A N e w s I e t t e r o F t h e W o r I d B a n kR e s i d e n t M i s s i o n i n t h e P h i I 'i pp i n e sM a r c h 1 9 9 8 V o I u m e 2 N u m b e r 3

WB President Visits the Philippinesuring his first official visit tothe Philippines last February,World Bank President James

D. Wolfensohn said he was particularlyconcemed about the impact of the Asianfinancial crisis on the poor.

"What I've been doing on this trip isto focus not just on the financial aspectsbut also on the social and humanaspects, which are real," the Presidentsaid.

Mr. Wolfensohn said the crisis hadcreated social tensions in varyingdegrees througheout the region. "That's aserious issuer," hee stressed, citing prob-lems like rising unemiploym-nent and foodshortage.

He observed that people who losttheir jobs in the cities wcmere going backto the rural areas. "Labor migration

Two Presidents. President James D. tholensohn pays a courtesy call to President Fidel from urban to niral areas usually disruptRamos in Malacaitang duiring his two-day visit to the Phiilippinies last February. MIr Wolfentsohnlater met withf goverment economic and social sector niatagers, business leaders afd otlie repre- the existence of poor failies, especial-sentativesfirom civil societv, ly women and children," he explained.

"Some of the children are beingDevelopment (ECD)^ $19M;forced to leave school and engage infiB OKs 3 Pr1oiaets to Hdp the Poor activities that we hope our kids would

not get into," he added.A month after WB President Community-Based Resource To help miral famiilies cope with theWolfensohn visited the Management (CBRM), $50M. difficulties brought about by the crisis,Philippines and announced To respond to the Government's Mr. Wolfensohn said the Bank has been

a $1-billion package for the efforts to refocus development providing support to the ral areas.Philippines in 1998, three new assistance in support of the Peace "We're fast-disbursing employmentprojects were approved by the Accord between the Philippine support to governunentprojects, particu-Bank's Board of Executive Government and the MoroDirectors. National Liberation Front, the WB larly in infrastructure and enviromnment.

These projects, worth $79 mil- approved a loan of $10M to help We want to send poor people to work,"lion, aim to increase the incomes finance the SZOPAD Social Fund he said.of the poor and provide basic ser- project. Further, he said the Bank wants tovices to them. These are the The project will increase access ensure that people have enough food toSpecial Zone of Peace and of the poor and those affected by eat at affordable prices.Development (SZOPAD) Social the conflict to basic economic andFund,$IOM; Early ChildhoodDevelopment (ECD), $1 9M; and Please turn to Page 2 Please turn to Page 2

iyE The Club af 29 News 3 Small Grants Program 6 Global Dev't Finance '98 7

IN TI S ISSU The President's Visit 4-5 Dialogue witih Civil Socieiy 7 The Asia Developmeni Forum 8

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WB President Visits RPContinuedfromii Page I1

71t.ii

Discussin. hr. faltensioha shares light ainones wi ialih 'Inancc SeCCettiiaiSalv ador nriquiez (left) cand f3angko Sentral ng Pilipinas (anv 0,ahnel .Sngsonxnrght) aifier disctissing naIa finance ana ;nonelarvt,ssaes.

meetings as "very enlhance the cnvironment. These projects

Remarkable Democratic Spirit Mr. lolfensohn ineets Socio-economnic Planning usual This are Local Goverimeiit Water andSecretary Cielito Habiao and Social Welfare and Development Secretagy Line Laigo, is rare intenns of Sanitation, $60M, Solid Wastealong with AiGO representati ves. my visit to 65 Environment Enhancemcnit. $100M. and

countries. I think Local Govenmment Finance. $1 OOMNI."Open, Democratic Society" that the Philippine model is a model that The Bank has also committed credit

Mr. Wolfensohn also said he was marn could follow." he said. lines estimated at $15()M for agriculturedceplv impressed bv the Philippilies'deeply .mpressed by the Philippines and industrv. particularly for srnall andopen. democratic societv. "I have to pay S-B Commitment m e

- . .S . . ~~~~~~~~~~~mediumn enterprises arnd cxport-orientedenonnous tribute to what has been done in Mr. Wolfensohn announced during his activities.the last 10 vears in tcms of linking gov- visit thlat for 1998, the Bank is preparing a The Bks aemnment, civil society and trade unions $1-billion package of financial assistance Government a package of $S((M fortogether," he said. to various government projects. The first

