ADB Approves $50M Loan to Improve Rural Health Care Services in the Philippines

(26 March 2009) - The Asian Development Bank’s Board of Directors have approved a US$50 million loan to improve the quality of health care in the Philippines, and to make these services more accessible and affordable to the poor.

The project will focus on cities and municipalities outside the capital region of Metro Manila and is expected to result in increased use of basic health care and referral services by the poor, and by women and children in particular.

The loan will finance the construction of new public health facilities and provide state-of-the-art equipment to existing facilities, with a particular focus on providers of maternal and child care health services and partnerships with the private sector. This will help facilities qualify for higher accreditation and increased financing from the Philippine Health Insurance Corp. (PHIC), and reduce the out-of-pocket payment of health care.

The Better Health Care Project will also provide financial support to small private health providers – such as midwifery clinics, diagnostic facilities, and community drug stores – to allow them to move closer to rural communities. It will also provide funds for capital investment and working capital to promote a more efficient health care delivery system through the outsourcing of services, and establishing private insurance schemes.

The ADB loan will be coursed through the Sustainable Health Care Investment Program, a credit facility established by the Development Bank of the Philippines to support the government's health sector reform agenda and implementation framework, Fourmula One for Health.

The credit facility has two lending windows. The direct retail lending window is for local government units (LGU) and larger private sector borrowers, such as health providers, foundations, and health maintenance organizations, with projects costing between $100,000 and $5 million. The wholesale lending window is available to accredited financial intermediaries, such as microfinance institutions and rural and thrift banks, where small private companies can borrow from $100,000 to $500,000.

"In addition to direct benefits resulting from this investment, the project will trigger increased LGU and PhilHealth spending on health," says Vincent de Wit, ADB's Principal Health Specialist for the Southeast Asia Department.

Demand for health services remain low among the poor and vulnerable groups, due to various reasons including the relatively high cost of medicines. Estimates suggest that around 30% to 40% of the population finds it difficult to pay for drugs.

The ADB loan will have a 25-year repayment term, including a grace period of 6 years and an interest rate determined in accordance with ADB's London interbank offered rate (LIBOR)-based lending facility.

The Gender and Development Cooperation Fund (GDCF) will provide a grant of up to $400,000, to be administered by ADB. The GDCF's contributors are the governments of Canada, Denmark, Ireland, and Norway.

A technical assistance grant of $1 million will be financed by the Japan Special Fund to build capacity for public-private partnership in health services.



Three Weeks to Register for Key Meeting on Asia
(26 March 2009) - Journalist have four more weeks to register online for the Asian Development Bank’s (ADB) 42nd Annual Meeting in Indonesia, where government ministers and other world leaders will come together to discuss the global economic crisis and other development issues facing the region.

The meeting will be held 2-5 May 2009 at the Bali International Convention Centre on the island of Bali. Only registered journalists with identification badges will be allowed access to sessions of the Board of Governors, other events and seminars. Deadline for online registration is April 18, 2009. A detailed media advisory is available at http://www.adb.org/annualmeeting/2009/media-invite.asp.

The meeting will be attended by finance ministers, central bank governors, private sector representatives, academics, and civil society groups from across Asia and beyond. Along with the global crisis, key topics up for discussion will include inclusive growth and regional integration, climate change, and environmentally sustainable transport, all of which constitute key elements of ADB’s long term strategic development agenda. A detailed program of events is available at http://adb.org/annualmeeting/2009/prog-events.asp.

Philippines Receives $250 Million ADB Loan to Strengthen Fiscal and Governance Reforms

The Asian Development Bank is extending a $250 million loan to strengthen the policy reform initiatives of the Philippine government for fiscal management, investment climate and social sectors.

The loan is a second of a three-part Development Policy Support Program aimed at helping the Philippines achieve its medium-term development goals. The first DPSP loan was approved in February 2007.

Since then, the Philippine government has implemented a series of measures to address the fiscal imbalance, resulting in improvement in the fiscal situation and macroeconomic stability. These measures provided much needed funds for increased spending on the social sector and infrastructure in 2007. The measures also contributed to the Philippines’ best macroeconomic performance in over 30 years.

However, the surge in commodity prices in early 2008, volatility in US financial markets, and the economic slowdown in developed economies have negatively affected the Philippine economy, with a sharper-than-expected slowdown in GDP growth and a spike in inflation to a 17-year high level in August.

“Despite the negative impact, the Philippine economy has weathered the external shocks well compared to some of our other member economies, and also compared to previous external shocks to the Philippines economy,” said Kelly Bird, an Economist in ADB’s Southeast Asia Department. “This resiliency is due to the government’s commitment to fiscal discipline and key reforms including tax reforms, especially on VAT, the absence of fuel subsidies in the national budget, previous trade reforms and synchronized fiscal and monetary policies.”

The external shocks will challenge the government’s resolve to maintain fiscal and macroeconomic stability and performance. At the same time, it is important to protect spending in the social sectors to help poor and vulnerable families, and achieve the country’s longer term development objectives.

“Responding to the recent developments in the global economy, the second loan addresses these issues through greater flexibility in fiscal policy in 2008 and 2009, further enhancement in tax revenue collection, and support for the government’s conditional and targeted cash transfer program currently piloted as a way to mitigate the worst effects of these shocks to the poor,” Mr. Bird added.

The conditional cash transfer program and broader social protection reforms are important as ADB preliminary research shows only about one third of the poor have access to social assistance.

The DPSP also includes a set of measures to strengthen the investment climate with focus on reducing red tape, support for infrastructure policy and rural development.

A policy and advisory technical assistance grant of $800,000 is included in the loan, to support public expenditure reform initiatives at the Department of Budget and Management. This will be a multi-year exercise over a three-year period.

The third DPSP loan is expected to be processed in 2009 and submitted for ADB Board consideration upon the completion of the second loan.