02 Phi PCR

Completion Report
Program Number: 40538

Loan Numbers: 2315, 2450, 2545
December 2010
Philippines: Development Policy Support Program

Cluster
CURRENCY EQUIVALENTS
Currency Unit – peso (P)
At Appraisal At Program Completion

(2 October 2006) (31 December 2009)
P1.00 = $0.019 $0.021
$1.00 = P50.25 P46.17
ABBREVIATIONS
ADB – Asian Development Bank

BIR – Bureau of Internal Revenue
BOC – Bureau of Customs
CCT – conditional cash transfer
COA – Commission on Audit
CSO civil society organization
DA – Department of Agriculture
DBM – Department of Budget and Management
DMF – design and monitoring framework
DOF – Department of Finance
DOH – Department of Health
DOJ – Department of Justice
DPSP – Development Policy Support Program
DPWH – Department of Public Works and Highways
DRMD – debt risk and management division
DSWD – Department of Social Welfare and Development
EAS – Enforcement and Advocacy Service
GDP – gross domestic product
GFC – global financial crisis
GFMIS – government financial management information system
GPPB – Government Procurement Policy Board
LGU – local government unit
MTEF – medium-term expenditure framework
MTPDP – medium-term Philippine development plan
NEDA – National Economic and Development Authority
NG – national government
OPIF – organizational performance indicator framework
P3F – post-Development Policy Support Program partnership framework
PCR – program completion report
PFM – public financial management
PhilGEPS – Philippine Government Electronic Procurement System
PPP – public–private partnership
RAO – revenue administrative order
RATE – Run after Tax Evaders (program)
RATS Run after the Smugglers (program)
RIA – regulatory impact assessment
SPD – Special Prosecution Division
TA – technical assistance
TASF – Technical Assistance Special Fund
VAT – value-added tax
NOTE
In this report, "$" refers to US dollars.
Vice President C. Lawrence Greenwood, Jr., Operations 2

Director General K. Senga, Southeast Asia Department (SERD)
Director J. Ahmed, Financial Sector, Public Management, and Trade Division, SERD
Team leader K. Bird, Senior Economist, SERD

Team members R. Aquino, Assistant Project Analyst, SERD
E. Dizon, Administrative Assistant, SERD
In preparing any country program or strategy, financing any project, or by making any
designation of or reference to a particular territory or geographic area in this document, the
Asian Development Bank does not intend to make any judgments as to the legal or other status
of any territory or area.
CONTENTS
Page
BASIC DATA i
I. PROGRAM DESCRIPTION 1
II. EVALUATION OF DESIGN AND IMPLEMENTATION 3
A. Relevance of Design and Formulation 3
B. Program Outputs 4
C. Program Costs and Disbursements 8
D. Program Schedule 8
E. Implementation Arrangements 8
F. Conditions and Covenants 9
G. Related Technical Assistance 9
H. Consultant Recruitment and Procurement 9
I. Performance of Consultants 10
J. Performance of the Borrower and the Executing Agency 10
K. Performance of the Asian Development Bank 10
III. EVALUATION OF PERFORMANCE 11
A. Relevance 11
B. Effectiveness in Achieving Outcome 11
C. Efficiency in Achieving Outcome and Outputs 12
D. Preliminary Assessment of Sustainability 12
E. Impact 13
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13
A. Overall Assessment 13
B. Lessons 14
C. Project Related and General 14
APPENDIXES
1. Design and Monitoring Framework: Indicators for Development Impact 16
2. Performance of Development Policy Support Program Subprogram 1 Policy Measures 19
5. Status of Compliance with Loan Covenants 29
6. Project Completion Report- Government Survey Results 30
i
BASIC DATA: DEVELOPMENT POLICY SUPPORT PROGRAM, SUBPROGRAM 1

A. Loan Identification
1. Country Philippines
2. Loan Number 2315
3. Program Title Development Policy Support Program
(Subprogram 1)
4. Borrower Republic of the Philippines
5. Executing Agency Department of Finance
6. Amount of Loan $250.0 million with an $0.8 million technical
assistance grant
7. Program Completion Report Number 1197
B. Loan Data
1. Appraisal
– Date Started 2 October 2006
– Date Completed 6 October 2006
2. Loan Negotiations
– Date Started 11 December 2006
– Date Completed 11 December 2006
3. Date of Board Approval 8 February 2007
4. Date of Loan Agreement 13 February 2007
5. Date of Loan Effectiveness

– In Loan Agreement 13 May 2007
(90 days after loan agreement )
– Actual 21 February 2007
– Number of Extensions 0
6. Closing Date
– In Loan Agreement 31 March 2007
– Actual 31 March 2007
7. Terms of Loan
– Interest Rate ADB London Interbank offered rate
– Maturity (number of years) 15 years
– Grace Period (number of years) 3 years
8. Terms of Relending (if any)

– Interest Rate Not applicable
– Maturity (number of years) Not applicable
– Grace Period (number of years) Not applicable
– Second-Step Borrower Not applicable
9. Disbursements
a. Dates
Initial Disbursement Final Disbursement Time Interval
22 February 2007 22 February 2007 0
ii
Effective Date Original Closing Date Time Interval

21 February 2007 31 March 2007 1.3 months
b. Amount ($ million)
Last
Category Original Amount Net Amount Amount Undisbursed
Revised
or Subloan Allocation Canceled Available Disbursed Balance
Allocation
1 250 None 0 250 250 0
0
Total 250 None 0 250 250 0
10. Local Costs (Financed)

- Amount ($) None
- Percent of Local Costs None
- Percent of Total Cost None
C. Program Data
1. Program Cost ($)

Cost Appraisal Estimate Actual
Foreign Exchange Cost 250,000,000 250,000,000

Total 250,000,000 250,000,000
2. Financing Plan
Implementation Costs
ADB Financed
Single Tranche 250,000,000 250,000,000
Total 250,000,000 250,000,000
ADB = Asian Development Bank.
3. Cost Breakdown by Program Component ($)

Component Appraisal Estimate Actual
Single Tranche 250,000,000 250,000,000
Total 250,000,000 250,000,000
4. Program Schedule
Item Appraisal Estimate Actual
Other Milestones
Single Tranche $250,000,000 $250,000,000
iii
5. Program Performance Report Ratings

Ratings
Implementation Period
Development Implementation
Objectives Progress
From 08 February 2007 to 31 December 2007 Satisfactory Satisfactory
D. Data on Asian Development Bank Missions

No. of No. of Specialization
Name of Mission Date
Persons Person-Days of Membersa
Fact-Finding 23 Aug 06–07 Sept 06 5 10 a, b, c, d, e
Appraisal 2 Oct 06–06 Oct 06 5 4 a, b,c,d,e
Review 1 7-9 Apr 2008 3 3 a,b, c
Program Completion Review 10-13Mar 2010 2 4 a, g
a
a = Economist, b = public sector specialist, c = economist, d = social protection specialist, e = health specialist, f =
governance specialist, g = project analyst..
iv

2. Loan Number 2450
(Subprogram 2)
6. Amount of Loan $250.0 million with a $0.8 million technical
assistance grant
B. Loan Data
1. Fact-Finding (Appraisal not required)
– Date Started 7 April 2008
– Date Completed 13 June 2008
– Date Started 3 September 2008
– Date Completed 3 September 2008
3. Date of Board Approval 30 September 2008
4. Date of Loan Agreement 7 October 2008

– In Loan Agreement 07 January 2009
(90 days after loan agreement)
– Actual 18 November 2008
6. Closing Date 31 March 2009

– In Loan Agreement 20 November 2008
– Actual 0
– Number of Extensions
7. Terms of Loan ADB London Interbank offered rate

– Interest Rate 15 years
– Grace Period (number of years)
8. Terms of Relending (if any) Not applicable

– Second-Step Borrower
9. Disbursements
a. Dates
20 November 2008 20 November 2008 0
18 November 2008 31 March 2009 4.4 months
v
Last
Revised
Allocation
1 $250 None 0 $250 $250 0
Total $250 None 0 $250 $250 0

- Amount ($) None
C. Program Data
1. Program Cost ($)


Total
2. Financing Plan
ADB Financed
Single Tranche 250,000,000 250,000,000
Total
ADB = Asian Development Bank.
3. Cost Breakdown by Program Component

Single Tranche 250,000,000 250,000,000
Total 250,000,000 250,000,000
4. Program Schedule
Other Milestones
Single Tranche 250,000,000 250,000,000

vi

Ratings
Objectives Progress
From 30 September 2008 to 31 December 2008 Satisfactory Satisfactory
From 1 January 2009 to 31 March 2009 Satisfactory Satisfactory

Persons Person-Days of Members
Fact-Finding 7 Apr–13 June 2008 4 5 a, b, c, d
Review 1 9-11 Mar 2009 2 3 a, d
Program Completion Review 10-13 Mar 2010 2 4 a, e
a = economist, b = public sector specialist, c= economist, d = governance specialist, e = projects analyst.
vii

2. Loan Number 2545
(Subprogram 3)
6. Amount of Loan US$250.0 million with a US$0.8 million technical
assistance grant
B. Loan Data
1. Appraisal
– Date Started 15 June 2009
– Date Completed 17 June 2009
– Date Started 10 August 2009
– Date Completed 10 August 2009
3. Date of Board Approval 15 September 2009
4. Date of Loan Agreement 16 September 2009

– In Loan Agreement 16 December 2009
(90 days after loan agreement)
– Actual 06 October 2009
6. Closing Date
– In Loan Agreement 31 December 2009
– Actual 31 December 2009
7. Terms of Loan
– Interest Rate ADB London Interbank offered rate
– Grace Period (number of years) 3 years
8. Terms of Relending (if any)

– Second-Step Borrower Not applicable
9. Disbursements
a. Dates
7 October 2009 7 October 2009 0
viii

6 October 2009 31 December 2009 2.8 months
Last
Revised
Allocation
1 250 None 0 250 250 0
Total 250 None 0 250 250 0

- Amount ($) None
C. Program Data
1. Program Cost ($)


Total
2. Financing Plan
ADB Financed
Single Tranche 250,000,000 250,000,000
Total
ADB = Asian Development Bank
3. Cost Breakdown by Program Component

Single Tranche 250,000,000 250,000,000
Total 250,000,000 250,000,000
4. Program Schedule
Other Milestones
Single Tranche 250,000,000 250,000,000
ix

Ratings
Objectives Progress
From 15 Sepember 2009 to 31 December 2009 Satisfactory Satisfactory

Persons Person-Days of Membersa
Fact-Finding 9 Mar 09–24 Mar 09 3 14 a,b,c
Appraisal 15 Jun 09–17 Jun 09 3 3 a,b,c
Review 1 10-11 Mar 2010 2 2 a, d
Program Completion Review 10-13 Mar 2010 2 4 a,d
a
a = economist, b = public finance specialist, c = governance specialist, d = project officer.
I. PROGRAM DESCRIPTION
1. The Philippines Development Policy Support Program cluster comprised three single
tranche loans (or three subprograms) from 2007 to 2009, each subprogram loan being $250
million from Asian Development Bank (ADB) ordinary capital resources. ADB approved the
program and its first subprogram on 8 February 2007, and the loan agreement for subprogram 1
became effective on 21 February 2007. 1 The second subprogram was approved on 30
September 2008, and the loan agreement became effective on 18 November 2008.2 The third
subprogram was approved on 15 September 2009, and the loan agreement became effective
on 6 October 2009. 3 The subprogram 1 policy matrix was jointly developed with the
Government of the Philippines and the World Bank. The subprogram 2 and 3 policy matrixes
were jointly developed with the Government of the Philippines and the Government of Japan,
which cofinanced subprogram 2 with ¥9.29 million and subprogram 3 with ¥9.22 million.
2. The critical fiscal situation that emerged in 2002 depressed public investment and
funding for the social sectors and hurt the poor. These problems were compounded by poor
governance in public financial management, corruption in procurement, and a weak investment
climate. Thus, reforms toward fiscal consolidation; strengthening governance in public financial
management (PFM); reducing corruption in key government agencies; and improving the
investment climate, rural development, and infrastructure are crucial to putting economic growth
on a more sustainable path, redirecting spending to social sectors, and contributing to poverty
reduction. The 2007 ADB study, Philippines: Critical Development Constraints, and the 2009
ADB study Philippines: Reforming Investment Incentives reiterated these areas as key to growth
in the Philippines and were used in formulating the program.4
3. Under subprogram 1, the government implemented a series of measures to address the