Aside from finance officials and busi- three of these projects will raise incomes of quick-disbursing loans and technical assis-ness leaders, Mr. Wolfensohn met with the poor and provide them with basic ser- tance for structural refonns in the financialrepresentatives from non-government vices. (Please see WE OKs 3 Prtjects ... ) and public managemicnt sectors.organiz6tions and trade tunions, along with Other projects scheduled for subtnissiongovenunent officials managing the coun- to the Bank's Board later this year wxilltry's social services. He described these improve infrastructure and protect and

WB OKs Projectsfor the Poor projectls.Since lQllf of thie cowjltrv's population of

Continuedfiromn Page I needs could lead to serious negative effects 67.5 illioii livc in the rual areas wihere theon the child's overall development. Thc incidencc of povertv remains hiigh, this pro-

social infrastructure, services and employ- project will also improve !tc parents' capaci- ject is expecled to create a positive impact onment opportunities in the SZOPAD areas. ty to tmderstand and take action to meet the millions of Filipinos.

Tlhmugh the Social Fund, grant financing needs of their children. The capacities of Thc project aims to enhiance the capacityxvill be provided through local governmnent local commnunities and community-based of low-incomc niral LGUs and commnunitiesunits (LGUs). non-govermnent organiza- groups to plan, manage and finance child to plan implement and sustain priority nat-tions (NGOs). and community-based groups development interventions in an integrated ural resource management projects; strength-*vlhich xvii carry out sub-projects. Thlese sub- nmanner will also be enlhanced. en the higher levels of govemunent systemsprojects may include rural access roads, rural Similarly, tlh capacity of central govern- to transfer finance and etvirounental tech-water stupply and sanitation, small-scale irri- mient agencies responsible for child develop- nology and improve implementation of envi-gation sclhmes, and communal clinics and ment to support LGUs in planning, manag- ronmental policies: and provide resources toschools. The ptnjcct Nvill be implemenlted by ing. finanicing. monitoring, and evaluating LGUs to finanuce natural resource manage-a Social Fund Agency created under the ECD programis wvill also be improved. ienit projects. The project xvill be supervisedOffice of the President. Project implementationi xvill be carried out by the Department of Finance and imple-

The ECD project xvill improve the lhealth, by the Departments of Social Welfare and inented by LGUs with assistance fromnutritional, educational, and psyclhological Development. Health, and LGUs. national agencies.status of prc-school children from poor coin- The CBRM projcc! xvill address ruralmunities. The years, 0-6. are the formative poverty and degradation of natural resourcesy ears of the child, wvhere failure to meet throughl support for locally generated and Dphysical. mental. social. and psyxchologieal impleiimenited natural resource management

2

The Club of 29 News

rT-Vr challenge for the Club of 29 andthe World Bank during the second Gov't W V Intensify

, half of fiscal year (FY) 1998 is to intensify the supervision of Bank-assistedprojects and the implementation of mea- Supervision of Projectssures that will improve procurement, dis-bursement and financial management,accordig to the FY '98 fid-Yea Poitfoho Action Plan WB-Assisted ProjectsReview Repoit. From Januaiy to June tius year, the Club FY 1998

As of December 1997-the end of the of 29, Government oversight agencies, and Agrarian Reform Communities Developmentfirst half of FY 1998-the Bank's poilfolio the Bank have outlined a five-point action Coconut Farms Developmentin the Philippines comprising 26 projects plan: Communal Irrigation IIhad total commitments of US$2.4 billion. * Maintain rigorous approach to closing Conservation of Priority Protected Areas

During the first half of FY 1998, actual dates for actual problem projects in the Engineering & Sciencedisbursements amounted to $190 million, absence of iealislic action plans that could be Environment & Natural Resources Mgmtabout 60% of the target of $323 million monitored First Water Supply, Sewerage & SanitationHowever, this was 11% lower than the *Raisetheproportionofnewprojectswith Health Development$213 million disbursements during the satisfactoiy quality at entry- consistent 'with Highway Managementsame period in FY 1997. the Bank's country assistance strategy- to Irrigation Operations Support i1

