindanao. The program for the period 2001-2004 which we have agreed to entails a Loan volume of roughly $1.2 billion for 22 projects. The projects relate to the agriculture, transport, energy, and finance sectors. Four of the project are for Mindanao and five more have components in Mindanao. We also plan for a technical assistance grant program in the amount of about $20.0 million which will be financed from the Bank's own Technical Assistance Fund and other Trust Funds, largely the Japan Special Fund, ACCSF from Japan and but also from other donor countries.

I am pleased to note the recent passage of the Electric Power Sector Reform Act in the closing days of the 11th Congress. This provides evidence of the strong commitment of the Macapagal-Arroyo Administration and the strong personal leadership by the President in moving forward with its policy reform agenda and foreshadows progress in key reforms during the 12th Congress, many of which are directly supported by ADB's policy lending.

We recognize that the process of tackling the budget deficit and enforcing fiscal discipline over the last five months involved difficult choices between development priorities. ADB has worked very closely with the Government as have the other two major donors, Japan and the Worldbank, to streamline its ODA portfolio in view of the counterpart resource constraints and to improve implementation. Now that the projects and programs have been streamlined, core priorities established and counterpart budgets assured, ADB expects to see a substantial improvement in portfolio performance in 2001. We already feel in our dealings with the oversight agencies and the Executing Agencies a much stronger pro-active attitude in resolving implementation problems. However, we would be remiss not to caution against an undue emphasis on fiscal austerity that reduces needed expenditures for development priorities and stifles both growth and equitable development. The Government needs to address not only the expenditure side of the budget, but very importantly also tax collections and the revenue side of the equation. We understand that far-reaching reforms of BIR are envisaged in the near future which we highly welcome. ADB would be pleased to work together with the Government in this effort in conjunction with the World Bank and our other development partners.

The ADB, with its Headquarters in the Philippines, has had a long and fruitful development partnership with the Philippines. The PhCO is designed to help better serve our clients in the Philippines within the Government, civil society, and the donor community. As the Country Director of ADB for the Philippines, I would observe that the enhanced level of cooperation and interaction between the staff of the oversight agencies, sector agencies, and ADB exhibited during this Country Programming Mission heralds an excellent beginning to an even closer and more successful development partnership in the future.

Thank you