fiscal imbalance, spurring a swift and impressive turnaround in the fiscal situation and improved
macroeconomic stability in 2006 and 2007. Subprogram 2 for 2008 built on reforms initiated
under subprogram 1 for fiscal consolidation and strengthening governance in public financial
management and procurement. These measures brought successful fiscal consolidation and
provided much-needed fiscal space for increasing spending on social sectors and infrastructure
in 2007 and 2008. With increased spending for priority sectors, set within a medium-term
balanced-budget framework, the Philippines enjoyed its best macroeconomic performance in
2007, with economic growth at 7.2% and investment growth at 17.4%. This growth momentum
continued into the first half of 2008.
4. Two major global shocks in 2008 adversely affected the Philippines economy and
influenced the design of subprogram 3. First, the surge in global commodity prices pushed
domestic inflation to 10.0% in August 2008. The slowdown in the United States economy that
began in 2007 affected Philippine exports of electronic goods and economic growth. Second,
the global financial crisis (GFC) that first erupted in the United States in September 2008 quickly
1
ADB. 2007. Report and Recommendation of the President to the Board of Directors: Proposed Program Cluster,
Loan, and Technical Assistance Grant to the Republic of the Philippines: Development Policy Support Program.
Manila.
2
ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the
Republic of the Philippines for the Development Policy Support Program, Subprogram 2. Manila.
3
ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to the Republic of the Philippines: Development Policy Support Program, Subprogram 3. Manila.
4
ADB. 2009. Philippines: Reforming Investment Incentives. Manila; ADB. 2007. Philippines: Critical Development
Constraints. Manila.
2
spread to other developed economies and emerging markets. The impact of the GFC on
domestic Philippine financial markets was relatively muted. The major impact was on the real
economy and its feedback to fiscal policy. Economic growth slowed from 7.2% in 2007 to 3.8%
in 2008 and 0.9% in 2009. Fiscal policy was affected in two ways. First, the sharp slowdown
caused a 6% decline in tax revenue collection in 2009. Second, the government responded to
the GFC by expanding spending in social sectors and labor-intensive infrastructure, pushing the
national government’s budget deficit from 0.9% of gross domestic product (GDP) in 2008 to
3.9% in 2009. Public debt inched up to 58.0% of GDP in 2009 from 56.0% in 2008.
5. Subprogram 3 for 2009 built on reforms initiated under subprogram 2 for fiscal
consolidation and strengthening governance in public financial management and procurement.
It sharpened the focus on institutionalizing governance programs within agencies to ensure
longer-term sustainability and effective enforcement, strengthening the investment climate and
social assistance programs. Responding to the GFC, subprogram 3 included a series of new
policy measures that addressed the increased vulnerabilities and risks to the Philippine
economy of the GFC and their poverty impacts. Also in response to the GFC, an innovation was
added in subprogram 3: the post-Development Policy Support Program partnership framework
(P3F) and its forward-looking policy measures. The Government of Philippines, ADB, and the
Government of Japan agreed to the P3F, with policy measures creating the basis for post-
program policy dialogue and engagement until the end of 2011, which is expected to address
program sustainability. ADB and the Government of Japan have carried out joint review
missions for the P3F.
6. The expected outcomes of the program cluster were to increase investment through
improved fiscal sustainability and public financial management, a better investment climate, and
enhanced human capital and social inclusion. These outcomes were to be achieved through the
following outputs:
(i) Improve fiscal sustainability, maintain macroeconomic stability, and improve
creditworthiness by enhancing the quality of fiscal management by (a) increasing
tax revenues annually for 2006–2009 through tax policy reforms; (b)
strengthening tax administration and enforcement, as well as reducing revenue
leakages through improved governance; (c) reducing inefficient spending to
permit increased social and poverty-related spending; and (d) strengthening the
debt-management strategy to manage government contingent liabilities and risks
prudently.
(ii) Enhance governance in PFM by (a) improving PFM from budget preparation
through budget execution, accounting, recording, and reporting; (b) strengthening
performance management and improving public service delivery; (c) reforming
procurement; and (d) implementing anticorruption and enforcement strategies for
revenue-collecting agencies and key procurement agencies.
(iii) Improve the investment climate and promote rural development by (a) clarifying
and strengthening the legal and regulatory framework for investment and trade,
(b) facilitating infrastructure development through greater public–private
partnership and greater coordination of public infrastructure investments, and (c)
improving rural–urban connectivity.
(iv) Enhance human capital and social inclusion by improving the policy framework
for social protection, sustaining real spending on health and education, improving
the targeting of programs, piloting the conditional cash transfer (CCT) program
tied to performance outcomes in child education and health, refining public
employment programs, and establishing a national poverty monitoring and
3
response system to help mitigate the impact of the economic slowdown on

poverty.
7. The program had a set of expected prior actions (or policy triggers) supported by a
series of three single-tranche subprogram loans. Overall, 40 policy triggers were accomplished
under the program. 5 During the midterm review of subprogram 2 policy triggers, the policy
trigger on the ratio of tax revenue collection rate to GDP was assessed as partly accomplished,
and it was agreed with the government to drop this trigger and thereby align with the approach
ADB used in the Indonesian development policy support program, which avoids numerical
targets and forecasts for key macroeconomic policy triggers including revenue collection, and
instead monitors performance through the design and monitoring framework (Appendix 1). A
new policy trigger related to social inclusion was added to subprogram 2 and was accomplished.
Also during the midterm review of subprogram 3 policy triggers, it was agreed to add three new
policy triggers to support government efforts to respond to the unexpected effects of the GFC on
the economy. These triggers are related to amendments to Philippine deposit insurance
legislation, ways to accelerate national government budget disbursements, and poverty
monitoring.
II. EVALUATION OF DESIGN AND IMPLEMENTATION
A. Relevance of Design and Formulation
8. The program was highly relevant in design and formulation, as it was embedded in the
government’s reform agenda as articulated in the government’s Medium-Term Philippine
Development Plan6 and sector strategies and supported by development partners through the
Philippines Development Forum. 7 ADB’s country strategy and program, 2005–2007 indicated
that ADB would consider cofinancing the proposed single-tranche development policy loan
contemplated by the World Bank in its country assistance strategy, subject to the government’s
continued progress in fiscal reform. 8 With a series of tax revenue-enhancing measures
implemented in 2005 and 2006, the government far exceeded the fiscal target in the country
strategy and program of a national government budget deficit of 1.4% of GDP by 2007 (the
actual deficit was 1.1% of GDP in 2006 and 0.2% in 2007) and provided the basis for
commencing the program.
9. The program was designed to promote a commitment to policy dialogue and reform.
Drawing on developments in good practice for program lending, the cluster design included (i) a
series of single-tranche operations with a well-defined medium-term framework specified at the
outset and including completed high-impact reforms prior to Board consideration; (ii) triggers for
subsequent subprograms as the basis for continuous dialogue among the government,
development partners, and stakeholders; and (iii) a small number of well-targeted policy actions
designed to achieve high-impact outcomes in priority sectors.
10. The program for the Philippines focused on a broad policy agenda that addressed
thematic and crosscutting issues of fiscal sustainability, governance and anticorruption policy,
the investment climate, and protecting spending on social sectors, all of which were key
5
Subprogram 1 had 13 policy triggers, subprogram 2 had 11 policy triggers, and subprogram 3 had 16 policy
triggers. In addition to the triggers there were monitored policy milestones in support of the triggers.
6
Government of the Philippines. 2004. Medium-Term Philippine Development Plan 2004–2010. Manila.
7
Philippines Development Forum. 2005. About the Philippines Development Forum. http://pdf.ph/about.htm
8
ADB. 2005. Country Strategy and Program: Philippines, 2005–2007. Manila.
4
outcomes and outputs of the ADB country strategy and program (footnote 8). The program
emphasized the achievement of measurable policy outcomes and results, while leaving detailed
policy prescriptions to programs and projects in individual sectors. In this way, the program
provided the basis for ADB’s sector loan programs and projects. For example, the program set
out broad policy outcomes for the CCT program in 2007, which elevated it to the national
agenda and laid the foundation for a much larger ADB sector program on rolling out the CCTs in
2009.9
B. Program Outputs
11. Outputs under the program are grouped into four components: (i) improve fiscal
sustainability, maintain macroeconomic stability, and improve creditworthiness; (ii) enhance
governance in PFM; (iii) improve the investment climate; and (iv) enhance human capital and
social inclusion.
1. Improve Fiscal Sustainability, Maintain Macroeconomic Stability, and

Improve Creditworthiness
12. In 2002, a critical fiscal situation emerged as the deterioration in tax revenues was
compounded by poor governance in tax collection, PFM, and corruption in procurement. The
critical fiscal situation transmitted into macroeconomic instability as the peso depreciated to as
low as P56 to the dollar and nonfinancial public sector debt reached 101% of GDP in 2005. The
program focused on supporting the government’s fiscal consolidation program that began in
2005. This comprised three areas: (i) fiscal discipline with the aim of balancing the national
government budget by 2010 and reducing the national government public debt ratio, (ii) a
sustainable increase in tax revenues, and (iii) improved public debt management.
13. Fiscal discipline. The program aimed to lower government budget deficits and the debt-
to-GDP ratio as a prerequisite for creating fiscal space to protect priority spending, which had
suffered expenditure suppression from 2002 to 2005. All fiscal-related policy triggers were met
under the program. Government measures reduced the nonfinancial public sector deficit from
4.8% in 2004 to a surplus for 2006–2008, exceeding program expectations. This reduction in
the nonfinancial public sector deficit was aided by a substantial reduction in the national
government budget deficit, from 3.8% of GDP in 2004 to 0.2% in 2007 and 0.9% in 2008. These
were major fiscal consolidation achievements and contributed significantly to improving the
Philippines’ credit rating outlook during this period, as Standard and Poor’s and Moody’s
upgraded the Philippines credit rating outlook from negative in 2005 to positive in 2008.
Corresponding with the improved fiscal deficit situation, the ratio of nonfinancial public sector
debt to GDP fell from 101.0% of GDP in 2003 to 61.0% in 2008, and the national government
debt decreased from 72.0% of GDP in 2005 to 56% by the end of 2008.
14. The GFC that erupted in September 2008 disrupted the Philippine economic growth path
and efforts toward fiscal consolidation. Fiscal consolidation from 2006 to 2008 attributed in part
to the contribution of policy actions under subprograms 1 and 2 created fiscal space for the
government to provide for a modest fiscal expansion in the order of 3.0%-4.0% of GDP in 2009.
The stimulus came from increased infrastructure and social expenditures and cash transfers to
9
ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Loan, Technical
Assistance Grant, and Administration of Technical Assistance Grant: Republic of the Philippines: Social Protection
Support Project. Manila.
5
the poor through the CCT program. The sharp cyclical downturn in the economy and weak tax
administration combined to affect the fiscal situation through an actual decline in tax revenues of
6.0% in 2009. With the increased spending and falling revenues, the national government
budget deficit came in at 3.9% of GDP in 2009.
15. Tax revenue sustainability. The government recognizes that ensuring that priority
spending is sustainable within the budget framework over the medium term requiring significant
efforts to raise tax revenues. Tax revenue collection as a share of GDP significantly declined
after the Asian financial crisis in 1998, and the reduction was redressed only after major tax
revenue-enhancing measures were implemented in 2005 and 2006. Under the program, the
government’s approach to raising sustainable tax revenue collection comprised three main
areas of reform, to (i) increase and expand coverage of key taxes such as the value-added tax
(VAT), (ii) implement its tax administration reforms that began in 2007, and (iii) enhance and
institutionalize its anticorruption initiatives in the Bureau of Internal Revenue (BIR) and the
Bureau of Customs (BOC).
16. These consequences of these reforms produced mixed results under the program but
were on balance a positive outcome. During subprogram 1, tax revenue collection surpassed
expectations and increased by 19.0% in 2006, increasing the tax-to-GDP ratio by 1.1
percentage points over 2005, and was a major factor in bringing down the government deficit in
2006 and 2007. The increase in tax revenues was achieved by several important tax reforms,
including broadening VAT coverage and increasing its rate from 10.0% to 12.0%.
17. Growth in tax collection slowed in 2007 and 2008. Substantial improvements in
collections were made in selected taxes in 2008: corporate income tax collection increased by
18.3% over 2007 levels, and excise tax collections on tobacco products improved by 18.8%.
However, the collection of other taxes was poorer. VAT collections under BIR's jurisdiction fell
by 3.2% in 2008 from 2007 levels. Poor compliance with VAT appeared to occur in the services
sector, especially retail and trade, which has a large number of small taxpayers. The prevalence
of VAT tax exemptions (causing breaks in the VAT chain and thereby weaker self-compliance)
and generous deductions from taxable income in the growth sectors of the economy continue to
limit growth-induced tax collection. With slower growth in tax collection in 2007 and 2008, the
tax-to-GDP ratio remained relatively constant in the range of 14.0%–14.3%, thereby technically
failing to achieve the subprogram 2 policy trigger of an increase in the tax-to-GDP ratio of 0.5
percentage points by the end of 2007. With hindsight, the formulation of the trigger was
inappropriate. The trigger is a revenue forecast and therefore vulnerable to changes in such
underlying macroeconomic assumptions as nominal GDP growth, inflation, and the peso
exchange rate, which changed during 2007. The tax trigger was dropped to align with the
approach ADB used in the Indonesian development policy support program, which avoids
numerical targets or forecasts for key macroeconomic policy triggers including revenue
collection in favor of monitoring performance through the design and monitoring framework. The
program intensified efforts to improve tax administration.
18. The BIR had a comprehensive tax administration reform program from 2006 to 2010, but
implementation was delayed and much slower than initially expected. This was partly because
the reform program was complex and the BIR’s budgetary resources for long-term reforms were
critically constrained. Staff resistance, vested interests, and corruption contributed to the slow
start of reform as it was rolled out to regional tax offices. The government did make progress in
addressing some of these governance problems during subprogram 3. Through the 2009
national government budget, the Department of Budget and Management allocated an
additional P1.0 billion in funds to the BIR to hire up to 3,000 new technical staff nationwide,
6
raising its manpower by 25%. The BIR made it a priority to institutionalize anticorruption in its
Run after Tax Evaders (RATE) program, as lessons from subprogram 2 of the loan program
indicate that it is necessary to institutionalize such initiatives within agencies to ensure they are
sustainable, permanent, and effective deterrents to tax evasion. The BIR institutionalized RATE
cases in a newly established special prosecutions division.
2. Improve Governance in Public Financial Management and Reduce

