Dusit Thani HotelMakati City, Philippines

October 29, 2009

Bert HofmanCountry DirectorWorld Bank Philippines

Association of Development Financing Institutions in Asia and the Pacific (ADFIAP)

CEO Forum VIFunders Panel:

Funding Sources for Financing Development

Outline of Presentation

Overview of the World Bank GroupWBG’s Strategy in the Philippines

Main Development ChallengeCAS Framework

WBG’s Programs in the PhilippinesCurrent PortfolioFinancing and AAA ProgramsIFC-IBRD Integrated ProgramsPartnerships

Flexibility and InnovationsResponding to CrisesOpportunities for Innovative Approaches

The World Bank Group

Provides financial and technical assistance to developing countries around the world.

Owned by 186 member countries, including the Philippines.

The IBRD focuses on middle income and creditworthy poor countries.

IFC financing private sector investment, and provides advisory services to businesses and governments.

Overall goal of WBG: Reduce global poverty.

Poverty Reduction in the Philippines versus East Asian Neighbor

Philippines’ Main Development Challenge

Philippine economic growth averaged 5.1% during 2000-2008,yet poverty drifted upwards in times of highest economic growth.

Poverty Incidence versus Magnitude of Poverty, 1985 and 2006

Philippines’ Main Development Challenge

While poverty incidence declined from 1985 to 2006, the absolute number of poor increased.

The WBG’s Country Assistance Strategy

Basis: Medium-Term Philippines Development Plan

Theme: “Making Growth Work for the Poor”

Overall goal: Inclusive Growth

Four strategic objectives: Stable macro economyImproved investment climateBetter public service deliveryReduced vulnerabilities

One cross-cutting theme:Good governance

The WBG’s Country Assistance Strategy

Strategic Emphasis:Intensify poverty focusOperationalize governanceInclude emerging global challenges (disaster risk management and climate change)Emphasize knowledge agenda

Lending Envelope:US$.7-US$1.0 billion per year

Partners: NG, LG, Private Sector Development Partners, Civil Society

Civil Society

Engagements:National and Local Levels

Private Sector

Philippines FY10-12 CAS

Current Portfolio

As of end Sept. 2009, there were 24 active projects (18 loans and 6 large trust funds), for a total net loan amount of $1.41 billion

Indicative breakdown of the portfolio by sectorHuman Development: 26%Rural and Environment: 21%Transport & Energy: 24%Urban and Local Government: 17%Social Development: 10%Economic Management/Governance- 2%

In addition, there were 81 active country-specific trust funds with total net grant amount of $136.7 million.

IBRD-IFC Integrated Programs

Infrastructure – Support reforms in electricity sector, private participation in water service delivery, and PPP in transport

Agribusiness – Support activities to increase rural and farmer access to credit and to improve market access for agriculture and agribusiness development

Financial Sector – Support increased access to financial services, banking sector competitiveness and reach, and financial literacy

Partnerships

Policy levelPhilippines Development Forum (government and development partners)Harmonization program (ADB)

Operational LevelParallel/co-financing (DPL1)Multi-donor Trust Funds (e.g., Mindanao)Jumbo Trust Funds (Japan, Australia, European Commission)Portfolio monitoring (ADB, Japan)Global programs (GEF, PPIAF, CTF, others)Special programs (KDC, Panibagong Paraan)

WBG Response Options to the Global Crisis

IBRDScale-up support to CCT programAccelerate disbursements under Health and Education programsProvide additional financing for CDD project (KALAHI)Budget supportActed: Food Crisis Response Development Policy Operation ($200 million), FY09

IFCBank Recapitalization FundExpanded Trade Finance ProgramInfrastructure Crisis FacilityGlobal Microfinance Funding Initiative

MIGAPolitical Risk Insurance ProductsSmall Investment Program

WBG Response to Recent Disasters

Ongoing:Post Disaster Needs AssessmentPortfolio restructuring/project reallocations (under discussions)

Other Response Options:New operations (Emergency Recovery Loan, Additional Financing, Supplemental Development Policy Operation)Projects on recovery and rehabilitation of critical infrastructure (e.g., water supply and drainage)Urban renewal initiativeScaling up of community-driven approaches for urban development

Illustration: Bicol Power Restoration ($13 million), FY08, in response to damage caused by typhoon Reming in December 2006.

Opportunities for Innovative Approaches

Extending DFI capacity to borrowWB to provide funding to DFIsWB to help develop a secondary market to increase LT resources

Increasing sources of funding for LGUsWB/IFC to develop direct lending to creditworthy LGUs, e.g. MarikinaEasier access to private funding for revenue-generating investmentsDFIs as wholesale lenders

Working with DFIs on specific emergency situationMore flexible lending instruments in case of crisis response, with lower interest rates and longer maturityGovernment to adapt lending guarantee fees

Summary:Priorities for Development Financing

Address overriding concern: Poverty, both at global and country levels.

Allow flexibility: WBG is prepared to support a country’s changing priorities.

Innovate: In the Philippines, WBG is exploring creative approaches through DFIs and LGUs.

Thank you!