Philippines Discussion Notes

31^ See DSWD (2009) for more information on the selection criteria and conditions of the 4Ps.

32^ World Bank staff estimates based on the total cash transfer (health plus education component) computed according to the actual demographic composition of potential beneficiary households and per capita income predicted using the Proxy-Means Testing (PMT).

33^ Based on SDC Resolution no 2, series of 2009

34^ Social protection spending in Besley et al (2003) covers social security and welfare while Manasan (2009) covers the key non-contributory social protection programs, including active labor market programs and community-driven development projects. Besley et al (2003) does not include estimates of spending for social security and welfare for the Philippines.

35^ World Bank staff estimates suggest that spending 1.5% of GDP on social protection will allow 4Ps to cover 2.3 million poor households. Covering all 4.7 million poor households will require approximately 1.9% of GDP spending on social protection.

36^ Per internal NDCC estimates (unpublished)

37^ The Hyogo Framework for Action (HFA) is a policy document adopted by 168 Member States of the United Nations in 2005. It provides the framework by which disaster reduction policy is approached globally. The HFA highlights five priority area of action: 1. Ensure that disaster risk reduction is a national and a local priority with a strong institutional basis for implementation. 2. Identify, assess and monitor disaster risks and enhance early warning. 3. Use knowledge, innovation and education to build a culture of safety and resilience at all levels. 4. Reduce the underlying risk factors. 5. Strengthen disaster preparedness for effective response at all levels.

38^ See http://www.dbm.gov.ph/index.php?pid=8&xid=28&id=989

39^ Information included in this annex is excerpted from the draft Catastrophe Risk Financing Strategy for the Philippines, currently under preparation by the World Bank with support from the Global Facility for Disaster Reduction and Recovery (GFDRR).

40^ CITYNET (The Regional Network of Local Authorities for the Management of Human Settlements) is a Network committed to helping local authorities improve the lives of its citizens and create urban sustainabilty across Asia-Pacific and beyond. See www.citynet-ap.org.

41^ Using GNP data (2008) from the Central Bank of the Philippines, this would correspond to about 825 million pesos, or some $18 million per year.

^ in terms of the willingness to pay for the risk reductions of premature mortality

42^ Major findings include a 53 percent lower rate of diarrhea cases in children younger than 15, 50 percent reduction in pneumonia cases in children younger than five, and 34 percent lower impetigo incidence in households who received soap and hand washing promotion. The likelihood of frequent diarrhea is over 80 percent lower in children in communities with improved drainage and sewage systems, after controlling for potential confounders.

43^ These figures are taken from World Bank (2010), “Fostering More Inclusive Growth”, and based on the 2006 Family Income and Expenditure Survey.

44^ The Muslim and indigenous populations, respectively.

45^ By almost any measure, ARMM also has the poorest human development outcomes among the 16 regions in the Philippines. Poverty incidence is twice that of the nation as a whole. Life expectancies for men and women are more than 10 years below the national rates. Infant and maternal mortality are 30 percent and 80 percent higher than the national rates, respectively. And net primary and secondary enrollment rates are 14 and 33 percentage points lower than the national rates, respectively (World Bank 2003).

46^ To put this in perspective, the IDMC estimates the number of IDPs in Palestine as 160,000 and Afghanistan as at least 297,000.

47^ These activities are receiving support from the Mindanao Trust Fund – Reconstruction and Development Program and the Japan International Cooperation Agency.

48^ CDD programs are appropriate in the conflict-affected parts of Mindanao because they (i) bring stakeholders together to address common problems, thereby promoting positive interactions between disparate community groups, (ii) provide solutions to issues of service delivery and local infrastructure prioritized by the community itself, and (iii) address issues of governance by empowering communities to ensure that they get what they need, thereby introducing elements of demand for good governance or social accountability.

49^ One such policy reform required is the repeal of the “Cabotage Law” to allow ships coming from international ports to pick up cargo in domestic ports (e.g., Manila) for shipment to another port (e.g., Davao or Cebu, for instance). This would have the effect of lowering the cost of cargo transport, which would be particularly beneficial for agricultural products which are shipped in bulk.