Corruption
19. The government, ADB, and other development partners have identified several core
areas to be addressed, from budget preparation to budget execution and reporting, that will
require a much longer-term coordinated effort in capacity development. To address these issues
the program cluster included measures in four areas to improve PFM: (i) implementing a
medium-term expenditure framework, (ii) enhancing transparency in budget execution, (iii)
implementing a procurement reform law, and (iv) enhancing the integrity of expenditure. It also
provided technical assistance (TA) attached to subprogram 2 and 3 to help the government
implement PFM reforms.
20. Medium-term expenditure framework. Progress was made in accomplishing key

policy triggers. The Department of Budget and Management (DBM) made gradual progress in
implementing the medium-term expenditure framework. By the end of the program in 2009, the
DBM had produced forward estimates for a 3-year rolling period for all 22 line ministries and
attached agencies and issued them as indicative budget ceilings for 2010 and 2011. The
government strengthened public sector performance management through the DBM’s more
aggressive implementation of performance-based budgeting and the final adoption of an
organizational performance indicators framework for measuring the budget outcomes of line
agencies. The DBM completed the rollout of the latter framework to four constitutional offices—
the Civil Service Commission, Commission on Elections, Commission on Audit (COA), and
Ombudsman Office—and state universities and colleges for the 2009 budget. Room exists to
improve the forward estimates and, in particular, provide line ministries with flexibility to set
budget allocations within the forward estimates.
21. Transparency in budget execution. Progress was made in accomplishing policy

triggers in this component. The DBM gradually improved transparency in the budget by
following key measures. First, as an underlying cause of weaknesses in budget execution,
recording, and reporting is the absence of an integrated government financial management
information system (GFMIS), the government took initial steps toward achieving consensus
among stakeholders on the design and development of an integrated GFMIS. During
subprogram 3, the DBM facilitated the establishment of a GFMIS taskforce to develop a road
map. The draft memorandum of agreement among the DBM, Bureau of the Treasury and COA
was a completed policy trigger for subprogram 3. The three parties formally signed the
memorandum on 10 January 2010, providing the coordination mechanism for developing a
GFMIS road map. ADB TA attached to subprograms 2 and 3 is currently being provided to
support the efforts of the taskforce. Second, the government began reforms to strengthen
internal control and internal audit in government agencies. Guidelines for internal control
systems were developed and printed for dissemination to agencies, corporations owned and
controlled by the government, and local government units (LGUs). With TA from the Australian
Agency for International Development, the DBM piloted internal control system guidelines in two
key spending agencies, the Department of Public Works and Highways and the Department of
7
Education, in the fourth quarter of 2008. In collaboration with the Australian agency, ADB is
piloting internal control systems in more agencies in 2010 under the P3F.
22. Procurement. Substantial progress was made under the program in implementing the
procurement reform law of 2003, with key policy measures either fully or substantially
accomplished. The Philippines electronic procurement portal began operation in 2007. By the
end of 2008, all 12 Government Procurement Policy Board (GPPB) member agencies were
posting bid opportunities and award notices, compared with 9 agencies in 2007. The GPPB
made progress in expanding outreach beyond its members. Subprogram 3 saw the
Procurement Transparency Group operationalized with the government and major civil society
organizations as members and begin tracking and monitoring the procurement of selected
infrastructure projects, from bid notice posting to the selection of the winning bid. 10 Regular
updates of procurement monitoring are posted on the group’s website.11
23. Expenditure integrity. The program included measures to promote governance and
address corruption in the key revenue and procurement agencies. These measures supported
the governments key anticorruption programs such as the RATE at the BIR and Run after the
Smugglers (RATS) at the BOC. While over 180 RATE and RATS cases were filed with the
Department of Justice during the program, only a few of cases were successfully prosecuted in
the courts. Resource constraints at the Department of Justice limited its capacity to deal with tax
cases. A key lesson during subprograms 1 and 2 was that such anticorruption programs should
be institutionalized in the agencies. During the review of subprogram 3, a new policy trigger was
introduced to institutionalize the RATE program in the BIR. In February 2009, the BIR issued
revenue administrative order number 10-2009, transforming the Enforcement Service into the
Enforcement and Advocacy Service under the Legal Division, which was a major achievement
in strengthening enforcement capability in the BIR.
3. Investment Climate
The program had measures to clarify and strengthen the legal and regulatory framework for
investment, improving trade facilitation, and facilitating infrastructure development. It was
successful in implementing the policy measures, and the investment rate picked up modestly
during the program. The program supported the government’s efforts to reduce business
transaction costs, adopting a sequential approach through policy triggers. The first trigger was
the government’s developing and endorsing a strategic framework for addressing red tape
through regulatory impact assessment. The second trigger mandated the National Economic
and Development Authority (NEDA) to begin advocating a regulatory review program including
the establishment of an oversight agency or unit mandated to advocate regulatory impact
assessments across the government. A memorandum order was drafted and, in July 2009,
submitted to the President's Office for approval. The order mandated NEDA to begin advocating
regulatory impact assessment and developing an action plan for institutionalizing it. Other
reforms under the program included the Department of Trade and Industry’s continued
improvements in business registration and promoting best practice registration in LGUs and
measures to enhance transparency and lower trade facilitation costs. The BOC worked with 21
10
The group, established under subprogram 2, comprises representatives from the GPPB, key procurement
agencies, and six civil society organizations (CSOs) nominated by the CSO Forum, a voluntary gathering of major
CSOs. The six CSOs are the Bishops–Businessmen Conference, Makati Business Club, Transparency and
Accountability Network, Ateneo Government Watch, Confederation of Filipino Consultants, and Procurement
Watch.
11
www.procurementtransparencygroup.wordpress.com.
8
agencies that issue import permits to implement the national single window and also
implemented the import assessment system. The government submitted to the Senate for
concurrence the instrument of accession to the Revised Kyoto Convention to promote greater
transparency and efficiency in customs facilitation.
4. Human Capital and Social Inclusion
27. This component of the program supported the government’s agenda to improve social
sectors with increased funding, improve governance in the budget process and procurement,
engage civil society in monitoring procurement, and improve the targeting of poverty-reduction
programs—all of which were achieved under the program. Fiscal consolidation provided fiscal
space to increase critical public spending. Importantly, the program elevated support for the
CCT program to the highest political levels by supporting the Department of Social Welfare and
Development’s test of the CCT program with 20,000 households in 2007, piloting of the CCT
program with 337,345 households in 2008, and scaling it up to reach over 700,000 households
in 2009. The introduction and scaling up of the CCT program came at a critical time, coinciding
with the start of the GFC and allowing the government to provide targeted and timely social
assistance to the poor. These accomplishments provided the groundwork for a much larger
sector program for the national rollout of the CCT program in 2009 (footnote 9).
C. Program Costs and Disbursements
28. The program was funded by a three single-tranche loans, each of $250 million, from
ADB’s ordinary capital resources. The Government of Japan cofinanced subprogram 2 with
¥9.29 million and subprogram 3 with ¥9.22 million. Three TA grants supported the program
cluster, one per subprogram, each amounting to $1,150,000 and financed by the Technical
Assistance Special Fund (TASF) with $800,000 and the government with $350,000.
29. Disbursements of the loan followed simplified procedures and related requirements for a
program loan. The loan proceeds were released in three single tranches relatively quickly. The
first subprogram loan of $250 million was disbursed on 22 February 2008 (1 day after loan
effectiveness and 14 days after ADB Board approval), the second subprogram loan of $250
million was disbursed on 20 November 2008 (1 day after loan effectiveness and 50 days after
ADB Board approval), and the third subprogram loan of $250 million was disbursed on 7
October 2009 (1 day after loan effectiveness and 22 days after ADB Board approval). So, all
disbursements occurred 1 day after subprogram loan effectiveness and, on average, 29 days
after Board approval.
D. Program Schedule
30. The program period was from November 2004 to December 2009. The commencement
date reflected the fiscal trigger in the country partnership strategy that allowed ADB to formulate
the program (para. 3). The program financially closed as planned on 31 December 2009.
E. Implementation Arrangements
31. The DBM was the implementing agency (IA) for subprogram 3. It was supported by line
agencies including the Office of the Ombudsman, Department of Education, Department of
Agriculture, Department of Health, Department of Public Works and Highways, Department of
Trade and Industry, and the NEDA. A program coordinating committee—chaired by the
undersecretary of the Department of Finance (DOF) and comprising officials of the DOF, DBM,
9
and NEDA—coordinated program implementation and sustaining actions with the DBM and the
line agencies involved in supporting the program
F. Conditions and Covenants
32. The program cluster accomplished 40 policy triggers. One policy trigger for subprogram
2 was dropped and replaced by a new one. The status of compliance with policy triggers for
each subprogram is in appendixes 2–4. In addition to the policy triggers, the program had 8
covenants on administering the program, all of which were complied with (Appendix 5).
G. Related Technical Assistance
33. Three TA grants complemented program implementation. Strengthening Investment

