25 May 2008

Australia Increases Aid to Philippines

Australian aid to the Philippines will not only increase by 20% every year for the next five years, it will exceed all other countries in the region. Australia has always believed in the Philippines. We have been one of the most consistent and generous nations pre and post war.


Aussie aid to RP hiked to Almost 104 Million
THE Official Development Assistance (ODA) extended by the Australian
Government to the Philippines has been increased to Aus$109.3 million
for the fiscal year of 2008 to 2009.

Based on the report released by the Australian Embassy, the funds
will be channeled through the Australian Government's agency for
international development, AusAID, which has reportedly provided more
than Aus$670 million worth of projects and financial assistance to
the Philippines for the last ten years.

The funding will focus on economic development, basic education, and
on national stability and human security.

"Australia has long been a strong development partner of the
Philippines, with our development cooperation program going back to
the 1950s," as Australian Ambassador to the Philippines, Rod Smith
was quoted in the report of the Australian Embassy.

"Over the years, the Philippines aid program has become one of our
largest globally," Smith added.

Australia will continue to work with the Philippines to pursue
necessary economic reforms, sustain fiscal discipline and
macroeconomic stability, and strengthen planning and management of
infrastructure investments.

From 2008 to 2009, Australia will increase its support to the
Philippines' infrastructure initiatives and provide over P425 million
(A$11.2 million) to help upgrade and maintain critical road
infrastructure at the national and local levels.

Australia is also helping public schools in the Philippines to reach
and maintain higher standards of basic education and to increase
access to education. Australia's basic education initiatives are
contributing to enhanced teaching and learning outcomes and assisting
thousands of educators and school children in 18 provinces in the
Visayas and Mindanao.

AusAID-PACAP will be funding 15 of the winners who will each receive a Php 1M grant.

The winning entries were able to demonstrate to the jurors how their project will address development challenges in their community by “Building Partnerships for Effective Local Governance.”

10 of the winners will be funded under AusAID’s Building Demand for Better Governance (BDBG) which addresses the development and promotion of peace in conflict affected areas. The remaining five projects will be funded under PACAP’s regular Responsive Assistance Scheme component.

To view the finalists visit the Official Panibagong Paraan 2008 website.


The Philippines, despite favourable human development indicators, has not matched its economic potential. While the country's growth rate has been on the uptake in the last two years, it still lags behind the achievements of many of its East and South-East Asian neighbours in reducing poverty. Another major challenge has been the instability in southern Philippines, which has affected long-term and broad-based development and has acted as a disincentive for investment.

Halfway through the 2015 target year to achieve the Millennium Development Goals (MDGs), the Philippines has made considerable progress particularly in poverty reduction, nutrition, gender equality, reducing child mortality, combating HIV and AIDS, malaria and other diseases and access to safe drinking water and sanitary toilet facility. However, the country needs to work harder on MDG targets concerning universal access to education, maternal mortality and access to reproductive health services. (Philippines 2007 Midterm Progress Report on the Millennium Development Goals)

Country overview
The Philippines is an archipelago comprising some 7,100 islands with a total land area of almost 300,000 square kilometres. Indonesia, Malaysia and Brunei border the Philippines to the south, China - and Taiwan - to the north, Vietnam to the west and the Pacific Ocean to the east. Three main island groups divide the country: Luzon in the north, the Visayas in the centre, and Mindanao in the south. Luzon and Mindanao together make up 65 per cent of the Philippines' total land mass. The capital city, Manila, is located on Luzon.

In 2007, the estimated population of the Philippines was 88.6 million. The most commonly spoken language in the Philippines is Filipino, a language derived from the Tagalog language of central and southern Luzon. English is also widely spoken, particularly in urban areas. There are some 87 ethnic languages and dialects spoken throughout the Philippines.

Political and economic environment
The Philippines achieved 7.3 percent GDP growth in 2007 - the highest in 30 years. The government attributed the increase to "positive growth" in all sectors of the economy, led by services and industries.

This impressive result continues the encouraging and positive trend of the past five years, and reflects the Philippines Government's impressive efforts on fiscal management. It has maintained fiscal discipline and recently increased spending in the social sectors, agriculture and infrastructure.

