In
a three-part report entitled “The Perils and
Pitfalls of Aid”, the Philippine Center for
Investigative Journalism (PCIJ) paints a disturbing
picture of how the Philippine government has wasted
opportunities for national growth that could have
made a difference in the decades-old campaign to reduce
poverty. In its stead lay the prospects of even more
difficult times ahead for the Filipino people while
the rest of our ASEAN neighbors pull away to become
the next tiger economies.
Official
development assistance is one of two major ways
– the other one being direct foreign borrowings
– by which a developing country gains access
to long-term foreign loans. There was a time when
ODA was given as grant and today, its easy repayment
terms (i.e. low interest rates) make it the preferred
mode of borrowing by fund recipients.
ODA
borrowing must be earmarked for the promotion of
economic development and the welfare of the recipient
state. Military assistance does not qualify as beneficiary.
There have been
instances when the availability of ODA funding has
been tied to such issues as corruption in government
and extra-judicial killings.
The
top three sources of ODA loans to the Philippines
are the World Bank, the Asian Development Bank and
Japan Bank for International Cooperation. Since
2002, China has been aggressively pushing its ODA
program into the country just as European donors
have also started reducing their contribution due
to pressing political pressures at home and a general
downturn in the global financial climate.
ODA
money has been part of the Philippine government’s
general strategy to raise funds mostly for infrastructure
projects since the time of deposed president Marcos.
The mothballed Bataan nuclear power plant remains
a lasting monument to the disastrous misappropriation
of ODA funds.
A
sharp rise in loans
In the past five years, PCIJ has observed a sharp
surge in ODA. From an average of $741 million in
new ODA loans in 2003 and 2005, borrowings ballooned
to $1.3 billion in 2006. PCIJ reports that 73 percent
of 71 completed projects funded by the top three
ODA lenders to the Philippines failed to deliver
the expected benefits. Moreover, the majority of
big-ticket projects went beyond their deadlines
and budget caps by a significant margin. Such failures
apparently stemmed from serious flaws in the identification,
design, evaluation, or implementation of government
projects.
As
always, probable graft and corruption, the report
claims, figure well in ODA-funded government programs
and projects. The good news is that the presidential
hand isn’t caught red-handed in the cookie
jar. The bad news is that the same head of state
had a hand in relaxing prevented the implementation
of projects disadvantageous to the common good.
In fact, a number of hands – those of the
implementing government agencies, the beneficiaries’,
and even those of the donors – may have spoiled
the well meaning intent of the ODA project.
The National Economic Development Authority or NEDA
is officially charged with ensuring the viability
of projects to be financed with ODA. Recent official
moves, by Malacañang tended to subvert the
integrity of NEDA’s project evaluation capacity.
For
instance, a minor bureaucrat close to the Palace
has publicly suggested that the agency lower its
passing hurdle for financial feasibility of projects
submitted for ODA funding. Th e obvious intent is
to allow more projects to gain access to foreign
funding, running the risk of adding more bad apples
to a cartful of already rotten ones.
Malacañang
took the initiative a step further by organizing
its own interim evaluation group in parallel with
NEDA’s Investment Coordination Committee.
This development led a former NEDA director-general
to crack, “There is NEDA sa Pasig, then there
is NEDA sa Pasig River!”
It
is, however, no laughing matter when a project repeatedly
disapproved by “NEDA sa Pasig’s”
technical committee fi nally received the green
light from “NEDA sa Pasig River.” Th
e project entailed the disbursement of additional
millions of pesos to complete a P3.6 billion project.
NEDA’s technical group felt that granting
the request would further dilute the meager long-term
benefi ts from the project. In October 2007, President
Macapagal Arroyo herself inaugurated the project
that is already being billed as “the most
expensive irrigation dam ever constructed in the
Philippines.”
Corruption
topnotcher
Extravagantly priced projects are hallmarks of undertakings
by the Department of Public Works and Highways,
a consistent topnotcher in public perception surveys
on the most corrupt government agency. PCIJ reports
that the World Bank cancelled funding to the second
phase of a national roads improvement project after
three failed biddings, which the Bank deemed were
marked by irregularities.
In
all the three biddings, the same pre-qualified contractors
figured among the top three winning bidders. DPWH
claimed that in the third round of bidding, it adopted
the strictest requirements recommended by the World
Bank. The public works body has raised the possibility
of collusion among the bidders.
As
for claims of expensive projects, PCIJ sources at
DPWH said there was no ceiling on the bid price.
ODA sources like the World Bank are particular about
placing a cap on bids.
DPWH
claims that this provision may have allowed project
costs to soar. It would also account for: 1) the
presence of international companies in the bidding;
2) the difficulty of local firms to even pre-qualify
to bid for multi-billion dollar projects; and 3)
the unopposed adjustment in project price during
the implementation of specific projects.
This is not to say that government agencies aren’t
tainted by corruption in a spurious project but
apparently all the major players have their finger
in the rotten pie as well. It is common knowledge,
for instance that some ODA funds have certain “strings
attached” such as the procurement of goods
and services, especially consulting services, from
the donor country using part of the ODA loan proceeds.
During
a meeting with the media on the report, head writer
Roel Landingin commented that when his group was
conceptualizing the report early last year, investigating
the ODA seemed to be a less controversial issue
worthy of consumption by the general public. Just
as they were sorting out the difficulties in gathering
data, the subsequent uproar relating to ODA such
as the National Broadband Network deal suddenly
made ODA irregularities a sexy issue once more,
Landingin said.
No
doubt, the Filipino people would not fi nd anything
sexy about the idea that the burden of present ODA
woes would be borne by generations to come. It is
with this thought that the report calls for continuing
vigilance against debts being made in the name of
development. Th ey may turn out to be Trojan horses.