Climate and Competitiveness, attached to subprogram 1, supported developing reforms to
strengthen the investment climate and competitiveness (footnote 1). Several analytical reports
were produced and will be used as inputs for formulating an investment climate program loan
expected for 2012. The TA was financed under the TASF for $800,000. Improving Public
Expenditure Management, attached to subprogram 2, supported the government’s
implementation of its PFM reform agenda (footnote 2). The TA was financed under the TASF for
$800,000. Improving Public Expenditure Management 2, attached to subprogram 3, continued
support for the government’s PFM reforms (footnote 3). The TA was financed under the TASF
for $800,000. The two TA projects on PFM are designed to strengthen capacity in the DBM and
line ministries to implement PFM reforms and are part of a series of TA projects on PFM
envisaged from 2008 to 2012. A third, standalone TA on PFM is in the pipeline for 2011.
34. All activities under the investment climate TA were completed by April 2010, and the TA
is expected to financially close in January 2011. The PFM TA projects are expected to be
completed in 2012.
H. Consultant Recruitment and Procurement
35. The investment TA engaged seven individual consultants and two firms. It was planned
that individual consultants would be engaged because of the diverse skill requirements of the
TA. The first firm was engaged to carry out two major surveys. The second firm was a research
institute that had specialized staff skills in farmer supply chains. No problems were encountered
in consultant recruitment or procurement. The completion of the farmer supply chain study
under the research institute took much longer than anticipated and delayed the financial closure
of the TA. The primary reason was that field surveys were delayed to coincide with the harvest
of mangoes, the selected product. Fifteen individual consultants are envisaged under the first
PFM TA and 10 consultants under the second. The first was slow to start recruitment as a
trigger to activate the TA—the signing of the memorandum of agreement by the DBM, Bureau of
the Treasury, and COA for establishing the GFMIS taskforce to develop the action plan for
implementing the GFMIS in the Philippine government—was completed only on 10 January
2010. The first national coordinator at the DBM has been engaged, and the international GFMIS
coordinator in the COA is expected to be mobilized in December 2010. All other recruitment
should be completed in the first quarter of 2011. Under the second PFM TA, all recruitment for
the public debt management component was completed in July 2010. Initially, the TA envisaged
one international consultant, but, at the request of the DOF, two minor changes in TA
implementation were made, to engage three international consultants for public debt
management: a public debt management specialist, an investment specialist, and an
10
institutional specialist. The debt sustainability assessment has been completed, and the first
draft of the debt management strategy is expected by the end of 2010.
I. Performance of Consultants
36. Performance evaluation reports for consultants under the investment climate TA are
completed, with six consultants rated excellent and one consultant and one firm rated
satisfactory. One firm was inadvertently not rated before the 60-day rating period expired.
J. Performance of the Borrower and the Executing Agency
37. Overall, the performance of the government and its agencies involved in the program is
rated highly satisfactory. The government, led by the DOF as chair of the coordinating
committee, made significant progress in fiscal consolidation and debt sustainability during and
after the program, with substantial progress made in implementing the procurement reform law
of 2003, medium-term expenditure framework, and organizational performance indicator
framework. The government's commitment to reforming social assistance and developing well-
targeted assistance linked to change in household behavior is demonstrated by the rapid
implementation and scaling up of the CCT program. The government was responsive to
proposed changes to the program to improve tax administration, such as the new trigger for
subprogram 3, and in mitigating the effects of the GFC on the economy.
38. Coordination among the DOF, DBM, NEDA and other IAs was a hallmark of the
program. As the executing agency of the program, the DOF has closely coordinated with ADB,
the Government of Japan, the IAs, and other agencies to satisfactorily comply with covenants
and the conditions for releasing subprogram loans. The coordinating committee, chaired by the
undersecretary for finance, was effective in coordinating the large number of IAs and other
development partners engaged in these policy areas, which reduced transaction costs. This
coordination mechanism was supported by the Philippines Development Forum, which provided
a platform for dialogue among stakeholders and development partners and the development of
action plans.
K. Performance of the Asian Development Bank
39. ADB’s performance has been satisfactory. This is evidenced by the successful releases
of the three subprogram loans within the original program period and the rapid disbursement of
loans, with disbursement averaging 29 days after Board approval of the loans and 1 day after
loan effectiveness. The program cluster financially closed on the originally scheduled date of 31
December 2009 and was closely and continuously monitored by the Financial Sector, Public
Management, and Trade Division from early 2007 to the end of 2009. ADB and the Government
of Japan continue to monitor reforms through the post-program partnership monitoring
framework. The program outputs were realized by the combined efforts of ADB and the DOF.
40. As part of project completion review, the government provided its assessment of the
program through a questionnaire completed by the DOF, DBM, GPPB, and NEDA in March
2010. Overall, the government rated the program highly satisfactory in terms of relevance,
efficiency, effectiveness, and likely sustainability. The government concurred that targets may
be inappropriate as policy triggers and better used in the design and monitoring framework. The
full results of the survey are in Appendix 6.
11
III. EVALUATION OF PERFORMANCE
A. Relevance
41. The program cluster is rated relevant when formulated in 2006, given the urgent need for
fiscal consolidation in 2004 and 2005; weaknesses in PFM affecting budget planning, execution,
and reporting; the slow implementation of the procurement reform law of 2003; the declining
investment rate; and the urgency of improving social assistance to the poor—all considered
necessary for the country's economic growth and poverty reduction. The program cluster is
rated relevant throughout the program period in terms of both program and policy design.
42. The program contributed to ensuring that fiscal consolidation remained on track and
public debt became sustainable. These priorities were achieved, creating fiscal space for
increasing spending on critical social priorities. Fiscal consolidation also supported the
government’s efforts to maintain macroeconomic stability from 2006 to 2009. International credit
rating agencies upgraded the Philippines’ sovereign credit rating outlook twice during the
program, primarily in recognition of the swift turnaround in the fiscal situation. PFM reforms in
particular, accelerating the implementation of the procurement law with the commencement of
the electronic procurement portal in 2008, establishment of the procurement transparency
group, and procurement capacity development in LGUs, helped improve transparency,
disbursement rates, cost savings in procurement, and selected efficiency indicators in budget
execution.
43. The reforms to social assistance programs and the piloted CCT program in 2007 and
2008 and its scaling up in 2009 improved the targeting of assistance to the poor, promoting
better education and health outcomes in poor families. The CCT program came at an
auspicious time, coinciding with the surge in global prices for food and other commodities in
early 2008 and the GFC. The CCT program, combined with temporary public employment
creation schemes, helped to mitigate the worst effects of the economic downturn on the poor.
B. Effectiveness in Achieving Outcome
44. The program is rated effective in achieving its outcome, as it strengthened the fiscal
sustainability and macroeconomic stability necessary for investment growth to take place over
the long term. The improved investment climate and conditions for human capital development
through reforms to education and the CCT program have contributed to increases in pubic and
private investment spending, including social spending.
45. The improved investment situation is reflected in national income accounts. Investment
grew by only 1.1% per annum in real terms (adjusted for inflation) from 2000 to 2005. Under the
program, investment picked up strongly, growing by 7.4% per annum on average from 2006 to
2010, with economic growth averaging 5.0% per annum over the same period. Investment
picked up in 2006, and its recovery accelerated to reach a real growth rate of 17.4% in 2007.
This growth continued until July 2008, before the GFC and the subsequent slowdown in the
economy in 2009. As investment is highly procyclical, it fell by 8.0% in 2009 and rebounded
strongly in the first semester of 2010, expanding by 16.2%. During the program, the share of
investment in GDP increased from 13.5% of GDP, measured in current (or nominal) prices, in
2006 to peak at 15.3% of GDP in 2008, fell to 12.8% in 2009 as a consequence of the GFC, and
recovered to 15.0% by mid-2010. Overall, the investment rate increased 1.5 percentage points
from 2006 to 2010. The disadvantage of measuring the investment rate in terms of current
prices is that it does not control for price changes. A better measure is the real investment rate,
12
which controls for price changes by using constant prices. The real investment-to-GDP rate
increased from 17.5% of GDP in 2006 to 19.4% in 2010, or by 1.9 percentage points. The
design and monitoring framework had two performance indicators for the program outcome: (i)
upgrades in sovereign credit ratings from the international rating agencies and (ii) an increase in
the investment rate by 2%–4% of GDP. The Philippines enjoyed two upgrades in its sovereign
credit rating outlook, from BB– in 2005 to BB+ in 2008. The real investment-to-GDP rate
improved by 1.9 percentage points by mid-2010, falling just short of the target for the program.
46. The program supported the government’s efforts to lay the groundwork for a better
investment climate in several respects. Fiscal consolidation, the simplification of regulations, the
establishment of the enterprise registration system, and the handbook on good practices in
enterprise registration by LGUs all helped to lower transaction costs for business start-ups. The
program’s support for basic education reforms and the CCT program, linked to education and
health outcomes, helped lay the foundations for a better-educated workforce and poverty
reduction.
47. Much remains to be done to improve the investment climate. ADB estimates that the
Philippines underinvests by as much as 4.0% of GDP. Improving competition policy, regulations,
and tax policy—and establishing a modern, public–private partnership (PPP) framework for
investment and a deeper, more diversified and efficient financial sector—are key to improving
investment in the longer term (para. 56).
C. Efficiency in Achieving Outcome and Outputs
48. The program is rated efficient in achieving its outcome and outputs, as it was efficiently
managed by the MOF, the IAs, and ADB. The design of the program cluster—including the use
of expected prior actions for subsequent subprograms enveloped by a medium-term
framework—and the flexibility built into the program for responding to changes in the external
environment enabled the program to be managed efficiently. Forty policy triggers were
accomplished within the original time frame. The program completion review survey asked the
government to rate the program on a scale from 1 (not efficient) to 5 (highly efficient), and the
government rated it 4.3, indicating it was highly efficient. The highest ratings were for the
provision of appropriately designed TA, responsiveness in the program framework to changes in
the external environment, and the provision of timely policy dialogue on program policy triggers
and milestones.
D. Preliminary Assessment of Sustainability
49. The program's sustainability is rated likely. All outputs achieved under the program have
proven to be sustainable in the year since it ended. All regulatory reforms are still in place.
Fiscal consolidation under subprograms 1 and 2 contributed to creating fiscal space that
strengthened the economy’s resilience to the GFC. While the fiscal situation remains
manageable, there are nevertheless significant fiscal risks exacerbated by the GFC. The GFC
affected the economy and fed back into the government’s fiscal policy, causing the national
government budget deficit to increase to 3.9% of GDP in 2009 and an expected 3.6% in 2010
(paras. 4 and 14). The government has announced its consolidation plan, and the national
government deficit is expected to fall to 2.0% of GDP by 2013. This planned public debt remains
broadly sustainable though vulnerable to shocks, in particular peso depreciation and another
sharp slowdown in the economy. With ADB TA, the government has carried out its own debt
sustainability assessment, is drafting its first-ever debt-management strategy, and will lay out its
debt strategy and organizational reforms for 2011, with the objective of maintaining public debt
13
sustainability and reducing debt-servicing costs in the national budget. The debt strategy will be
updated annually. The main risks to sustainability are weaknesses in tax policy and tax
administration, where reforms have produced only modest efficiency gains. This is a complex
reform agenda and will require a long-term effort. The new administration is reluctant to initiate
tax increases and favors instead Congress-initiated tax increases. In the absence of new tax
increases and the consolidation of tax exemptions, real (inflation adjusted) growth in tax
revenue collections will be limited, constraining government priority spending initiatives over the
medium term.
50. The PFM reforms remain in place, and the government’s reform agenda continues. The
GFMIS taskforce is active, with the support of ADB TA, and a road map for a GFMIS is being
developed. Procurement reforms remain in place, and the Philippines electronic procurement
portal is fully operational. Capacity development for procurement in LGUs will need to continue
for some time.
51. Regarding the investment climate, there is now strong government commitment to
developing a credible PPP framework for infrastructure. ADB is preparing TA to assist with
creating an enabling policy and legal environment for PPPs. The program includes the post-
program partnership framework to continue post-program policy dialogue in key areas, and this
helps address issues of program sustainability.
E. Impact
52. The program was made substantial progress in achieving impact. Its intended impact
was to contribute to a sustainable recovery with economic growth in the range of 6%–7% by
2010 and to reduce unemployment to 6.5% by 2010. The economic growth rate reached 7.2%
in 2007, the highest in 32 years. External shocks in 2008 contributed to a slowdown to 3.8% in
2009 and 0.9% in 2009. The economy rebounded in the first semester of 2010 to reach 7.9%.
Growth for 2010 is expected in the range of 6.0%–7.0%, achieving the program impact target.
Average economic growth over the period was above 5.0% per annum, with per capita income
growth at about 2.5% per annum, for the highest rate and longest expansion since the 1970s.
ADB estimates that the Philippines’ potential growth rate for the long run is in the range of
5.0%–5.5%, suggesting that growth performance during the program was in line with the
Philippines’ long-term growth potential. The unemployment rate dropped to 6.9% in July 2010,
within the program’s target range.
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS
A. Overall Assessment
53. The program was implemented as conceived and was relevant in program and policy
design to the government’s reform agenda, ADB’s partnerships strategy with the Philippines,
and ADB’s strategic objectives at the time of approval. With the government’s strong
commitment, albeit constrained by the highly contestable political environment and a powerful
Congress, a well-sequenced reform framework, effective high-level coordination among
executing and implementing agencies, and Government of Japan’s cofinancing of subprograms
2 and 3, the program was effective and efficient toward achieving its expected outputs and
outcomes. The government’s strong ownership of program reforms and ongoing commitment to
further reforms, and periodic reviews in the P3F, allow the sustainability of the program to be
rated likely. Overall, the program is rated successful.
14
B. Lessons
54. This performance evaluation suggests several lessons:

