A large proportion of the population in the Philippines is vulnerable to falling into poverty even as efforts continue to reduce the number of poor. In addition to the economic shocks that can affect income and employment, vulnerabilities are worsened by the risks stemming from climate-induced natural disasters and related impacts which disproportionately affect the poor. The sustainable management of environment and natural resources to safeguard livelihoods is critically important.
xvi.Expanding and rationalizing the social safety net
An estimated 33 percent of the population lives under the poverty line, up from 30 percent in 2003, and nearly half remain highly vulnerable to falling into poverty or deeper into poverty. To address these mounting challenges, programs and resources must be better aligned, targeted, and coordinated. The Philippines has begun to improve its previously fragmented and poorly targeted social protection programs. To sustain these efforts, speedy actions are required to (i) accelerate and enhance social welfare reform to develop an operational social protection strategy, (ii) improve targeting of social protection programs by adopting the National Household Targeting System for Poverty Reduction as the single national targeting system, (iii) further strengthen the operations of the CCT program, particularly through institutional strengthening of program administration, and broaden its coverage of poor households, (iv) eliminate ineffective programs and redirect resources to core programs to create fiscal space and to strengthen the social protection system, and (v) implement a secure unique identification system to facilitate better targeting of social programs. This can be achieved by reallocating funds to efficient programs from less efficient programs such as the NFA rice price subsidy program and the Food-for-School Program.
xvii.Engage in pro-active disaster risk reduction and management actions
For countries as vulnerable as the Philippines, natural disasters perpetuate many of their development challenges, including the proliferation of slums and heavy congestion in urban areas, inadequate infrastructure, and environmental degradation. The government has introduced a policy framework for dealing with natural disasters that emphasizes prevention and mitigation measures, but it needs a strategy that will expand the cost-sharing role of the private sector, particularly the insurance industry. Priority actions include the (i) fast-track completion of risk assessments to determine which areas are most at risk from natural disasters so that future interventions can be well targeted, (ii) review of the capacity and upgrading of the weather forecasting and early warning systems for highly exposed localities, (iii) use of urban areas (such as Metro Manila and other economic centers) as geographic starting points to package risk reduction investments, (iv) adoption of a catastrophe risk finance strategy that will reduce fiscal exposure, and (v) empowerment and encouragement of LGUs to undertake priority disaster risk reduction investments by providing them with affordable and accessible financing options.
Adaptation to climate change is particularly critical for the Philippines, given the country’s high vulnerability to impacts including sea-level rise and extreme weather events such as intense typhoons and changes in rainfall patterns that exacerbate floods and droughts. The Philippines has adopted active legislative and institutional responses to climate change issues, but is still building up its organizational structure and capacity in this area and lacks an operational strategy to respond to climate change. With the Climate Change Act of 2009 as the legal basis, the new administration is in a good position to strengthen the Philippines response to climate change by (i) implementing the new Climate Change Act and strengthening institutions and coordination, (ii) mainstreaming adaptation and disaster preparedness activities in policies, plans, and programs at the national, sub-national and sectoral levels, (iii) developing financing facilities for adaptation and disaster response, and (iv) selectively implementing mitigation programs in key sectors (energy, transport, waste management) where emissions are on the rise.
The new government’s reputation and legacy will be largely determined by its record in improving governance and reducing corruption. For the most part, strong regulatory and institutional frameworks for good governance and anti-corruption are already in place. The country’s active civil society and media are strengths that can be leveraged. And bright spots such as procurement reform show that positive change can be achieved when sound laws are combined with strong institutional backing and meaningful civil society participation. For the new government, an appropriate strategy would be to build credibility and public confidence through “quick wins” in order to lay the foundation for longer-term change. Short-term actions that could achieve this objective are the (i) resolution of high-profile graft cases, (ii) putting forward a Freedom of Information Act for legislative approval, (iii) voluntary disclosure of financial information by high level policymakers, and (iv) the launch of a comprehensive reform plan in a strategically selected agency that is widely perceived to be corrupt. These short-term measures would build political capital for the government to tackle more fundamental longer-term reforms.
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xxi.Strengthening core governance systems in public financial management
Improving public financial management (PFM) is critical for making progress towards the Philippines’ development goals and is also a core element of the governance reform agenda. For both these reasons, a fundamental reform of PFM should be a high priority for the government. Although the PFM system in the Philippines is reasonably capable of maintaining overall fiscal balance, it is not a good tool for efficient execution of priority policy programs and is particularly weak in transparently accounting for how taxpayers’ money has been spent for public purposes. By launching a comprehensive PFM reform program to enhance transparency, accountability, and efficiency in budget and financial management, the government could immediately signal its commitment to strengthen governance as a decisive step away from “business as usual.” Two important steps that can be taken immediately in this direction are to (i) announce a comprehensive PFM reform program as a centerpiece of the government’s governance reform agenda, and (ii) launch a coordinated project to build a government financial management information system. If sustained over time, the reform would build institutional capacities to implement priority programs efficiently and accelerate development.