Large disbursements flowed to five pro- 85% or higher. Leyte-Cebu Geothermaljects- Transmission Grid Reinforcement, - Meet the disbursement target of $323 Leyte-Luzon GeothermalLeyte-Luzon Geothermal. Highway Ma- million bytheendofFY 1998. Manila Second Seweragenagement, Coconut Farms Development * Continue to implement the procuement Municipal Development Illand Rural Finance 11. and firocial naagemitientiniatives. Ozone Depleting Substances-MP

The Report said 24 projects satisfactori- Progress in the action plans will be Power Transmission & Rehabilitationly met development objectives while 22 assessed during the joint Government-Bank Rural Electrificationprojects had a satisfactory perfonnance FY 1998 Country Portfolio Perfonnance Rural Finance 11during the period. Review (CPPR), which is scheduled in May Subic Bay Freeport I

It also identified four projects in the thisyear. Subic Bay 11portfolio that need improvement in perfor- Tax Computerizationnance. These are Highway Management. Decentralization Third Elementary EducationRural Electrification and Revitalization and The role of the Bank's Resident Mission Transmission Grid ReinforcementUrban Health and Nutrition (which encoun- staff in overseeing projects will also be Urban Health & Nutritiontered persistent procurement problems) and strengthened. Vocational Training 11Manila Second Sewerage, which has been With the decenralizaion of field offices, Water District Developmentdelayed due to the privatization of the the Resident Mission now directly oversees Water Resources DevelopmentMetropolitan Waterworks and Sewerage five projects-Subic Bay Freeport projects I Women's Health S Safe MotherhoodSystem. and II, Ueban Health and Nutrition, Health

Developmenit and Third Elementary, ~~~EducationL

Before decentralization in July 1997, onlySubic Bay Metropolitan Authority projectswere being directly supervised from theResident Mission Office.

The Report noted that "experience withdecentPozatison has been positive with nlomcollaborative and constant interactionbetween RNiP staff and the project man-agers.

Further, it observed thiat the portfolio coni-tinued to beniefit from increased supervision

The supervision budget for FY 1998, forsinsac, amounts to $1.7nmillion,2l%highr

thanthe $1.4 billionbudlget in FY 1997.

Project Visit. Counttryv Director VinaY Blhargava anid staff during last year's retreat visited antirrigalion project under thte NVati Onal Irrigation Administration s Communal Irrigationi IIProject.

3

A *,A ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~A~~m *

"It's been a very good visit. Idon 't think anyone is immune fromthe problems of a financial turmoilbut I really do feel that the team hereis working very well together and gotthe right priorities."

Good Listener. Ar.Wolfensohn listens intent-ly to queries fro7u thepress.

Face-to-face. lir. Wolfensohn meetsMr. Mitsuio Sato, President of AsianDefvelopent Bank. Looking on is Mr.Peter Suillivan, ADB's Vice President.

'Game. 'Mr. Wfolfensohn gamely answers questions thrownbyAManila-based media, both print and broadcast

4

"*Wat I've been doing

on this trip is tofocusnot just on the finan-cial aspects but alsoon the social and

human asPects, whichare real."

IrJh Civid Socioet. ihe President joins representtatiles

fromn VGOs and trade Unions.

AT.,. the Familyi'Twas a Picture of dihe

WB jain i/v hi Me

Philippines with Ar'.

ffolfctisohi anjd hiswifi, Elaine-a a,riefleiio

a] a aieyinorahle oced-Coekail. M .-. _ ,- -P/ipie ihAr

Wo?fensohn a for-

hanker, chas withFilipino hankersOctavio lisp iritaanxd Deogracmas

6

_1!|_~*

WB's Small Grants Program As of March this year, the ResidentWB's Small Grants Program NMissionimthePhihppmeshasfiillvapprovedrequests for funding from its $25.COM fund forNow Managed at Country Level tCfoaocviugactsofies

* 10,000 for the Caucus of Devel-clients. opment NGOs for the conduct of its Second

he World Bank- s Small Grants "The initiative will help improve National Congress and Forum Series dunngT aProgram (SGP) is now being Bank-NGO communication at the coun- the SocialDevelopment WeekfromFebrmar