If the growth trend can be maintained, public and international confidence will build and provide a clear signal that the Philippines is capable of realising its enormous potential.

Clearly the most significant challenge is to continue to strengthen the fundamentals of the economy to ensure sustained high growth that will lead to a sustained decline in poverty. The Philippines is, however, volatile and there are signs of poor performance in several areas. The Macapagal-Arroyo administration, elected in May 2004 for a six-year term, faces the challenge of implementing essential policy reforms, particularly in areas of tax administration, tax revenue collection, public expenditure management, budget execution and transparency, as well as those affecting globalisation and trade liberalisation. The slowing global environment and its potential downward pressure on the economy will add to the challenge. The Philippines, like all countries, will not be immune from global pressures and, combined with existing structural issues, the economy is likely to slow in 2008.

A tenuous peace process in Mindanao, the re-emergence of the New People's Army (NPA) as a serious threat to stability in various parts of the country, including Mindanao, and other internal security issues, also threaten to worsen this fragility.

Poverty in the Philippines
Poverty is a significant problem, but in combination with inequality, it poses a serious threat to stability in the Philippines. In 2006, almost 27.6 million people lived below the Philippines' poverty threshold. This represents 26.9 per cent of Philippine families and 32.9 per cent of the population. According to international data, 44 per cent of the population subsisted on US$2 or less a day. Recent food price increases are estimated to push another 2.7 million people into poverty.

Poverty in the Philippines is mainly rural and, although variable by region, is widespread in the southern Philippines, particularly Mindanao. Poor productivity growth in agriculture, under-investment in rural infrastructure, unequal land and income distribution, high population growth and the low quality of social services lie at the root of rural poverty.

If the recent Income and Expenditure Household Survey figures are valid, despite consistent economic growth poverty appears to have increased over the period 2003 to 2006 and on current projections a number of MDG targets may not be achieved.

The Philippines acknowledges in its 2007 Midterm Progress Report on MDGs that it needs to step up its efforts in meeting some targets. Almost all the regions are consistently on track on targets on poverty, nutrition, child mortality rates, access to safe drinking water and sanitary toilet facility. This however does not hold true for dietary energy intake, elementary participation rate, elementary cohort survival rate, ratio of boys to girls in elementary and secondary level of schooling, maternal mortality ratio and contraceptive prevalence rate.

One measure indicative of a shortfall is access to primary education. The most recent figure reported for school year 2005-06 indicated a decline in the participation rate from 96.8% in 2000 to 84.4%. Dropout rates in elementary education increased from 2001-2005; completion rates were on a decreasing trend from 2002-2005.

The decline in the number of maternal deaths per 100,000 live births has slowed down: from 209 deaths in 1993, maternal mortality ratio (MMR) went down to 172 in deaths in 1998, and in 2006 to only 162. At this slow rate, it is unlikely that the 2015 target of 52 deaths in the MMR will be met. Access to reproductive health care improved at a modest rate for currently married women aged 15-44. However, at this rate, the 2015 target of 100 percent access is difficult to achieve.

In addition, the Philippines has one of the highest levels of income inequality in Asia, with the poorest 20 per cent of the population accounting for only 5 per cent of total income or consumption.

Natural disasters, the risks associated with variable markets, and armed conflict in Mindanao, also threaten to deepen existing disparities by disrupting growth and worsening poverty - with the conflict affected areas being the poorest in the country.

Australian assistance to the Philippines
Country program estimate 2008-09: $97.3 million

Total ODA estimate: $109.3 million

Australia is one of the top three bilateral grant aid donors along with the United States and Japan. The Philippines is among Australia's five largest development partners including Indonesia, Papua New Guinea, and Solomon Islands.

In 2007, Australia revised its approach to development in the Philippines and began implementing a new, four-year country program strategy. The Australia-Philippines Development Assistance Strategy 2007-2011 has an overarching objective to assist the Philippines to meet its development goals, especially in reducing poverty, increasing economic growth and maintaining national stability.

