ADB's $300 Million Loan to Help Philippines Improve Justice System

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $300 million loan to help the Philippine government improve the integrity and efficiency of its justice system.

An ADB study on binding constraints to Philippines’ growth identified macroeconomic instability, high transaction costs of doing business, inadequate infrastructure, and weak investor confidence as the principal issues. They have been partly shaped by governance and corruption concerns. The judiciary and justice sector agencies perform a critical governance and oversight function. A well-functioning justice sector is therefore key to support sustained growth and poverty reduction.

The loan for the Governance in Justice Sector Reform Program will be used to increase budget resources, improve public expenditure management, and introduce new internal controls in the sector. By supporting more competitive salaries and higher budgets, the loan is expected to reduce vacancies among judges and prosecutors, improve information and case management systems, and help cut delays in the justice system.

High caseloads and low conviction rates are prevalent in the court system, while resource constraints have made justice sector agencies susceptible to external influences, undermining the independence of courts, the integrity of other agencies, and efficiency in public service delivery.

The overall impact of the Program will be strengthened judicial fiscal autonomy and justice sector accountability, along with an improvement in the governance and efficiency of sector agencies’ service delivery. It also aims to widen access to justice for poor and disadvantaged groups, and to expand the capacity of agencies to address gender-based issues, more importantly, violence against women and children.

“This program responds to a clear message we get from repeated surveys - that the Filipino people expect higher standards from their public officials,” said Jaseem Ahmed, Director, Governance, Finance and Trade Division of ADB’s Southeast Asia Department.

“They want better governance and better justice services. While the justice sector budget in the Philippines has been compressed in recent years, we are encouraged to note that there is consensus now across the executive, legislative and judicial branches for action to improve the budget, salaries, incentives, and resources for this sector,” he added.

The Program is divided into two subprograms. The $300 million loan will finance the first subprogram, with the funds released in two equal tranches under certain conditions. The second subprogram will be submitted for ADB Board consideration by 2011.

The loan is sourced from ADB’s ordinary capital resources provided under the London interbank offered rate (LIBOR)-based lending facility.

A technical assistance of $2.2 million has also been approved to assist the various justice sector agencies prepare governance and policy reforms under the second subprogram. ADB will source $1.5 million from its Technical Assistance Special Fund, while another $500,000 will come from the Gender and Development Cooperation Fund, administered by ADB. The remainder will come from the Philippine government.