(i) A program cluster approach with prior expected actions enveloped by a medium-
term framework with flexibility built into its design is an effective approach to
supporting government reforms. It promotes continuous dialogue with the
government on reforms and allows for program changes to effectively and
efficiently respond to new or worsening risks to the economy and shifts in
government policy priorities. This was demonstrated in subprogram 3, with the
introduction of new measures to address heightened macroeconomic risks to the
economy and help the government effectively provide a fiscal stimulus package
in 2009.
(ii) Using numerical targets such as the tax revenue-to-GDP ratio as triggers, as
initially done in subprogram 2, should be cautiously approached. Ambitious
numerical targets that are not supported by a realistic reform timetable are likely
to fail.
(iii) If necessary, triggers should be supported by TA, as were the subprogram 2 and
3 PFM triggers. During the review of subprogram 2 policy triggers, the
government and ADB identified gaps in government budget execution, internal
audit and controls, and reporting, acerbated by the underdevelopment of the
government’s computerized accounts system. The government asked ADB for
longer-term integrated TA to strengthen its PFM framework.
(iv) A program should have a well-defined exit strategy. This program was designed
for implementation over 3 years with specified medium-term targets. It
successfully closed upon completing subprogram 3. Without an exit strategy, the
program risks reform fatigue and may encourage lax compliance with policy
reforms. Introducing the post-program partnership framework during subprogram
3 proved to be effective in ensuring the sustainability of key reforms.
C. Project Related and General
55. Post-program policy framework. First, the P3F ensures the continuation of a
structured policy dialogue with the government and therefore supports the sustainability of
program reforms. Greater use of P3Fs should be made in programs. Second, improvements in
PFM are critical for the effective delivery of public services, whether financed through the
government budget or through development partners’ projects. Therefore, it is important that
ADB social and economic sector programs include or promote PFM reforms in their respective
sectors.
56. Further action or follow-up. The following recommendations relate to initiatives under
the P3F and are important to ensure likely sustainability of program reforms:
(i) Fiscal responsibility legislation. While the government's fiscal policy and
medium-term target of a balanced budget has served the Philippines very well in
achieving consolidation, the global crisis has provided an opportunity to explore
with stakeholders alternative fiscal rules. Moreover, the balanced budget target
has been changed three times since 2005, potentially undermining its credibility.
An increasing number of countries have adopted fiscal rules to anchor fiscal
policy, and these rules are generally formalized through legislation such as fiscal
responsibility acts. Rules may pertain to debt, budget balances (overall or
primary), expenditures, or some combination of these. For example, Thailand
does not set budget ceilings but anchors fiscal policy in debt rules set in
15
legislation and Ministry of Finance policy guidelines for public debt. The P3F
includes a measure to assess fiscal policy and explore the feasibility of
formalizing fiscal rules. ADB assistance on debt management complements this
effort.
(ii) Sustaining priority spending. The government’s priority is to increase spending
in social sectors and public infrastructure. Achieving this goal will require
intensified efforts to raise tax revenues. As discussed in previous Board
documents on the program, revenue management is challenged by (i) the
proliferation of tax incentives in growth sectors of the economy that have resulted
in foregone revenues, (ii) generous income tax deductions that have eroded the
tax base, (iii) a poorly structured excise tax regime, and (iv) weak tax
administration, including that of the VAT. Over the longer term, the government
will need to continue to address budget resource allocations to the BIR as it
implements its tax reforms and enhances tax administration regarding monitoring
tax credits and managing tax arrears, tax audits, and anticorruption programs.
(iii) Investment climate. The government has prioritized improvements in the
investment climate to sustain economic growth, generate employment, and
reduce poverty. There is strong commitment to modernizing PPP in the
infrastructure policy framework to support investment. Competition and
regulatory policy are also identified as priorities.
16 Appendix 1
DESIGN AND MONITORING FRAMEWORK: INDICATORS FOR DEVELOPMENT IMPACT
Design Performance Targets and/or Assumptions

Summary Indicators Update to Subprogram 3 And Risks
Impact By 2010, revised MTPDP Assumption
goals attained: Macroeconomic and political
(i) Sustainable higher (i) Economic growth 7.2% in stability
economic growth (i) Real gross domestic 2007, 3.8% in 2008, 0.9%
product (GDP) growth at in 2009 and 7.9% in Risks
6%–7% semester 1 of 2010 over Lack of effective coordination
(ii) Reduced the same period in 2009. among national government
unemployment departments
(ii) Unemployment reduced (ii) Unemployment rate at
from 8% in 2005 to 6.5% 6.9% in July 2010. A prolonged and severe global
in 2010
a recession will lead to increase
fiscal stress, and higher
unemployment and poverty.
Outcome By 2009: (i) Standard & Poor’s Assumption
Increased investment (i) Upgrade in sovereign upgraded outlook from Government maintains fiscal
credit rating (BB-negative ‘negative’ in 2005 to expansion in 2009 and 2010
outlook or equivalent in “stable” in 2007 and to within a disciplined fiscal
2005) “positive” in 2008 framework. Can withstand a
second shock from global
(ii) Increase in share of fixed (ii) Investment increased by financial markets in 2009.
capital to GDP in the 1.5 percentage points
range of 2 to 4 percentage (current prices) and 1.9 Risk
points (14% in 2006) percentage points Political and regulatory
(constant 1985 prices) uncertainties may continue to
from 2006 levels. prevail.
Outputs By end-2009 (with baseline Assumption
2004/05 indicators in Government stays on course
1. Improved fiscal brackets): (i) CPS surplus of 0.1% of with key policy reform measures,
sustainability, (i) Consolidated public sector GDP in 2006; 0.4% in and effectively able to liaise with
maintained deficit of 0.5% in 2009 and 2007; 0.4% in 2008 Congress
macroeconomic balanced in 2010 (4.8% in
stability and 2004) Risks
improved (ii) National government deficit Weak interagency coordination,
creditworthiness (ii) National at 0.2% of GDP in 2007; and staff capacity to implement
government 0.9% in 2008; and 3.9% in reforms
• Reduced national budget deficit of 2009. Resistance from government
government and 1% in 2008, 0.5% agencies and stakeholders to
consolidated public in 2009, and participate in reforms and share
sector deficits balanced in 2010 data.
(deficit of 2.7% in
2005)
b 2010 elections may encourage
populist policies hurting fiscal
discipline and economic
efficiency.
• Strengthened public (iii) Nonfinancial public sector (iii) Nonfinancial public sector
debt management debt reduced to 58% by debt reduced to 61% in
systems 2009 (87% in 2005)c 2007; stabilized around
this level in 2008
(iv) National government debt
reduced to 50% by 2009 (iv) Debt at 57.3% of GDP in
(72% in 2005) 2009.
• Increased tax (v) Tax revenue (v) Tax collections as % of
revenue and its long collections GDP fell from 14.3% in
term sustainability increased 2006 to 14.0% in 2007
to 15.0% of and remained at that level
GDP by 2010 in 2008. Revenues fell 6%
(13% in 2005) in 2009 with the sharp
Appendix 1 17

slow down in the
economy.
• Efficient and (vi) Increased number of RDO (vi) 97% of RDOs

transparent tax computerized systems (50 computerized in 2008
revenue RDOs in 2006)
administration
• Enhanced stability in (vii) Maintain low inflation (vii) Inflation averaged 9.6% in
the macro-economy 2008; converged back
towards its inflation target
of 3-5% for 2009: inflation
in 2009 was 3.2%)
2. Enhanced public (viii) OPIF completed for all 23 (viii) OPIF completed for 22 of
financial management national departments and national departments and
their attached agencies attached agencies by
• Strengthened and rollout to 2007; and 35 other offices,
institutional and constitutional bodies ARMM, the judiciary, the 4
reporting started.d constitutional offices, and
framework for 112 SUCs by 2009.
effective public (ix) Increase disbursement
financial utilization rates for key (ix) Above 85% for all four
management, and procurement agencies (DA, agencies in 2009.
improved DPWH, DOTC, DepED –
performance baseline 75-85% in 2008)
management and
delivery of public
services
• Procurement (x) 100% of all publicly bid (x) Increased posting of
systems made more opportunities and awards notices and bids for 8/9 of
efficient, useable, of central offices of 23 the 12 GPPB members in
and transparent national departments 2008 over 2007 levels,
posted on PhilGEPS and roll out to 4 non-
website GPPB member
departments in 2008.
• Strengthened (xi) Increased number of tax (xi) Corporate tax returns
anticorruption returns (baseline 2005, increased by 12%
programs in the 134,151 returns)
revenue agencies (xii) Six agencies at different
(xii) Growing number of stages of implementing
government agencies with integrity development
integrity development reviews
review action plans
substantially complied
with (none implemented in (xiii) Under MCC assistance,
2006) more than 15 prosecutors
trained in tax
(xiii) 15 investigators and investigations
prosecutors trained in tax
investigations (xiv) In early design stage.
(xiv) Monitoring and

performance indicators
system established at
NPS in 2008.
3. Investment (xv) Number of days to start (xv) Reduced to 59 days in
climate and up a new business 2007, to 59 days in 2008 and
infrastructure reduced (60 days in 2005) 53 in 2009.
18 Appendix 1

• Reduced business
transaction costs
• Improved (xvi) Share of gross public (xvi) Gross public investment
coordination of investment to GDP to GDP reached 2.7% in 2007
public-private increased by 1 to 2 and X in 2008
participation in percentage points (2.2%
infrastructure in 2005)
provision
4. Enhanced human (xvii) Coverage and use of the (xvii) As of March 2008, 451
capital and Social community-based municipalities, 32 cities, and
inclusion monitoring system 11,758 barangays
• Improved poverty increased to 75% of the
monitoring and LGUs
targeting (xviii) CCT piloted in 337,345
(xviii) CCT design completed, households in 2008 and scaled
national rollout started up to over 700,000 households
in 2009.
(xix) Cohort survival rates for (xix) Not yet available
elementary school
(2003/04 baseline =
63.6% for all; 68.1% for
females; and 59.5% for
males)
(xx) Coverage rate of fully (xx) Not yet available

immunized children for 3
main items increased to at
least 87% for all (2003
baseline =n 71.3% for
females; and 68.4% for
males)
(xxi) Social services (xxi) Social services spending

spending increased from 27% of budget
increased by in 2005 to 31% in 2008.
3%–5% of budget
in 2005 (27% in
2005)
Appendix 2 19
PERFORMANCE OF DEVELOPMENT POLICY SUPPORT PROGRAM, SUBPROGRAM 1

POLICY MEASURES
Policy Actions Summary of Actions Accomplished in 2006

1. Improved Fiscal and Macroeconomic Stability
1.1. Initiate reforms to reduce national (i) The Government reduced the national government deficit
government and consolidated public as a share of GDP from 3.8% in 2004 to 2.7% in 2005, and
sector deficits estimated to fall to 2.1% in 2006.
(ii) The consolidated public sector deficit as a share of GDP
fell from 4.8% (04) to 2.0% (05)
(iii) Reduced national government debt from 79% in 2004 to
72% in 2005, and non-financial public sector debt from 101%
in 2003 to 87% in 2005
1.2. Increase tax revenues and its long Government accomplished the following actions:
term sustainability through: (iv) increased coverage of VAT by including petroleum
products and professional services effective November 2005;
(i) Broadening the VAT base by
(v) raised the VAT rate from 10% to 12% in February 2006;
including petroleum products and
(vi) raised excise taxes on alcohol and tobacco products on
medical and legal professional services
average by 30% in December 2004;
(ii) Increase VAT tax rate from 10% to (vii) increased corporate tax rate from 32% to 35%
12%
These measures contributed to an increase in the share of tax
revenue to GDP from 13% in 2005 and to an estimated 14% in
2006.
1.3. Make tax revenue administration To support tax administration reforms the Government
efficient, transparent and fair. Start with undertook the following actions:
establishing a high level tax reform (viii) established a high level administration reform
management group at BIR to implement management group in the Bureau of Internal Revenue to
reforms implement reforms
(ix) development of the revenue enhancement action plan as
an initial reform initiative in BIR
2. Improved Governance in Public Expenditure Management and Anti-Corruption
2.1. Introduce measures to improve In 2006 the Government implemented several actions to
efficiency and transparency in public improve efficiency and transparency in public expenditure
expenditure management management. These included:
(x) implemented the Medium Term Expenditure framework
(MTEF) for the 2007 budget and incorporated in the Budget
Call on the basis of the budget strategy paper and forward
estimates for 2007-09, and multi-year expenditure framework
for health and education sectors.
(xi) approved and published budget releases of priority
projects and Internal Revenue Allocations (IRA) of LGUs by
positing on the Department of Budget and Management
website.
(xii) made initial progress in use of electronic financial
management systems in budget releasing, accounting, and
procurement.
2.2. Introduce reforms to strengthen In 2006 the Government initiated targeted civil service reforms
performance management and delivery to improve management performance and efficiency within the
of public services. public service. These included:
(xiii) agency logframes and MFOs, including department level
performance indicators, developed and agreed with 20
20 Appendix 2