Australia's aid program in the Philippines is centred on three focus areas: economic growth, basic education and national stability and human security.

Under these pillars, Australian assistance to the Philippines in 2008-09 will focus on:

Basic Education, through support for programs under the Government of Philippines Basic Education Reform Agenda to assist the Philippines to achieve its MDG target for universal primary education. This includes support for school based management, rationalisation of teacher deployments to ensure coverage of remote schools, text book provision and school building construction. Increased support will be provided to improve access to and quality of education for children in disadvantaged and conflict affected areas.

National Stability and Human Security, through support for peace building programs focused at the community level, provision of economic opportunities through small scale infrastructure development and micro finance, and delivery of health services. The program will facilitate more coordinated efforts by donors in their work in conflict affected areas. Increased Australian funding will be provided through multilateral partners to support efforts to reduce the high maternal mortality rate in the Philippines.

Economic Growth, through programs to increase the quality and level of government expenditure on social services and infrastructure, by supporting improvements to national level budgeting, public financial management and public-private partnerships. The program will support improved public sector management in upgrading and maintenance of critical road infrastructure at the provincial level. Major design work will be undertaken to develop a program of assistance to improve economic opportunities for the rural poor.

Australia's approach to aid delivery in the Philippines over the years to 2011 will include analysis of development challenges and expanding policy and sectoral expertise to strengthen program coherence and impact.

As well, it will include collaboration with multilateral agencies and other bilateral donors to support common policy agendas and embedding anti corruption measures throughout the program. It will also include incorporating conflict-risk management and peace-building principles in Mindanao initiatives and a joint annual review with the Philippines Government on strategy performance and relevance.

In addition to the current bilateral program, the Philippines will receive around $12 million in other flows in 2008-09, including regional projects, volunteer programs, non-government organisations assistance and the Australian Centre for International Agricultural Research (ACIAR).

See also:

Rapid Assessment of Philippines Country Strategy 2004 - 2008
Since 2006 Australia has:

assisted in strengthening the Philippine Government's public expenditure management and budgetary processes by introducing improved budget planning, in the form of forward estimates and the performance-based allocation of the national budget. Both the Budget Strategy and the Medium Term Expenditure Framework were developed with Australian technical assistance.
provided technical advice on stabilising the initial operations of the wholesale electricity spot market, and in formulating the Philippine minerals reporting code and accreditation guidelines
been successful in introducing reforms in policy and property valuation standards, records management and increasing title security for landowners. The One Stop Shop established by the Land Administration and Management Project in Leyte has integrated land related services in a more efficient, cost-effective manner. Leytenos can now get true copies of their certificates of titles in just three hours (it formerly took two days) - a major feat considering the bureaucracy involved in land-related services and transactions in the Philippines.
implemented the Local Government Code in Misamis Occidental (the only province to do so) and improved participative planning in agrarian reform communities, as demonstrated by 16,000 households benefiting from 100 small scale infrastructure projects.
increased production of small enterprise development by an average of PhP36,403 (approx A$960) per production unit corresponding to an increase in average enterprise income of PhP 8,367 (approx A$220) per month through small enterprise development projects supported by the Philippines-Australia Community Assistance Program. These small enterprises generated dividends averaging PhP30,204 (approx A$800) per member per year.
immunised over 213,000 children from vaccine-preventable diseases, inoculated more than 700,000 children under six with two doses of polio vaccine in partnership with the United Nations Childrens Fund, and developed a program for maternal and child health in Mindanao
enhanced teaching and learning outcomes and assisted thousands of educators and school children in 18 provinces in Mindanao and Visayas, and has introduced new approaches to basic education delivery through the introduction and adoption of school-based management, enhancement of Muslim education curriculum and access for indigenous people.
has been instrumental in providing tested innovations to the Philippines Department of Education which have influenced the Basic Education Sector Reform Agenda in standards setting, educational planning, learning outcomes management; financial management, educational administration and management, and monitoring and evaluation
helped the government of Philippines meet international ship and port security standards with support from the Australian Government Department of Transport and Regional Services and the Australian Federal Police, and helped establish a crime assessment protocol system for information sharing.

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