50^ World Bank (2010) Behind the Veil of Conflict notes that, “Land is an important asset for a largely agriculture region like Mindanao. But its full potential cannot be realized unless landowners or developers are assured of their rights to investments they might combine with land assets. Institutions governing land titling, registration, and land use are crucial. If there were widely accepted rules for gaining access to land resources and adjudicating conflict, investors would not have to be physically present to defend their investments. Unfortunately, the land market in the Philippines has been characterized by weak and inefficient institutional structures, rigid and outdated land laws and regulations, multiple and inconsistent land valuation systems used in various government agencies, and no transparency in the land registration system.”

51^ Such an audit can build on the auditing done this year at the direction of the Arroyo administration.

52^In the case of the Ampatuan clan, it has not only been a reliable ally in delivering solid votes for the administration during election time, the family also formed an integral component of the Government’s counter-insurgency strategy against the MILF considering the existence of a “rido” between the Ampatuan clan and rival political families sympathetic to the MILF. Moreover, as traditional political leaders, the Ampatuans compete against the MILF for the loyalty of ordinary Muslims. Thus, the creation of private armies by the Ampatuan family should not only be seen as protection for members of the clan but a way to wean away ordinary Muslims from joining the MILF and for their military deployment against the MILF whenever needed.

0^ Improvement of one standard deviation in the International Country Risk Guide corruption index leads to a 29 percent decrease in infant mortality, a 52 percent increase in satisfaction among recipients of public health care, and a 30–60 percent increase in public satisfaction in roads: see World Bank. (2004) Mainstreaming Anticorruption Activities in World Bank Assistance: A Review of Progress since 1997, Washington, DC: World Bank

0^ The largest recipient of these transferred “savings” was the Department of Public Works and Highways which received PHP 32.9 billion on top of its originally proposed obligations level of PHP 94.5 billion. The largest “contributors” to the overall “savings” (i.e., those agencies from which most savings were derived) were the Department of National Defense (PHP 7.1 billion) and the Department of Education (PHP 6.0 billion). Data source: National Expenditure Program 2010.

0^ This estimate includes the Area Development Assistance Fund, Calamity Fund, Contingent Fund, National Unification Fund, E-Government Fund, Priority Development Assistance Fund, parts of the Unprogrammed Fund, Economic Stimulus Fund and the Allocation to LGUs other than the IRA.

0^ Because “savings” includes money drawn from the SPFs, the PHP 90 billion figure is an estimate, as it includes some double counting.

0^ In addition to SPFs, there are multiple other budget items over which the Executive enjoys wide discretion. These include agency Intelligence Funds and so-called nationwide lump-sum allocations in individual agency appropriations, the exact use of which is at the discretion of the government (the President or agency heads). An example of a nationwide lump-sum allocation is the so-called GMA Rice Program, which comprised PHP 10.04 billion of the total PHP 14.47 billion appropriated in 2009 to DA’s Development of Crops Sector operations.

0^ General Appropriations Act 2010, s 95.

0^ For example, over the period 2006-2008, DPWH received three consecutive “adverse” audit findings and fully implemented only 11 of 138 CoA report recommendations. However, from 2007-2009, the Department’s budget increased from PHP 71 to PHP 130 billion.

0^ This authority derives from the 1987 Constitution, Article VII, Section 16.

0^ Human Development Network (2009) Philippines Human Development Report 2008/2009; Manila: HDN.

0^ “Dirty Deal” Newsbreak Sep/Dec. 2007.

0^ Government of the Philippines, Medium Term Philippines Development Plan 2004-2010, p.250.

0^ Lifestyle checks have been undertaken at different times by the Revenue Integrity Protection Office under the Department of Finance, the Office of the Ombudsman and the Presidential Anti-Graft Commission (PAGC).

0^ See companion Philippines Discussion Note on public financial management.

0^ An example is a requirement in the 2003 Governance of Basic Education Act that the Department of Education consult with a relevant member of Congress in identifying school/classroom building/repair projects.

0^ PFM refers to a system of rules, procedures and practices for the government to manage its public finances. Good budgeting is a core element of any PFM system, but a good PFM system is more than good budgeting. It also encompasses other crucial aspects and operations in the public sector such as management of public debt, assets and revenues, the arrangement governing fiscal relations between levels of government or between the government and public enterprises, and a system of public reporting on the public sector’s financial operations.