agencies, and used in 2007 budget preparation
(xiv) completion of the human resources management
information system for CSC for roll out to its regions;
2.3. Measures to improve efficiency, (xv) posting bid opportunities and awards on PhilGEPS. The
transparency and accountability in public number of notices significantly increased from 3,128 in Jan to
procurement, starting with posting bid Sept 2004 to 8,987 for the same period in 2006. Amount of
notices and awards on PhilGEPS. awards posted up from P4.4 billion to P21.2 billion. Posting all
bid awards by central offices of selected departments (DPWH,
DOH, DepEd, DA) started.
2.4 Initiate measures to combat The Government initiated measures in the revenue agencies
corruption with initial focus on the and selected line ministries to reduce corruption. These
revenue agencies (BIR and BOC). actions included:
(xvi) The Office of the Ombudsman completed Integrity
Development Reviews (IDRs) in five agencies (Bureau of
Customs, Bureau of Internal Revenue, Land Transportation
Office, Department of Public Works, and the Philippine
National Police). The IDRs are an instrument to identify
weaknesses in agency procedures that increase vulnerability
to corruption;
(xvii) COA audit reports for all government departments made
public through the COA website.
(xviii) the Government put in place anti-corruption revenue
programs and the number of cases filed to Department of
Justice for each are: 65 cases of tax evaders filed (RATE
program); 16 smuggling cases (RATS) filed; 43 RIPS cases
were filed. Also, DOJ and BIR signed a Memorandum of
Agreement creating a task force to expedite cases
(xix) The OMB office increased the capacity of staff as
evidenced by the increased conviction rate for cases involving
high-ranking officials before the corruption court
(Sandiganbayan) from 24% in 2004 to 33% in 2005.
3. Investment Climate and Infrastructure
3.1. Strengthen the legal and regulatory The Government has implemented actions that lay the ground
framework on investments, aimed at work for future reforms in the legal and regulatory framework
reducing transaction costs for business for investments. These included:
and improving competitiveness (xx) initiated review of the investment incentives framework
with a view towards improving administration of incentives in
2007;
(xxi) issued Aug 2006, EO 557 establishing the anti-red tape
task force responsible for developing a medium-term action
plan, chaired by Department of Trade and Industry.
(xxii) issued July 2006, EO 554 eliminating the fees and
charges imposed on export clearance, inspections, permits,
certificates, and other documentation requirements.
3.2. Improve policy framework for private To improve the policy framework for infrastructure investments
sector participation in infrastructure to occur the Government has completed the following actions:
investment, and strengthen coordination (xxiii) issued revised implementing rules and regulations of the
of public infrastructure projects BOT law through the BOT Implementing Rules and
Regulations (IRR) committee;
(xxiv) developed contractors performance evaluation system
Appendix 2 21

guidelines (CPES) through the INFRACOM.;
(xxv) commencement of Procurement Assessment Report
4. Social Inclusion
4.1. Improve poverty targeting of social (xxvi) issued NSCB Resolution No. 6 (series of 2005)
programs and expenditure recognizing and supporting the community-based monitoring
system (CBMS) as the tool to strengthen the statistical system
at the local level.
(xxvii) issued NEDA Board Social Development Committee
Resolution No. 3 (series of 2006) adopting the CBMS as the
prescribed tool for the generation of the core poverty indicator
database
BIR = Bureau of Internal Revenue, BOC = Bureau of Customs, BOT = build-operate-transfer, CBMS = community-
based monitoring system, COA = Commission on Audit, DA = Department of Agriculture, DepED = Department of
Education, DOH = Department of Health, DOJ = Department of Justice, DPWH = Department of Public Works and
Highways, EO = executive order, GDP = gross domestic product, INFRACOM = Infrastructure Committee, LGU =
local government unit, LTO = Land Transportation Office, NEDA = National Economic and Development Authority,
NSCB = National Statistical Coordination Board, PhilGEPS = Philippine Government Electronic Procurement System,
RATE = run after tax evaders, RATS = run after tax smugglers, PNP = Philippine National Police, VAT = value added
tax.
Sources: Asian Development Bank and the World Bank.
22 Appendix 3

TRIGGERS
Original Triggers as Specified in

Subprogram 1 Document, Table A2.2 of
Appendix 2 Performance
Fiscal Triggers
1. Maintain the consolidated public sector Surpassed expectations. consolidated public sector
deficit at 2% of GDP in 2006 and on surplus of 0.1% in 2006 and deficit of 0.1% in 2007
track to 1.4% of GDP in 2007
2. Continue progress in reducing the Surpassed expectations. National government deficit of
national government deficit to 1% of 0.2% of GDP in 2007
GDP in 2007
3. Tax revenues on track to increase by Partially accomplished. Trigger dropped from Program.
0.5% of GDP in 2007 Tax revenues up by 9% in 2007 resulting in a drop in the tax
to GDP ratio from 14.3% in 2006 to 14% in 2007. The
shortfall occurred in the first semester of 2007, with tax
revenue collection up 5.1% for the same period in 2006.
Remedial actions were undertaken in mid-2007 contributing
to a recovery in tax revenue collection: tax revenues grew
between 13% and 15% in the second semester of 2007 and
13.8% in the first semester of 2008. Overall, for the 12
months ending June 2008, tax revenues grew 14% on a
year-on-year basis. With nominal GDP growth estimated
between 10.4% for the 12 months ending June 2008 (and
11.6% in the first semester of 2008), the tax to GDP ratio
increased about 0.3 percentage points. Factors that
contributed to the shortfall in tax revenues in the first
semester include macroeconomic factors (peso exchange
rate appreciation, slower growth in imports), tax policy
changes (removal of the cap on value-added tax credits),
tax administration and enforcement weaknesses (front
loading of excise tax payments at the end of 2006, and a
surge in fuel smuggling out of the Subic special economic
zone). Weak tax administration and inefficiencies in the tax
policy indicate that BIR and BOC were unable to increase
tax revenues through improvements in tax efficiency and
enforcement. Remedial action undertaken in mid-2007
included removal of senior BIR personnel, including the
commissioner, and increased use of legislative instruments
(tax amnesties and abatements) to encourage payment of
tax arrears and increase inspections. Technically, the trigger
was not accomplished in 2007; however, progress since
August 2007 indicates the Government’s commitment to tax
revenue enhancement and therefore partial accomplishment
of the trigger. With hindsight, the formulation of the trigger
was inappropriate. The trigger is a revenue forecast and
therefore subject to change based on changes in the
underlying macroeconomic assumptions (nominal GDP
growth, inflation, peso exchange rate), which also changed
during 2007. The tax trigger was dropped to align with the
approach the Asian Development Bank (ADB) used in the
Indonesian DPSP, which avoids numerical targets and
forecasts for key macroeconomic policy triggers including
Appendix 3 23

revenue collection, and instead monitors performance
through the DMF.
4. Clean up and expand the corporate Accomplished. This process has started, including
and business registration database cleaning the taxpayer database, identifying unregistered
corporations (about 9,429 registered at SEC) and inactive
taxpayers in the database (162,352 taxpayers), and
addressing the backlog in registrations. BIR has begun
computerization of around 30 RDOs to ensure efficient
processing of income tax returns and tax registration.
Public Financial Management and Anticorruption Triggers
5. Base the 2008 budget proposal on a Accomplished. Forward estimates for 2008–2010 were
refined MTEF drawn from an improved incorporated into the budget for the first time. This process
budget strategy paper, and develop provided the Government with much improved
forward estimates with departments understanding of fiscal space over the next 3 years
especially for discretionary spending. As a consequence,
greater amounts of the 2008 budget were channeled to the
priority areas of infrastructure development, basic
education, health services, and housing.
6. DepEd, DOA, DOH, and DPWH submit Partially accomplished. DOH submitted its 2008 budget
2008 budget proposals to DBM based proposal to DBM based on a new budget structure
on a new budget structure consistent with its MFO. The new presentation of budget
allocations for programs and projects takes a more function-
based approach consistent with the OPIF. Three other
departments (DepEd, DOA, DPWH), designated to submit
budget proposals on the new budget structure under
subprogram 2, were unable to do so as DBM had not
approved their rationalization plans. However, the
Government remains committed to restructuring department
budgets in line with the MFOs under the OPIF to improve
the budget’s readability and performance focus.
7. Disclose detailed data on all payments Substantially accomplished. Scanned documents of all
to contractors for central offices and payments to contractors of the central offices of the four line
four pilot regions of DOH, DPWH, departments and four pilot regions for 2007 were uploaded
DOE, and DOA retroactively on the on the DBM website (www.dbm/fundreleases). The website
DBM website on a quarterly basis includes a link to DPWH to ensure consistent data as all
payments to contractors are uploaded on the DPWH
website. The inadequate computerized accounts system
meant that DBM had to scan documents onto its website
taking up considerable personnel time. While this effort
substantially achieved the desired outcome, the process
was not as intended. When the trigger was formulated, the
Government and development partners had not fully
assessed the infrastructure necessary to provide timely data
from the relevant agencies. This reiterates the need to
develop the GFMIS beginning under subprogram 3 and
providing longer-term technical assistance to DBM. The
Government remains committed to continuing to post
budget data as part of its efforts to improve budget
transparency.
8. Disclose detailed data on allotments Partially accomplished. This policy trigger encountered
and quarterly cash releases by central similar difficulties. Hence, DBM published data on the
offices of DepEd, DOA, DOH, and allotment releases, obligations, and disbursements for the
24 Appendix 3

DPWH retroactively on the DBM major programs and projects of the four central departments
website on a quarterly basis for 2007; this signifies the Government’s thrust to greater
transparency and accountability.
9. Post all publicly bid opportunities and Substantially accomplished. All certified publicly bid
awards of central offices of all GPPB opportunities of 10 of the 12 departments were posted on
member departments (altogether 12 PhilGEPS. Progress was made in posting award notices of
departments) on PhilGEPS in the central offices of the all GPPB member departments. By
compliance with RA 9184 the end of April 2008, all bid results of the 12 departments
were posted including those awarded, failed, canceled, or
currently short-listed. Overall, more than 77% of certified
bids have been posted on PhilGEPS. The remaining 33%
will be posted in 2008. The initial delay in posting award
notices was due to unanticipated technical problems with
the PhilGEPS electronic portal. Problems have been
addressed and substantial progress made in posting awards
since November 2007. GPPB provides ADB with monthly
updates on progress.
Investment Triggers
10. Develop a medium-term action plan for Accomplished. Strategic framework for addressing
reducing business bureaucracy in bureaucracy through regulatory review assessments drafted
selected agencies to reduce the and advocated by the National Competitiveness Council and
number of steps, time, and cost Department of Trade and Industry (NEDA chairs the
required to start up and operate a committee on the regulatory review assessment). ADB is
business providing technical assistance on details of the action plan.
The ADB report was used as input into a proposed NEDA
action plan submitted for discussion at the RIA working
group under the National Competitiveness Council.
11. NEDA Infrastructure Committee to Accomplished
submit to DBM a list of priority
investment projects by start of budget
preparation
Poverty Reduction and Social Inclusion Trigger (new trigger)
12. The Government is to adopt a Accomplished. NEDA issued Social Development
Philippine definition of social protection Committee Resolution No. 1, series of 2007, on Adopting a
to provide the foundation for improved Philippine Definition of Social Protection. The components
social protection programs of social protection are (i) labor market programs, (ii) social
insurance, (iii) social welfare, and (iv) social safety net.
ADB = Asian Development Bank, BIR = Bureau of Internal Revenue, BOC = Bureau of Customs, DBM = Department
of Budget and Management, DepEd = Department of Education, DMF = design and monitoring framework, DOA =
Department of Agriculture, DOE = Department of Energy, DOH = Department of Health, DPSP = development policy
support program, DPWH = Department of Public Works and Highway, GDP = gross domestic product, GFMIS =
government financial management information system, GPPB = government procurement policy board, MFO = major
final outputs, MTEF = medium-term expenditure framework, NEDA = National Economic Development Authority,
OPIF = organizational performance indicator framework, PhilGEPS = Philippine Government Electronic Procurement
System, RDO = revenue district office, SEC = Securities and Exchange Commission.
Source: ADB. 2007. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to
the Republic of the Philippines for the Development Policy Support Program. Manila.
Appendix 4 25

