Regions and Countries

	Table of Contents
p. 6 of 20 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Philippines : I. Country Performance Assessment

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E. Implementation Assessment

1. The Portfolio

22. As of 31 December 1999, ADB had approved 175 loans – 162 for public sector projects and 13 for private sector projects totaling $7.37 billion. This constitutes 8.7 percent of total ADB lending. One hundred twenty-two loans amounting to $6.03 billion were sourced from ADB's ordinary capital resources (OCR) and 40 loans totaling $1.11 billion were from the Asian Development Fund (ADF). Of the 162 public sector loans approved for the Philippines, 118 have been closed as of 31 December 1999. Following the country portfolio review of 1999, $126.7 million was cancelled from ADB's undisbursed portfolio as part of the “spring cleaning” process. Another $59.3 million has since been identified for cancellation.

23. As of 31 December 1999, ADB had provided technical assistance (TAs) for 263 projects amounting to $111 million. Of these, 118 were for project preparation and 145 were advisory. A large share both in terms of amount and number of total TAs approved has been extended to the agriculture and natural resources, and social infrastructure sectors. There has been a sharp increase of late in the share of TAs in the social infrastructure sector, in keeping with the greater emphasis on social infrastructure in the country strategy. As of end 1999, these TAs accounted for 33.3 percent in terms of number and 37 percent in terms of amount of the total ongoing TAs to the Philippines. Other sectors that remain important are agro-industry, finance, and physical infrastructure sectors. In recent years, the TA program has emphasized capacity building for development management and for strengthening planning, policy formulation, and administrative capacities of development agencies. A cluster of three TAs for development of capacity building in LGUs is being provided, the first of which, for improving public finance and planning capacity, is currently ongoing.

2. Issues in Project Implementation

24. Project implementation in the Philippines has been weak, particularly after the financial crisis, and needs improvement. The most common problem is implementation delay caused by delay in loan effectivity, recruitment of consultants, procurement, policy reform, and disbursement. Sixty-nine ADB-assisted projects in the Philippines have been postevaluated. Of these, 30 projects (43.5 percent) with total lending of $785 million (38.8 percent) were rated as “generally successful” and 26 projects (37.7 percent) with total lending of $918 million (45.4 percent) as “partly successful.” Thirteen (18.8 percent) of the postevaluated projects with total lending of $320 million (15.8 percent) were rated as "unsuccessful.” In comparison with the ADB-wide average of 11.3 percent, the share of unsuccessful projects in the Philippines is high.

25. Postevaluation studies reveal that the major reasons for the "unsuccessful" projects were (i) agriculture – inadequate preparation and design, lack of beneficiary participation, institutional weaknesses, inadequate maintenance, and external factors such as natural calamities and falling agricultural prices in world markets; (ii) finance – development banking projects initiated during the recession in the 1980s, and inadequate autonomy experience of participating institutions in loan appraisal and supervision; (iii) social infrastructure – lack of a systemwide approach in designing water supply projects is necessary to remedy situations of high non-revenue water; and (iv) transport and communications – institutional weaknesses and lack of commitment by the executing agency resulting in major delays in implementation, cost overruns, inadequate technical appraisal, and poor maintenance performance. Recent portfolio review exercises have also revealed that performance of projects devolved to LGUs remains an important concern, due to (i) inadequate capacity of LGUs, and often insufficient commitments owing to frequently changing LGU administrations; and (ii) the deficiency in the funds channeling mechanism through Municipal Development Fund Office (MDFO). Given that more projects would be devolved to LGUs, the importance of this issue has been well recognized by the Government. Further efforts on the part of the national government at initiating more meaningful measures for devolution and strengthening capacities of LGUs, improving LGU project implementation performance, and strengthening the functioning of MDFO are, however, necessary. Some of these issues, particularly compliance with loan covenants on policy reforms, government procurement procedures, and better financing and implementation mechanisms for projects devolved to LGUs were raised during the 2000 Country Portfolio Review Mission (CPRM).

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