0^ More detailed discussions on decentralization and local governance issues are found in the companion Discussion Note No. 23 “Decentralization: Improving Local Governance for Better Service Delivery.”

0^ The 2005 COA report concluded that “the existing budget allocation system needs improvement in order to ensure the implementation of priority programs and projects identified in the MTPDP for CYs 2004-2010 and the attainment of a balanced budget by 2010” (p. 4).

0^ A PEFA assessment uses a standard set of performance indicators to rate the quality of selected key aspects of PFM on an objective basis. The PEFA assessments have been carried out in more than 100 countries in every region of the world, including two developed countries (Norway, Switzerland). In a number of countries, repeat assessments have been conducted to monitor reform progress.

0^ A striking finding of the PEFA assessment is that the peculiarities of budget reporting in the Philippines make it impossible to estimate the most basic measures of budget performance, budget out-turns, which measure the extent to which the approved budget is executed. Large deviations during budget execution mean the budget as approved is not a credible guide of the actual government operations and suggest accountability issues. The inability to even estimate budget out-turns also means the credibility of the budget document is highly compromised

0^ The genuine efforts to improve strategic planning of the budget over the past few years perhaps have contributed to the prioritizations of additional spending in key areas of need such as education and infrastructure.

0^ An example is the launch of the Electronic New Government Accounting system (eNGAS) and the sudden halt in its roll-out subsequently as the agency in charge (COA) re-assessed its priorities and launched new initiatives (e.g., a review of the chart of accounts) before the roll-out was completed.

0^ For instance, the roll-out of forward estimates has probably been compromised by the limited capacity of the basic budget information systems.

0^ The PEFA method considers key PFM dimensions as (i) credibility of the budget; (ii) comprehensiveness and transparency; (iii) policy-based budgeting; (iv) predictability and control in budget execution; (v) accounting, recording and reporting; and (vi) external scrutiny and audit.

0^ The PEFA method rates the quality of PFM in its various sub-dimensions in an A-D scale. Here we have converted the alphabetical ratings as A=4, B-3, C=2 and D=2 and converted them into an overall average score without any weighting.

0^ Comprehensiveness and transparency appears to be in better form compared to the other dimensions, but this is due to the limited extent of unreported government operations, comprehensiveness (but not user-friendliness) of information included in the budget documentation, and reasonable transparency in inter-governmental fiscal relations. Among other sub-dimensions of interest for fiscal transparency, classification of the budget and public access to key fiscal information scored particularly poorly.

0^ Having a single agency is not necessarily a magic bullet solution to the problem of coordination. Anecdotes abound of cases where coordination failures within a single agency result in inefficient institutional outcomes. Nevertheless, it should help, given that COA’s constitutionally independent status limits the government’s ability to force coordination as COA is not obligated to respond to presidential directives.

0^ The main legal instruments governing aspects of PFM include EO292 (Administrative Order) regulating general budgetary matters and PD1445 on audit issues. In addition, certain sector-specific legislation (e.g., RA7880 of 2004 on governance of basic education) includes provisions that regulate aspects of PFM practices, which merit scrutiny as part of the legal review).

0^ The relationship is statistically significant (at the 0.01 level), with an R² of 0.09. General Public Services expenditures include general administration expenditures that cannot be attributed to other sectors/departments of the LGU.

0^ Another example is the Special Education Fund (SEF), a 1-percent additional levy on the real property tax earmarked for education expenditures. The SEF, however, may be more justifiable given the chronic under-investment in public education in the Philippines and the relatively simple accounting it would allow by virtue of the fact that the use of this Fund is limited to one sector.

0^ A conversion of a municipality to a city, on the other hand, does not have the same negative effect of hyper-division, at least in the aggregate, although it would reduce IRA allocations to the existing cities.

0^ To be functional, the RDCs would need to be given the necessary independence and tools to effectively perform their technical coordination role (i.e., staff and financial resources). Also, their composition and decision making process would need to be consistent with a more technocratic view of the world that is still accountable to existing political structures. Most important is that RDCs remain accountable to local chief executives but are not easily subject to capture by national authorities or a small number of local interest groups.

0^ The share of the IRA that barangays currently receive, which represents 20 percent of the total IRA allocation, would then be transmitted to the respective municipal and city governments, which could then earmark these funds to pay for wages of the barangay captain and staff and to finance barangay activities across the LGU.