TRIGGERS
Original Triggers as Specified

in Subprogram 2 Document, Performance
Table A2.2 of Appendix 2 (as of 30 October 2010)
1. Public Sector Consolidated 1. Accomplished. PSC budget in surplus equivalent to 0.4% of
(PSC) budget deficit of no more GDP.
than 1% of GDP in 2008.
2. National government budget 2. Accomplished: Budget deficit at P68 billion or 0.9% of GDP in
deficit of no more than 1% of GDP 2008.
in 2008.
3. Establish the DRMD as a 3. Implementation ongoing: In June 2009, DOF issued a
middle office to integrate the department order establishing the DRMD as a middle office. It was
different management functions. issued subject to DBM's approval of DOF's rationalization plan.
The DRMD has a submitted finding for the division in its proposed
2011 budget. The DRMD is being set up with staff already
assigned to the DRMD. In 2010, under the P3F, ADB is providing
technical assistance with capacity building at the office, as well as
with the Bureau of Treasury (BTr) at DPOF. DOF has completed
its first ever debt sustainability assessment and is preparing a draft
debt management strategy.
4. Make substantial progress in (i) 4. Partial to substantial accomplishment.
cleaning the Corporate Taxpayers (i) Encoding backlog of tax data – substantially
database and (ii) encoding of accomplished. 71 (or 97%) of the remaining 75 revenue district
backlog of tax registration and tax offices (RDOs) had been computerized by end of 2008. The 4
return files. remaining uncomputerized RDOs in Southern Mindanao will be
completed when security conditions permit. Of the 35
USAID/MCC-assisted RDOs, 27 RDOs have completed the
encoding of backlog of tax information, and encoding in 11 MCC-
assisted RDOs ongoing. These completed encoding of backlogs
amounted to 348,465 tax registrations, 1,235,889 income tax
returns filed, and 2,275,103 PDES. BIR has a proposed work plan
to complete encoding in the 11 RDOs and start encoding in the
remaining 36 RDOs in 2009.
(ii) Cleaning corporate taxpayers database – partially

accomplished and ongoing. Some progress made in cleaning
the corporate taxpayers' database in 2008 and it remains ongoing.
Under DPSP-2, BIR had identified 125,563 inactive tax payers in
the registry (had not filed an income return for the last three years)
and 9,429 SEC registered corporations not registered with BIR.
Under DPSP-3 these are to be validated as part of cleaning the
tax registration database (i.e., remove inactive ones, duplications,
and register and penalize unregistered corporations). BIR
contracted a civil society organization to undertake this activity
under the World Bank tax administration reform project at BIR. As
of September 2008, only about 47% had been validated by the
CSO. About 10% (or 6,956) were reported by the CSO as
operational, 68% non-existent, and 17% invalid addresses. With a
limited budget to carry out the activity (less than P50 per validation
which required transport to the identified address, verification the
taxpayer still resides at the address, photographs to evidence the
field visit and a copy of the barangay certificate of premises) the
26 Appendix 4

contract was not completed and only 47% had been validated. BIR
instructed RDOs to complete the validation and cleaning process
but progress has been slow since then. On hindsight, it would
have been more effective if the activity started with 9,429 SEC
registered corporations where the biggest gains in tax collection
are more likely.
5. Forward estimates (FEs) 5. Accomplished. The Government updated and produced FEs
produced by DBM staff with for all line ministries for the 2009 budget. DMB carried out
increasing involvement of consultations with line ministries in formulating the FEs. The FEs
departments and agencies continue to be updated for the 2010 and 2011 NG budgets.
6. Initiate development of GIFMIS 6. Accomplished. DBM initiated development of the GFMIS
starting with a diagnostic study of starting with a diagnostic study of the scope and requirements with
the scope and requirements assistance from the USDTA. The diagnostic study sketched out a
broad roadmap for implementing an integrated GFMIS. The study
was completed in June 2009. DBM organized a series of
workshops in July to discuss the findings. It facilitated the drafting
of an MoA with BrT (DOF) and COA to establish a taskforce for
developing an action plan under the post-program monitoring
framework. The MoA was signed in January 2010. Under the P3F,
ADB is providing technical assistance to the taskforce on GFMIS
action plan in 2010 and 2011.
7. National guidelines for internal 7. Accomplished. Guidelines for internal control systems (ICS)
control standards formulated and produced, printed and disseminated to agencies, GOCCs and
piloting in one department and LGUs. With assistance from AusAID (PEGR) two ICS ministry
one agency started. pilots (DepEd and DPWH) started in the 4th quarter of 2008, and
are expected to be completed in 2010 at a cost of almost A$3.3
million. In 2010 and 2011, ADB is assisting with rollout of the ICS
in tow other departments under the P3F
8. Institutionalize the RATE 8. Accomplished. BIR issued Revenue Administrative Order
program by strengthening the (RAO No 10-2009) transforming the Enforcement Service to an
RATE Program with permanent Enforcement and Advocacy Service (EAS) under the Legal
staff, budget, operational Division. The EAS comprises of four divisions of which the Special
procedures and guidelines, and Prosecution Division (SPD) is tasked to handle prosecution of
training program. RATE cases. There are 23 positions designated under the new
SPD. The RAO was prepared subject to DBM approving BIR's
rationalization plan. In June 2009, approved BIRs plan for the
EAS, thereby permitting BIR to implement the RAO. In anticipation
of the approval of the Rationalization Plan, the FY2009 NG budget
has allocated an additional P1.0 billion to BIR for new technical
positions, approximately 3,000 new positions nation-wide will be
funded under this additional budget. Under MCC assistance,
which was completed in December 2008, BIR staff had been
trained in tax evasion investigations, toolkits provided and
guidelines produced.
9. Ensure all publicly bid 9. Substantially accomplished. Progress made in the PhilGEPS
opportunities and awards of second year of operation in raising compliance with the 2003 law
central offices of the 12 GPPB on procurement (RA9184). This included: (i) all 12 GPPB member
member departments plus three agencies had posted bid opportunities and award notices,
non-GPPB members (DA, DSWD, compared to 9 agencies in 2007; (ii) 9 of the 12 GPPB member
DENR) posted on PhilGEPS in agencies had increased posting of bid notices in 2008 compared
compliance with RA 9184. to 2007, and 8 out of 12 agencies had increased posting of award
notices than they did in 2007; and (iii) progress made in expanding
Appendix 4 27

outreach to non-GPPB members with DA, DSWD, DENR and BIR
all posting some bid notices and awards on PhilGEPS for the first
time in 2008. Technical problems in the first year, time required
for line ministries to change business processes, and resistance
from some line ministries explain why not all award notices and
awards were posted by 2008 and 2009. The PhilGEPS is fully
operational in 2010.
10. Operationalization of the 10. Accomplished. The Procurement Transparency Group
Procurement Transparency Group (Group) was operationalized in 2008. CSOs, and GOP
and start tracking selected representatives appointed to the Group. Group members have
infrastructure projects identified infrastructure projects to track, monitoring underway and
regular updates posted on the Group's website. Regular Group
meetings are held with GPPB.
11. Adopt an action plan for 11. Implementation ongoing. Memorandum Order drafted and in
implementing a regulatory review July 2009 submitted to the President's office for approval. The MO
process. mandates NEDA to advocating a regulatory impact assessment
program and develops an action plan for implementing it across
national agencies. The accomplishment of this trigger has taken
longer than initially expected due to resistance from some line
ministries with regulatory powers primarily as these ministries are
not familiar with the RIA and its implications for their business
operating procedures. Consequently, NEDA carried out extensive
and often drawn out consultations with key line ministries to
achieve some measure of support. NEDA's job was made harder
as its mandate as chair of the RIA working group under the
National Competitiveness Council was to develop a strategic
framework for RIA. It did not have a legal mandate to implement or
advocate RIA implementation in other line ministries Thus, the first
step of NEDA's new mandate will be to advocate RIA, build
support for it, develop capacity to implement RIA, and facilitate the
design and development of RIA action plan and timeframe for its
implementation. Support for advocacy and development of an
action plan will be provided under a forthcoming ADB technical
assistance on the investment climate.
12. Assess bottlenecks in 12. Accomplished. The GOP and stakeholders of PDF Working
distribution of agriculture products Group on Sustainable Rural Development/ Sub-Working Group on
from farmer to supermarkets and Agribusiness held Strategic Agribusiness Planning Workshop in
traditional markets, and define March 2009 towards formulation of the Strategic Agribusiness
appropriate public policy options Development Plan (SADP). Discussions focused around
for addressing identified bottlenecks in agriculture including production, post-production,
bottlenecks. marketing/distribution and financing sectors. Recommendations
were provided and action plans were produced.
13. Based on the 2007 program 13. Accomplished. DSWD had scaled up the CCT to cover
implementation, the government is 337,345 households by end of 2008. Each household receives
to expand the CCT to cover P1,400 per month per household. It was scaled up to over
321,012 households nationwide. 700,000 households in 2009. In 2010, the ADB Board of Directors
approved a sector project supporting the national rollout of the
CCT.
28 Appendix 4

Additional Triggers for Subprogram 3
14. DBM ensure acceleration of . Accomplished. These measures included: (i) the issuance of a
critical budget spending by line DBM circular letter (No. 2008-11, dated December, 2008) shifting
ministries while protecting from a quarterly cash release to a 6 months cash releases and
procurement transparency requiring line ministries to spend each month’s cash allocation or
reforms (at GPPB). lose it; and (ii) A GPPB circular to line ministries clarified that
ministries can start procurement process prior to receiving
allotments from DBM (authority to obligate the budget) but the
signing of contracts will require receipt of these allotments.
15. Introduced measures to 15. Accomplished. Congress passed and President enacted the
enhance stability in the macro- law to increase the ceiling on the deposit insurance from P250,000
economy. to P500,000 to enhance depositors' confidence in the domestic
banking system.
16. Technical Committee of 16. Accomplished. This trigger is a new initiative under the third
Poverty Statistics prepare draft subprogram of the DPSP and in response to the poverty impacts
framework for establishing poverty of the global economic recession. Technical Committee on
monitoring mechanism for Poverty Statistics of the NSCB produced a draft of the poverty
implementation in 2009. monitoring mechanism to provide timely data and assessments of
the impact of the economic slow down and other external shocks
on the poor that would allow timely response by authorities (June
2009). NEDA instruction approving the mechanism is expected in
the third quarter of 2009 and implementation of the monitoring
framework thereafter.
ADB = Asian Development Bank, AusAID = Australian Agency for International Development, BIR = Bureau of
Internal Revenue, BOC = Bureau of Customs, CCT = conditional cash transfer, CSO = civil society organization,
DBM = Department of Budget and Management, DepEd = Department of Education, DMF = design and monitoring
framework, DA = Department of Agriculture, DENR = Department of Environment and Natural Resources, DOE =
Department of Energy, DOH = Department of Health, DPSP = Development Policy Support Program, DPWH =
Department of Public Works and Highway, DRMD = debt risk and management division, DSWD = Department of
Social Welfare and Development, GDP = gross domestic product, GFMIS = government financial management
information system, GPPB = government procurement policy board, LGU = local government unit, MFO = major final
outputs, MTEF = medium-term expenditure framework, NEDA = National Economic Development Authority, OPIF =
organizational performance indicator framework, PhilGEPS = Philippine Government Electronic Procurement System,
RIA = regulatory impact assessment, RDO = revenue district office, SEC = Securities and Exchange Commission.
Source: ADB. 2008. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to
the Republic of the Philippines for the Development Policy Support Program: Subprogram 2. Manila.
29 Appendix 5
STATUS OF COMPLIANCE WITH LOAN COVENANTS
Reference in Loan
Covenant Agreement Status of Compliance
Loan 2545/2450/2315
Program to be carried out with due diligence LA Section 4.01 (a) Complied with.
and efficiency and in conformity with sound
administrative, financial, public policy, social,
and governance practices.
Perform all obligations set forth in Schedule LA Section 4.01 (b) Complied with.
5 to this Agreement
Borrower shall make available promptly as LA Section 4.02 Complied with.
needed, the funds, facilities, and other
resources, which are required, in addition to
the proceeds of the Loan, for the carrying out
of the Program
Borrower shall ensure that the activities of its LA Section 4.03 Complied with.
departments and agencies with respect to
the carrying out of the Program are
conducted and coordinated in accordance
with sound administrative policies and
procedures.
Borrower shall maintain, or cause to be LA Section 4.04 (a) Complied with.
maintained, records and documents
adequate to identify the Eligible items
financed out of the proceeds of the Loan and
to indicate the progress of the program.
Borrower shall enable ADB’s representatives LA Section 4.04 (b) Complied with.
to inspect any relevant records and
documents referred to in paragraph (a) of
this section.
Borrower shall furnish ADB all such reports LA Section 4.05 (a) Complied with.
and information as ADB shall reasonably
request concerning the implementation of
the Program, and/or the Program Cluster
covering all subprograms including the
accomplishment of the targets and carrying
out of the actions set out in the subprograms
Policy Letters and Policy Matrices.
At the completion of the Program Cluster, LA Section 4.05 (b) Complied with (PCR
the Borrower shall furnish or caused to be survey questionnaire
furnished, to ADB reports on the carrying out completed).
of the Program, or the Program cluster, and
on the accomplishment of targets and
carrying out the actions set out in the Policy
Letter and Policy Matrix at the completion oc
the Program cluster.
30 Appendix 6
Project Completion Report – Government Survey Results
1. As part of the PCR process, ADB and the government designed a survey questionnaire
to collect the EA and IAs views on the performance of the Program. The survey was
implemented in March 2010. Senior policy makers from DOF, DBM, NEDA and GPPB
completed the questionnaire. It included government rating performance on a scale of 1 (highly
negative view) to 5 (highly positive view) for the Program’s relevance to achieving development
goals, effectiveness of the Program in achieving the Program’s outcome of increased
investment, efficiency in which ADB managed the Program and the likelihood of the Program’s
longer term reforms sustainability. The assessment scores were determined as follows: below 3
(not relevant, effective etc), 3 to 4 (relevant, effective, etc), and higher than 4 (highly relevant,
effective etc). The questionnaire provided the government provided with the opportunity to
suggest what features of the Program should be retained, dropped or added in future DPSP
Programs.
2. Summary results are presented in Figure A1. It provides the overall rating by
evaluation criteria. The government rated the Program has highly relevant (4.3) and highly
efficient (4.4), and effective (3.9) and likely to be sustainable (3.5).
Figure A1: Summary Results of Program Performance