< managed at the country level, try level and grant decision-making 2-8, 1998;At least 20 of the Bank's Resident based on a country level assessment of $3,750 for the hiolding of the National

Missions in developing countries now priority needs and NGO professional- Confederation of Cooperatives' Thinkadminister the program. They respond to ism," said Gloria Davis, director of the TankMeetinginquiries, accept and evaluate applica- Bank's Social Development Departnent. $2,700 for the capacitv-building ttainingtions, and award and monitor grants. She added that the move also aimis to activity of Kapunungan Alang sa

Formed in 1983, the SGP supports create simple, systemiic and low-cost tool KuwgnsKsda-ub,n;nactivities of non-profit, non-government for improved Bank-NGO relationships * $8,550 for NGO participation in theorganizations (NGOs) through grants. It and provide better service to the Bank's Regional Consultation for the UNpromotes dialogue and disseminaton of clients. Commission on Sustainable Developmentinformation on international develop- For FY 1998 (July 1997 to June (UNCSD) in Bangkokn an the Otl Sessionofment in foruns outside the Bank's oper- 1998), the Bank's Small Grants dte UNCSD in New York, organizedby theations. Committee has approved a fund of PhilippineInsfituteofAlternativeFtttures.

The initiative is part of the Bank's $25,000 for each of the 20 Residentdecentralization efforts to bring the Missions all over the world, including the mBank's products and services closer to Pilippines.ii

About the Progrmm ~ ~ ii. n i't the applying organization?The Small Grants Program was cre- T he Sm all G rants Program (Organizations are not eligible for two

ated in 1983 to provide a way for the T grants in one fiscal year.)Bank to promote dialogue and dissemi- Phnmpplnes 1998ynation of information on intemational faiance the whole activity but should cover only a Which Grant Activities Aredevelopment in forums outside its operations. portion of it. A cash or in-kind counterpart from the Given Priority?Starting fiscal year 1998, the management and grantee of less than 25% of total cost required and * Activities which focus on lessons from other

administration of the SGP has been decentralized to should be reflected in the proposed budget. countries relevant to Philippine setting.

country offices. A total of $25,000 has been alloted Contributions from other donors or sources will be - Activities that promote regional representation

for the Philippines' Resident Mission. highly encouraged. or the participation of people from the provinces orregions.

Who Can Apply? HowAre Grants Awarded? * Activities whichi promote Iinkages with and

Any single or a coalition of non-stock, non-prof- Applications will be screened, reviewed and cooperation aniong diverse groups of stakeholders

it, non-governmental, voluntary organizations estab- evaluated by a committee of Resident Mission Staff such as NGOs, govenument, donors, business com-

lished primarily to work for development. Examples appointed by the Country Director. Short-listed pro- munity, private sector, local people, women and

are cooperatives or a broad coalition of cooperatives, posals will be recommended to the Country children.NGOs, foundations and people's organizations Director who will make the final decision. Leters Activities which focus not only on identifying

which are based in the Philippines and managed by will be sent out to applying organizations to infonm a problem but also on finding an indigenous solution

Filipinos. The organization should be registered with them ofthe Bank's decision. to the problem.the Securities and Exchange Consmission or any * Activities which can show that early World

accrediting institution by the Philippine How Are Applications Evaluated? Bank support will help Menerate additional support

Govenitnent. * Will the grant promote relevant development from other donors.

issues and concems among non-govemmental insti-VAiat Sat of Activities Are Supported? tutions, the World Bank, Government and other Howto Apply fora Grant

TIse Program supports activities that promote members of civil society? Applicant organizations should apply at least six

networking, dialogue and dissemination of informa- * Will the grant contribute to the creation of months before the date of the grant activity,

tion about local, regional and international develop- enabling environment for civil society participa- Competition for grants is intense, and with a limited

menit among various stakeholders. These may tion? budget the Program cannot support all of the many

include conferences, seminars,special editions or * Is the grant intended for a specific activity? worthwhile activities for which applications are

start-up costs of publications, audio-video materials, * Will the activity be completed within one year? received. Applications should be brief and concise,

or other innovative networking efforts that non-prof- * Does the proposal have clearly stated objec- no more than four (4) pages.

