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ADB plans to increase focus on Mindanao, LGU financing reform

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THE Asian Development Bank (ADB) said it plans to increase its focus on Mindanao, particularly in the areas of regional connectivity and enhancing financing capabilities for local government units (LGUs), as it firms up the terms of its new medium-term partnership program with the Philippines.

In a review of the ADB’s engagement with the Philippines, the bank said the 2017-2020 Country Partnership Strategy also focuses on aligning its programs with the Philippine Development Plan.

“Given Mindanao’s poverty and general lack of infrastructure and regional connectivity, there is a strong rationale for ADB to scale up its operations there,” the bank said, while noting that such a move would sync with the government’s increased focus on the south. It said that the ADB could also establish a liaison office in Mindanao.

Enhanced operations in Mindanao will aid regional integration with the Association of Southeast Asian Nations (ASEAN), especially the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area, to which Mindanao is the country’s nominated gateway.

“Mindanao has great potential for regional cooperation and integration with Brunei Darussalam, Indonesia and Malaysia, given its geographical proximity to these countries and historic links rooted in culture and religion,” it added.

The bank said it plans to focus its efforts on developing LGU finance, particularly a municipal bond market.

Between 2011 and 2016, the ADB’s total approved portfolio was $4.78 billion, almost double the planned investment for the period. Sixteen projects accounted for loans worth $4.317 billion, and 11 were grants amounting to $47 million. There were also 37 technical assistance projects totaling $73 million, while nonsovereign operations consisted of four projects totaling $342 million.

Of the total, 50% were in public sector management, 12% in education, 11% in agriculture and natural resources, 11% in transportation, 8% in energy, and 8% in the water sector and other municipal infrastructure and services.

In terms of the projects’ relevance to the country’s needs, the ADB assessed them as “highly relevant,” and validated program performance as “efficient,” as the processing time of all loans from approval to effectivity averaged 6.9 months, slightly below the bank average of  seven months.

However, the review found program performance “less than effective,” due to shortfalls in achieving project and program outputs and outcomes, design and monitoring frameworks, compared with targets.

It added that the development impact of the partnership program was “less than satisfactory.”

“In terms of achievement of the government’s overall targets, only three targets out of six are likely to be achieved or exceeded,” which include improvements in the human development index, reduction in the fiscal deficit, and consolidation of the public-sector deficit.

“Achievements are lagging in terms of GDP (gross domestic product) growth, rate of growth of employment, and poverty incidence.” — Elijah Joseph C. Tubayan

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