(Rated on scale of 1 to 5, with 5 as the highest positive score)
Relevance
Effectiveness
Efficiency
Sustainability
0 1 2 3 4 5
Sources: PCR Survey, Government of the Philippines.
3. Relevance of the Program to achieving the Philippines ‘government development

goals. Figure A2 shows the government’s rating by the four Program components: fiscal
sustainability, public financial management, investment climate and human capital and social
inclusion. The Overall rating by government is 4.3 or highly relevant. All components were
viewed as highly relevant by the Government. The investment climate and human capital and
social inclusion components received the highest ratings of 4.5 each. The Program was
embedded in the Medium Term Philippine Development Plan (2004-10), sector strategies and
supported by development partnership through the Philippines Development Forum.
Appendix 6 31
Figure A2: Program Relevance

Human capital and

social inclusion
Investment climate
Public financial
managemenbt
Fiscal sustainability
3 3.5 4 4.5 5
4. Effectiveness of achieving Program outcome of increased investment through

measures under the four components or outputs. The investment rate did increase between
1.5 and 1.9 percentage points of GDP depending on whether investment is measured in current
or nominal price terms of constant1985 prices or real terms. The government rated the Program
overall as effective with a score of 3.9. Fiscal sustainability (4.5) and public financial
management (4.0) components were rated has highly effective in achieving outcomes and
results. The investment climate and human capital components were rated as effective (3.5
each).
32 Appendix 6
Figure A3: Program Effectiveness

Human capital and

social inclusion
Investment climate
Public financial
managemenbt
0 1 2 3 4 5
5. ADB efficiency in managing the Program in achieving Program outcomes and

outputs. The EA and IAs were asked six questions related to ADB’s performance in managing
the Program (see Section C of the questionnaire). The government gave an overall rating of 4.4
indicating highly efficient in program management. Highest scores were given for designing
appropriate technical assistance to support implementation of triggers, ADB responsiveness in
adjusting the Program to mitigate the increase risks to the economy and social sector from
changes in the external environment, timely dialogue on policy issues related to the Program,
and in carrying out periodic Program reviews.
6. Sustainability of the Program in terms of outcome and outputs. The EA and IAs
were asked to rate the Program component according to their views on reform sustainability
with 1 as not sustainable and 5 as highly sustainable. The government gave an overall rating of
3.6. Scores varied across the four components. The human capital and social inclusion
component (primarily the CCT and poverty monitoring mechanisms) was rated as highly likely to
be sustainable. The Program had elevated the CCT to a national agenda with continued support
from ADB and the World Bank through their separate project loans for the CCT. The PFM
component was also rated as highly sustainable due to the demonstrated commitment by the
government in implementing its reform agenda. The fiscal and investment climate components
were assessed as likely sustainable with ratings at 3.0. The increase national government
deficit, the absence of credible fiscal rules and unstable external environment that affect
Philippines macroeconomic indicators are suggested reasons for fiscal risk.
Appendix 6 33
Figure A4: Program Sustainability

Human capital and

social inclusion
Investment climate
Public financial
managemenbt
0 1 2 3 4 5
7. The government provided its assessment of lessons learned from the Program. The
common comments are summarized here. It appreciated the responsiveness and flexibility built
within the Program to changes in macroeconomic environment and government policy priorities.
It has found the post-program partnership framework as a discipline for continuing engagement
of policy in these sectors. It also appreciated the timely processing of the loans that enabled
predictability of available financing. It also suggested areas for future programs such as
investment climate (regulatory reviews/reforms, PPP in infrastructure), continue support
government priorities in PFM such as the GFMIS, capacity development of the debt
management office including monitoring contingent liabilities, focus on improving financial
governance in the government owned and controlled corporations.
34 Appendix 6
QUESTIONNAIRE
PROJECT COMPLETION REPORT
DEVELOPMENT POLICY SUPPORT PROGRAM CLUSTER
March 8, 2010
Appendix 6 35
(A) We would like to know your views on the RELEVANCE of the Development Policy Support Program
cluster from 2006 to 2009 to the Government's Economic Priorities
For each of the questions below relevant to your agency, please rank them in terms of their relevance in
supporting the economic priorities of the Government of the Philippines both at the time of formulating the DPSP
in 2006 and its completion in 2010 (with 1 being not relevant at all and 5 being highly relevant)
(1) (2) (3) (4) (5)
At the time of formulating the Program in 2006
(1) Component 1a: Fiscal sustainability measures
(2) Component 1b: Tax sustainability measures
(3) Component 1c: Establishing the debt and risk
management division
(4) Component 2a: Public financial management
measures
(5) Component 2b: Anti-corruption measures (integrity
development reviews; support for RATE program etc)(
(6) Component 2d: Public procurement reform measures
(7) Component 3a: Investment climate measures (RIA etc)
(8) Component 3b; Infrastructure measures
(9) Component 4: Human capital and social inclusion
measures
At the completion of the Program in September 2009
(10) Component 1a: Fiscal sustainability measures
(11) Component 1b: Tax sustainability measures
(12) Component 1c: Establishing the debt and risk
management division
(13) Component 2a: Public financial management
measures
(14) Component 2b: anti-corruption measures (integrity
development reviews; support for RATE program etc)
(15) Component 2d: Public procurement reform measures
(16) Component 3a: Investment climate measures (RIA
etc)
(17) Component 3b; Infrastructure measures
(18) Component 4: Human capital and social inclusion
measures
.
36 Appendix 6
(B) We would like to know your views on the EFFECTIVENESS of the Development Policy Support Program
achieving the Program's outcome of increased investment.
For each of the questions below, please rank them in terms of the Program's effectiveness in achieving the
Program's outcomes (with 1 being not effective at all at and 5 being highly effective)
Outcomes (1) (2) (3) (4) (5)

Increased investment
Through improved fiscal sustainability
Through improved public financial management
Through a better investment climate
Through enhanced human capital and social inclusion
(C) We would like to know your views on the EFFICIENCY of the Development Policy Support Program in
achieving the Programs outcome and outputs
For each of the questions below, please rank them in terms of the Program's efficiency in supporting the
Program's outcome and outputs (with 1 being not efficient at and 5 being highly efficient)
(1) (2) (3) (4) (5)

(1) Did ADB efficiently manage the DPSP program related
to carrying out periodic policy reviews and meeting loan
processing schedules?
to providing timely policy dialogue on DPSP policy triggers
and milestones?
to providing appropriate technical assistance?
(4) Was ADB responsive within the DPSP framework to
changing macroeconomic circumstances and priorities of
the Government? Were these changes appropriately
reflected in the DPSP subprograms?
(5) Did ADB efficiently coordinated with other development
partners
(6) Overall how would you rank ADB management of the
DPSP in terms of efficiency
Appendix 6 37
(D) We would like to know your views on the SUSTAINABILITY of the Development Policy Support Program
terms of Program outcome and outputs
For each of the questions below, please rank them in terms of sustainability of the Programs' outcome and
outputs after the completion of the Program in September 2009 (with 1 being not sustainable at all at and 5 being
highly sustainable).
(1) (2) (3) (4) (5)
(1) Core outcome of increased investment over 2005 is
sustainable
(2) Fiscal sustainability
(3) Improved public financial management
(4) Improved public procurement
(5) A better investment climate
(6) Enhanced human capital and social inclusion
(7) The Post-Program Policy/Monitoring Framework will
support sustainability of outcome and outputs?
38 Appendix 6
(E) Lessons Learned
We would like to know, if we were to do another DPSP program cluster, what features of the Program design,
structure and or policy priorities would we keep, what would we drop, and what should we add (please list, if any)
Features and priorities to keep

(1)
(2)
(3)
(4)
(5)
Features and priorities to drop

(1)
(2)
(3)
(4)
(5)
Features and priorities to add

(1)
(2)
(3)
(4)
(5)

02 Phi PCR

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Completion Report

Program Number: 40538

Philippines: Development Policy Support Program

Currency Unit – peso (P)

At Appraisal At Program Completion

ADB – Asian Development Bank

In this report, "$" refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations 2

Team leader K. Bird, Senior Economist, SERD

BASIC DATA: DEVELOPMENT POLICY SUPPORT PROGRAM, SUBPROGRAM 1

3. Date of Board Approval 8 February 2007

4. Date of Loan Agreement 13 February 2007

5. Date of Loan Effectiveness

8. Terms of Relending (if any)

Effective Date Original Closing Date Time Interval

10. Local Costs (Financed)

1. Program Cost ($)

Foreign Exchange Cost 250,000,000 250,000,000

3. Cost Breakdown by Program Component ($)

5. Program Performance Report Ratings

D. Data on Asian Development Bank Missions

BASIC DATA: DEVELOPMENT POLICY SUPPORT PROGRAM, SUBPROGRAM 2

3. Date of Board Approval 30 September 2008

4. Date of Loan Agreement 7 October 2008

5. Date of Loan Effectiveness

6. Closing Date 31 March 2009

7. Terms of Loan ADB London Interbank offered rate

8. Terms of Relending (if any) Not applicable

Total $250 None 0 $250 $250 0

10. Local Costs (Financed)

1. Program Cost ($)

Foreign Exchange Cost 250,000,000 250,000,000

3. Cost Breakdown by Program Component

5. Program Performance Report Ratings

5. Program Performance Report Ratings

D. Data on Asian Development Bank Missions

BASIC DATA: DEVELOPMENT POLICY SUPPORT PROGRAM, SUBPROGRAM 3

3. Date of Board Approval 15 September 2009

4. Date of Loan Agreement 16 September 2009

5. Date of Loan Effectiveness

8. Terms of Relending (if any)

Effective Date Original Closing Date Time Interval

Total 250 None 0 250 250 0

10. Local Costs (Financed)

1. Program Cost ($)

Foreign Exchange Cost 250,000,000 250,000,000

3. Cost Breakdown by Program Component

5. Program Performance Report Ratings

D. Data on Asian Development Bank Missions

3. Under subprogram 1, the government implemented a series of measures to address the

response system to help mitigate the impact of the economic slowdown on

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

1. Improve Fiscal Sustainability, Maintain Macroeconomic Stability, and

2. Improve Governance in Public Financial Management and Reduce

20. Medium-term expenditure framework. Progress was made in accomplishing key

21. Transparency in budget execution. Progress was made in accomplishing policy

4. Human Capital and Social Inclusion

C. Program Costs and Disbursements

F. Conditions and Covenants

G. Related Technical Assistance

33. Three TA grants complemented program implementation. Strengthening Investment