it organizations find difficult to ftund through their tives, expected activities and outputs?regular program budgets. The focus could be on * Could the grant generate additional support Applications should be sent by mail or faxed to:

development issues such as poverty reduction, envi- from other donors and sources? Ms. Leonora A. Gonzalesronmental protection, human resource development * Were previous grants (from the Bank or other Extemal Relations Officer

and private sector development. donors) to the organization well used? The World BankIs the organization suitable for World Bank Resident Mission in the Phcilippines23/F The Taipan Place

What Size of Grants Are Awarded? support? , Emerald Ave., Ortigas CenterMost grants are in the raiige of $5,000 to * Was the'application received six to twelve Pasig City

510,000. Smaller grants are possible, but larger nsontls in advance oftlhe proposed activity? Tel. 637-5855 to 64grants are rare.The grant should not be used to * Has there been a recent grant from the Program Fax. 917-3050/914-2835

6

WB Bulletin

GDF '98 FocusesOn East Asian Crisis "Can Asian Societies Be

orld Bank's latest publication. Caring and Competitive?\5tGIobal Development Finance

(GDF) 1998. is now avail-able, m ~~~~~~his was the main focus of

GDF focuses on the causes and discussion in a dialogueimplications of the East Asian financial TLforum initiated by the Worldcrisis, as well its evolution and Bank's Resident Mission in the

prspct. the mostcomprehensiveand Philippines with representatives fromGDF. te mos comprhensie and civil society in Westin Philippine Plaza

detailed publication on developing ManilalastMarch 13.countries' external debt and financial Th ilgefrm a teddbflows, explores the following East representatives from non-govermnent

Asian issues: ~~~organizations (NGOs). trade unions,* Problems that led to the financial academe and the media.

crisis, including large current account The discussions wcre led bv CountnV Ishac Diwan Michael Walton

deficits. real exchange rate. misalloca- Director for the Philippines Vinaythonofinvestment Bhargava and two World Bank econo- this issue was prompted by the

* Severity of the crisis, which was mists-Ishac Diwan. Manager of Ma- recent visit of WB President Jamesexacerbated by hesitant policy respons- croeconomic Management Network of D. Wolfensohn to the Philippines.es andipolitical uncerta rities the Bank's Economic Development During his visit. Mr. Wolfensohn

D Difficulties mainly arising from Institute. and Michael Walton, Director expressed the Bank's support to theprivate sector financial decisions and of the Bank's Poverty Reduction and adoption by East Asian governmentsthe small sector of public sector bor- Economic Management Network. of wide-ranging reforms in the cor-rowimg Mr. Bhargava said the dialogue was porate and financial sector, improve-

r Impact of the crisis beyond East an opportunity for the Bank and repre- ment of quality and transparency ofAsia and the intemational conuntmutt's sentatives from civil societv to interact key government institutions and

With insu olated sthaffected countnes on important socio-economic issues. strengthening of social protection forWith consolidated statistics for all The holding of the dialogue on the poor.

developing countries. GDF continues tobe an indispensable reference guide foreconomists, bankers, country risk ana- cross-country comparison of key statis-lysts, financial consultants, and others tics, including summary statisticalinvolved in investment lending and cap- tables for income and regional groups. GDF '98 is the mostital flows worldwide. Further, the country tables present a

GDF consists of two volumes. The wealthofdetailoneachcountr's exter- comprehensive publica-first volume. Analyvsis and Stunimmarv nal debt, including total external debt tion on developingTables, examines recent development stocks and flows, major economic countries' external debtflows from international capital markets aggregates, and key debt ratios. and financial flowsto developing countries. The kev data are debt service paid,

It also provides expert commentary average terms of newZ commitments, For orders, you can contact theon trends in net official finance and aid currency composition of long-teni debt, Bank's distributor in the Philippines,allocation, efforts to assist the heavily debt restructuring. and scheduled debt Booksource Inc., 8964501.indebted developing countries, and the service projections.increasing volume and scope of guaran- GDF is also available on diskette and Prices:tee activities. a Windows-based CD-ROM. The CD-

Further, it has appendices which ROM presents the data and text from Analysis &cover debt burden indicators, country the two volumes and gives users the Summary Tables $40classification, official and commercial ability to map and graph data sets. Country Tables,debt restructuring. privatization. and You can read the publication at the Analysis & Summary $300external financing and debt of the geo- World Bank Public Infonnation Center Tables Setgraphic regions. (PIC) in Manila, 23/F, The Taipan Place.

