WORLD BANK CAN AID PHILIPPINES' LAND DEVELOPMENT
The World Bank's policies prevent it from
lending money for the transfer of land from landowners to the
landless, but it can help finance development of the
Philippines' proposed land reform program, a bank official
said.
    "The World Bank by its established policies cannot use its
resources to finance the transfer of assets from one group to
another. Our mandate is to finance investment-related
activities," Rolando Arrivillaga, the bank's resident
representative in the Philippines, told Reuters in an
interview.
    Arrivillaga said he wanted to clarify part of a report by a
World Bank mission that came in March to review the land reform
program and which said the bank would not be able to finance
compensation payments for the transfer of land.
    He said the Philippine government had never asked the bank
to finance land transfers, and the bank's position should not
be taken to mean that it ruled out any lending for the program.
    "Clearly in the case of land reform the question of land
transfer by definition is transferring assets from the landed
to the landless," Arrivillaga said. "However, the bank as an
institution can finance the development aspects of the program."
    "We will deal with the part of the program that deals with
how to put the land to effective use once it has been
transferred and how to make the on-farm investments that are
needed to attain the goal of improving the income level of the
beneficiaries," Arrivillaga said.
    "I wouldn't be surprised if other multilateral institutions
are faced with similar constraints," he said.
    President Corazon Aquino's spokesman said last week that
she was committed to launching the program, which limits land
holdings to seven hectares, by using her sweeping powers of
rule by decree before a new Congress convenes in July.
    Presidential spokesman Teodoro Benigno said the land reform
program, estimated to cost about 44 billion pesos, would be
implemented in four phases and benefit 2.64 mln farmers.
    Benigno said the first two phases would complete the
transfer of rice and corn lands and abandoned farmland as well
as the transfer of land sequestered, expropriated or foreclosed
by the government and would cover 1.15 mln hectares.
    But Aquino would not decree the redistribution of large
sugar, banana and coconut plantations, leaving it to the
Congress to work out the details, Benigno said.
    Arrivillaga said bilateral aid donors, who form part of a
consultative group led by the World Bank, might be prepared to
finance the land transfers.
    "I don't think there are fast and easy rules as to how
international sources of finance would behave in a situation
like this, because land reform by its very nature requires rich
financing to be able to carry out the reform in a way equitable
to both the landowner and the beneficiary," he said.
    Arrivillaga said the first priority for the government
would be to tap domestic sources of financing for the land
transfer, but external assistance could be brought in if there
were gaps.
    "In such a fundamental reform the test of the willingness of
the government is how it confronts the domestic resource
requirement," Arrivillaga said. "Multilateral agencies by their
very nature are lenders of last resort. It means they have to
be convinced that the government prioritises the program."
    He said the World Bank had financed developmental costs
under an earlier land reform program launched by former
President Ferdinand Marcos in 1972, and such aid had been
channelled through the Land Bank of the Philippines (LBP).
    The LBP is the main implementing agency under Aquino's
program.
    "If asked to do so again and the program is designed to
improve the standard of living of the poor then we would
certainly be prepared to consider (lending)," Arrivillaga said.
    He said the tendency in such programs was to exaggerate the
costs by presenting ten-year perspectives in a one-year
context.
    Arrivillaga said the government could solve most of its
financing problems by devising effective instruments to
compensate landowners.
    Finance Secretary Jaime Ongpin has said landowners are
likely to be paid 10 pct in cash and the rest in 10-year bonds
with 10 pct of their face value redeemable each year.
    Arrivillaga said any instruments used to compensate
landowners had to be freely tradable at near face value and
added: "The challenge is to devise a system of deferred payments
that is as good as cash."
    He said the international financing community was watching
the Philippine experiment with great interest.
    "They are going to be an interesting model for many other
countries because they opened a dialogue on the reforms to
every sector of the population and even international
institutions," he said. "I think they'll be on a very solid base
when they make the decision to launch the reforms."
 REUTER
