MANILA, DECEMBER 16, 2008 -- The World Bank (WB) and the Department of Finance (DOF) signed today a $200 million loan agreement in program assistance to support the Philippine government’s efforts to address the challenges of high food prices in the short and long term. In particular, the fund will support measures that strengthen social protection and safety nets for poor and vulnerable households.
Called the Food Crisis Response Development Policy Operation (DPO), the loan focuses on emergency measures that the Government has undertaken to mitigate the impact of the food price shocks on consumers, as well as the steps being taken to put in place social protection to help the poor cope with future shocks.
Finance Secretary Magarito Teves said the key benefit expected from the DPO is improved social protection programs to protect the poor and vulnerable populations. “In the short-term, the measures supported by this DPO will benefit consumers through lower and more stable domestic food prices. More importantly, poorer households will enjoy greater benefits from government subsidies and other social protection programs as a result of better targeting,” he stressed.
“In the broader context, this operation will stabilize domestic food prices, mitigate short-term impacts of high food and energy prices on poor households, improve policy coordination and institutional arrangements for social protection, improve targeting of poor households, and enhance the impact and efficiency of social safety nets through a CCT program,”Secretary Tevesadded.
In May 2008, the World Bank put into place a Global Food Crisis Response Program (GFRP) to provide quick support to countries that were affected by sharp increases in food prices. Having decided to enhance its social protection programs, the Philippine government sought assistance from the World Bank.
Bert Hofman, World Bank country director for the Philippines said that through the GFRP, the Bank is well placed to respond quickly to the Government’s request. “The focus of this DPO is social protection, where the Bank has a comparative advantage in providing support given its vast global experience in this area,” he said.
He said that the DPO is highly relevant because of the increasing expectations of a global economic slowdown in 2009 that could translate into less exports and more business failures, more unemployment, lower remittances from overseas Filipinos, and more poverty. Improving the country’s social protection system, he stressed, is one of the best ways to deal with the global financial storm.
The poorest of the poor, he said, will be hit hardest by the slowdown. The latest East-Asia & Pacific Update projects that the Philippines will grow by only 3 percent in 2009 from a three-decade high of 7.2 percent in 2007 and about 4.3 percent in 2008. “We want to support the country manage this downturn with rapid financing to help minimize the impact and by assisting the government in designing supportive policies,” said Mr. Hofman.
The DPO consists of four components: • Supporting the Government’s social protection measures to stabilize domestic food prices and mitigate the impact of high food prices on poor households; • Improving policy coordination in social protection, • Enhancing the impact of targeted social protection programs through improved targeting, and • Strengthening the Conditional Cash Transfer (CCT) program as the main vehicle for social protection.
Called Pantawid Pamilyang Pilipino (4Ps) in the Philippines, CCT provides modest food, health and educational subsidies to the poorest of the poor in return for sending their children to school, attending health centers, and having regular prenatal and postnatal care for mothers.
Under the program, the DOF serves as the primary liaison with the World Bank on budget support, while policy dialogue, implementation, monitoring and evaluation will be undertaken by the Department of Social Welfare and Development (DSWD). The loan amount (US$200 million) will be fully disbursed upon its effectiveness.
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