0^ Internationally, some countries organize their local governments in wards, wherein each ward (basically equivalent to a barangay) elects a member to the legislative council of their local government. The council acts as a legislative body and acts as a check on the executive branch of the local government. As a representative of a particular ward, the elected official is also responsible for bringing issues important to the community he or she represents to the attention of the council and the local chief executive.

0^ As suggested above, the IRA share of barangays can be blended with the shares of municipalities and cities as part of a fundamental reform of the LGU organizational structure. This reform would not entail an increase in the overall IRA allocation but would help to improve the efficiency of local service delivery.

0^ There have been repeated calls from LGUs to increase the share of the IRA from 40 percent of national internal revenues to perhaps 50 percent or more, and numerous proposed bills supporting such increase have been filed in past Congresses. Furthermore, it has been estimated that additional national government transfers to LGUs to finance devolved services (including Congressional allocations) are collectively equivalent to approximately 20 percent of the IRA in a given year. A combination of a legislated increase in the share of the IRA as well as a re-orientation of existing non-IRA transfers may be used to finance additional transfer programs for LGUs.

0^ This point was already made earlier by President Quezon. As related by Corpuz (1997), “In December 1935, the Philippine legislature created a national economic council as the Commonwealth government’s advisory body in the formulation of economic plans. The Commonwealth president, Manuel L. Quezon, however, saw the imprudence of formulating and adopting a ‘comprehensive program of economic development,’ due to the ‘absence of adequate data and sufficient information about the different phases of Philippine economic life...’ ”

0^ While provincial statistics are produced, the current master sample is not designed to produce reliable estimates of provincial level statistics. This results in a mix of reliable and non-reliable provincial level statistics.

0^ Refer to the Discussion Note on Social Protection in the Philippines.

0^ The major statistical agencies in the PSS include the statistical policy-making and coordinating body, the National Statistical Coordination Board (NSCB), which has an executive board and a secretariat; producer of general purpose statistics, National Statistics Office (NSO); producer of agriculture and fishery statistics, Bureau of Agricultural Statistics (BAS) under the Department of Agriculture (DA); producer of specific purpose statistics on labor and employment, Bureau of Labor and Employment Statistics (BLES) under the Department of Labor and Employment (DOLE); producer of monetary and banking statistics, Department of Economic Statistics of the Bangko Sentral ng Pilipinas (BSP); and a research and training institution on statistics, Statistical Research and Training Center (SRTC). Other data producers in government include divisions/units usually within the planning service of the various departments and bureaus. The functioning of each of these agencies is governed by separate statistical laws that are geared to meet their own statistical information requirements.

0^ The World Bank Statistical Capacity Indicator provides an overview of the statistical capacity of developing countries. It is based on a diagnostic framework developed with a view to assessing the capacity of statistical systems. The framework consists of three assessment areas: methodology; data sources; and periodicity and timeliness (institutional framework has not been included in score calculation). In 2009, the Philippine garnered an overall score of 86. It scores high in the area of collection (100) but lower in the area of data availability (78). The mean overall score is 73 for 145 countries. The Philippines scores higher than Thailand, Malaysia and Indonesia.

0^ The availability of Philippine macroeconomic data is comparable to that of Indonesia and Thailand, and are generally better than those of other countries in East Asia and the Pacific, such as Cambodia, Vietnam and Myanmar (World Bank 2002).

0^ In some countries, such as Mongolia and Vietnam, the Planning Minister takes an active role in leading the preparation of the statistical strategy, helping to raise the public visibility of this effort.

0^ In Nicaragua, for example, the underestimation of GDP (by around 70 percent) in the 1990s distorted a number of economic indicators, vastly overestimating the public sector’s role in the economy (World Bank 2001).

0^ The Annual Poverty Indicators Survey, which is supposed to provide poverty estimates in between the triennial FIES, was not conducted in 2001 and 2005. The Annual Survey of Philippine Business and Industry, which is an important data source for the national accounts and is supposed to be conducted every year, was also not conducted in 2002 and 2004. Meanwhile, the 2002 Census of Agriculture and Fisheries was delayed to 2003 and the 2005 Census of Population was delayed to 2007.

Download 2.19 Mb.

Share with your friends: