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Philippines
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Economic Governance | 492-002 |
12,143 |
16,000 |
15,000 |
| Family Planning and Health | 492-003 |
28,850 |
26,800 |
21,400 |
| Environment and Energy | 492-004 |
10,060 |
13,396 |
9,396 |
| Conflict Resolution in Mindanao | 492-010 |
13,010 |
|
|
| Education | 492-011 |
4,000 |
9,680 |
6,680 |
| Conflict Resolution in Mindanao and Other Areas | 492-012 |
|
23,220 |
10,449 |
|
Total (in thousands of dollars) |
68,063 |
89,096 |
62,925 |
|
The Development Challenge: The Philippines has long been a close strategic ally of the United States and USAID's development assistance program is making important contributions to fighting terrorism and supporting national social and economic development. However, the Philippines continues to be held back by internal conflict and violence, especially with separatist rebels in Mindanao and the communist New People's Army throughout the country. Given the strategic location of the Philippines and clear regional links among terrorist organizations such as the Jemaah Islamiyah, developments in the Philippines have a demonstrable impact on regional stability. The sizeable Muslim population in Mindanao is marginalized economically and lacks adequate access to basic social services. Development needs are greatest in conflict-affected areas, particularly the Autonomous Region in Muslim Mindanao (ARMM). The ARMM has the country's highest poverty rates with an average per capita income of less than $1 per day and disturbingly low human development indicators. Often the only alternative for poor Muslim families seeking to educate their children in the hundreds of communities in the ARMM region, where no public school is available, is to send them to local Islamic schools (madari), many of which provide only religious education and are not accredited.
The Philippines clearly faces serious development challenges. It remains East Asia's economic growth laggard and is falling further behind its neighbors in key areas. The country's rapid population growth, which at 2.36% is the fastest in East Asia, has diluted the impact of what economic growth has taken place and severely strains access to basic social services, from energy and sanitation to education. Poverty afflicts 34% of the population, the largest incidence in Southeast Asia. The country's natural resources are being severely depleted through population pressures, over-exploitation, and pollution, damaging globally-significant biodiversity. Corruption and ineffective institutions result in weak regulatory oversight, inhibit the development of competitive markets, and deter badly needed foreign investment. This, in turn, severely limits the government's ability to raise revenue and make needed investments in infrastructure, health, and education. Indeed, the Government of the Philippines (GRP) has suffered a fiscal decline that led in 2002 to a record high deficit of 5.3% of gross domestic product (GDP). The deficit to GDP ratio was 4.6% in 2003 and dropped to 3.6% in the first six months of 2004, but still remains dangerously high. Weak leadership (despite democratic institutions), powerful vested interests, and ongoing conflict feed the cycle of poor economic performance by discouraging private investors and tourism and draining public coffers. External debt is another major obstacle to development, reaching $57 billion or 70% of GDP in March 2004, with debt servicing absorbing 15% of export revenue.
Nevertheless, the Philippines can accelerate its economic and social development as well as the ongoing peace process with the Mindanao-based Moro Islamic Liberation Front (MILF). Philippine democratic institutions have proved resilient, and the Philippines has maintained its market-based economy. Under the administration of President Arroyo, who was re-elected for a six-year term beginning in July 2004, some significant results have been achieved on various fronts. Macroeconomic performance has been respectable, with annual GDP growth estimated at 4% or higher in the past several years, and the rate of inflation has remained in the single digits. In FY 2004, the GRP managed to increase revenue collection from taxes and customs duties. This resulted in improvement in domestic tax collection to 13% of GDP for the first nine months of 2004, up from 12% in 2003. This accomplishment reflects spending restraint and, most importantly, more vigorous and successful efforts by the tax collection agencies to improve administration and enforcement. There are now a number of high-level champions in the battle against corruption (including some key figures with constitutionally-protected positions), as reflected in the increasing prominence of lifestyle checks on government officials and some ongoing prosecution of senior officials, including one military general. Efforts to improve transparency and effectiveness of government bureaucracies are beginning to bear fruit. The GRP is intensifying efforts to negotiate a lasting peace with the MILF and international monitoring teams are now on the ground. With USAID assistance, more than 24,000 former combatants from the Moro National Liberation Front (MNLF) have been successfully reintegrated into the productive economy. Their success is demonstrating the tangible benefits of peace, and in the event of a peace settlement with the MILF, USAID stands ready to provide similar assistance quickly to MILF ex-combatants who agree to forswear the use of violence and pursue peace.
The USAID Program: The Program Data Sheets provided below cover the five objectives for which USAID is requesting FY 2005 and FY 2006 funds. These five objectives concentrate on reducing conflict in Mindanao and other areas vulnerable to violence; fighting corruption and supporting improved performance of selected government institutions; promoting health and well-being of Filipinos through support for improved and decentralized service delivery, increased private sector involvement, social acceptance of family planning, and policy reform; strengthening management and governance of life-sustaining natural resources, better urban environment management, and reliable and cleaner energy; and increasing access to quality education and livelihood skills in the conflict affected areas of Mindanao and supporting broader education sector policy reform. Assistance to the conflict-affected areas of Mindanao addresses the kinds of conditions that terrorist groups can exploit and crosscuts the portfolio. The specific activities to be funded by FY 2005 and FY 2006 appropriations are described in more detail in the following Program Data Sheets.
Other Program Elements: In addition to the resources requested in the Program Data Sheets, USAID is helping administer programs funded by USAID regional and central programs such as the anti-trafficking in persons program funded by USAID' Women in Development Office and the U.S. Department of State's East Asia and Pacific Affairs Bureau; the World Council of Credit Unions' credit union development program; a wheelchair program under the War Victims Fund; several central USAID Global Development Alliances such as the Sustainable Coastal Tourism in Asia, solar energy for renewable development, and a public-private alliance with the Knowledge Channel; the U.S. Asia Environmental Partnership program; a disaster assistance program funded by USAID's Office of Foreign Disaster Assistance; and USAID's Collaborative Research Support Program for integrated pest management.
Other Donors: There is good coordination among bilateral and multilateral donors and general consensus on the priority development challenges. Overall, total development assistance to the Philippines over the last several years has averaged $1.5 billion a year, or less than 2.5% of GDP. The largest donor is the Japan Bank for International Cooperation (JBIC), followed by the Asian Development Bank (ADB), and the World Bank, all of which primarily provide loans for infrastructure or sector policy programs. USAID is the largest donor of grant assistance. USAID collaborates with the ADB and the World Bank on sectoral policy reform in energy, basic grains, bank and non-bank financial regulation, and expenditure management. The overall U.S. Mission maintains an active dialogue with the International Monetary Fund, which has a small but influential technical assistance program that includes tax administration. The United Nations Development Program helps coordinate donor activities in Mindanao, and USAID communicates regularly and looks for opportunities to coordinate with JBIC and the Japan International Cooperative Agency. For example, USAID is currently discussing with them collaboration on renewable energy and urban water financing. Assistance from Australia and Canada includes an emphasis on Mindanao, corruption, and governance that complements USAID's programs. Several donors have education initiatives and have formed a working group on education. Other bilateral donors include the European Commission and other European Union members who emphasize direct assistance to small enterprises and small farmers.
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