The second volume, Country Tables, Emerald Ave., Ortigas Center, Pasig Citv. CD-ROMprovides statistical data from the 138 The PIC is open Monday to Friday. 9-12 (individual version) $300countries that report public and puiblicly a.m. and 1-3 p.m. Or write to The Worldguaranteed debt under the World Bank Bank, Office of the Publisher. 1818 HDebt Reporting System. Street, N.W., Washington, D.C. 20433.

The tables are designed to facilitate You can also visit www.worldbank.org.

The Asia Development Forum

The Poor Worst Hit By East Asian CrisisT he crisis in East Asia poses risks "Thefinancial crisis was the result of a num-

to the poorest in societv, accord-T ing to two economists who spoke ber offactors which have made these econo-at the recent Asia Development Forum mies especially vulnerable to a sudden with- @on East Asian economnies in Mainila.d

Michael Walton, a senior World drawal of confi'dence. Restoring growthi inBank poverty specialist, said the most East Asia requires restoring confidence. This :affected by the crisis are the poor and means establishing an effective regulatory sys-the workers in the informal sector, whonow suffer from job losses, risingprices ter, improving corporate governance and .and cuts in public services. enhancing transparency more broadly."

Mr. Walton said the crisis could sig- Joseph E. Stighitznificantly derail social progress in the WB's SVP & ChiefEconomistregion. "If distribution patterns in EastAsian economies worsen, poverty fishing for livelihood, adding to overfish- lishing an effective regu-increases would be magnified," he ingpressures to coastal waters." he said. latory system is one way to restore andwarned. sustain the growth of East Asian

He suggested that Asian govern- Reforms economies.ments continue support for small-farm Despite the crisis, President Fidel Mr. Stiglitz, the lead author of theproduction and adopt a policy of V. Ramos said during the opening of Bank's Rethinking the East Asian"greater transparency to reduce unfair the four-day conference that Asian Miracle study, also pointed to the needwealth acquisition." economies should pursue financial to improve corporate governance and

refonrs and liberalization. enhance transparency.Hardships Mr. Ramos noted some "glaring

Philippine Socioeconomic Planning weaknesses" in the financial systems OrganizersSecretary Cielito Habito said the cost of of East Asian countries, among them, The Asia Development Forum wasthe crisis to poor Filipino families is crony capitalism, which contributed to organized by the World Bank'sexacting, pointing to layoffs, budget cuts "questionnable government contracts, Economic Development Institute andand increasing food prices. corruption and cost overruns." the Asian Development Bank, in coop-

He said the Philippine government He said the Philippines was partly eration with the National Economic andalone had received notices of 19,000 "buffered from the storm" because of Development Authority.layoffs. "Spending constraints will the financial reforms it had undertak- The conference (March 9-12) wasaffect health budgets, and budget pres- en in the past. attended by over 350 people from gov-sures will hit schools, teacher training He said, for example, that only emments, universities, think tanks, theand education programs," he added. 11.6% of the Philippine commercial private sector and the media in Asia.

Mr. Habito also feared a worsening banks' loan portfolio went to the riskyof environmental problems due to the real estate sector compared withcrisis. "There would be more pressure to Thailand's 94%.chop local forests to generate export World Bank's Chief Economistearnings. Laid-off workers would turn to Joseph Stiglitz emphasized that estab-

The World BankResident Mission in the Philippines P. .ACE23/F, The Taipan Place STMPEmerald Ave., Ortigas Center hIERE |Pasig City

InTouch is a quarterly newsletter of the World Bank Resident Missionin the Philippines. All correspondence may be addressed to

The World BankResident Mission in the Philippines

23/F, The Taipan PlaceEmerald Ave., Ortigas Center Pasig City

Tel. 637-58-55 to 64

Editorial Staff: Vinay K. Bhargava, Editorial Adviser;Leonora A. Gonzales, Editor; Charito Cabalang, Production Asst.|

8