WORLD BANK TEAMS STUDYING PHILIPPINE LOAN REQUESTS
Two World Bank review teams are in the
Philippines to assess government requests for funding for an
expanded housing plan and an accelerated land reform program,
bank officials said.
    They told Reuters the housing program loan request is for
100 mln to 150 mln dlrs.
    The government has said it will ask for another 500 mln dlr
long-term loan from a World Bank-led consultative group of
multilateral and bilateral aid donors to partially fund its
land reform program.
    The officials said negotiations will start next month on
another 150 mln dlr loan sought by Manila to carry out reforms
in 14 major state-owned corporations.
    On Tuesday, the world bank approved two loans totalling 310
mln dlrs to help the country's economic recovery program.
    The bank was also studying Philippine proposals for loans
to finance geothermal and education projects, sources said.
    World Bank sources said the bank's lending to the
Philippines since 1957, including the latest loan, totalled 4.3
billion dlrs. The money has been spread out over more than 100
loans and about 1.2 billion dlrs remains undisbursed.
    The World Bank sources said the bank cancelled 450 mln dlrs
in loan commitments to the Philippines during the last three
years of President Ferdinand Marcos's rule. Marcos was toppled
by a military-civilian revolt in February 1986.
    "The loans were cancelled because the projects slated for
aid were not implemented properly," they said.
    The sources said the bulk of this week's loan would be used
to rehabilitate the state-owned Development Bank of the
Philippines (DBP) and the Philippine National Bank (PNB) which
are saddled with seven billion dlrs of non-performing assets.
    "At least 300 mln dlrs of previously cancelled loans were
supposed to go to the DBP," the World Bank sources said. "Over
the past three years the bank's disbursement pipeline to the
Philippines almost completely dried up."
    In 1986 alone, the two banks paid out 16 billion pesos in
loan repayments, about 59 pct of the government's budget
deficit of 27 billion pesos for the year, they said.
    Agreement on the latest loan was reached in principle last
September when President Corazon Aquino visited the U.S. The
sources said the loan was held up because of delays by the
government in submitting essential documents.
    The World Bank sources said the request for land reform
funding would be discussed at a meeting of the World Bank-led
consultative group to be held alongside the April 27-29 annual
meeting of the Asian Development Bank (ADB) in Osaka.
    The government has said the land reform plan aims to
distribute 9.7 mln hectares of land to impoverished peasants.
    The sources said the Philippine government estimated the
entire program would cost 60 billion pesos. "About 27 billion is
long-term and will cover land transfer costs borne mainly by
landowners," they said. "The landowners will be paid in 10-year
bonds redeemable in ten instalments."
    The sources said the bulk of financing would cover
development costs for the land program and help to bridge the
gap between the 10-year spread of payments to landowners and a
proposed 30-year loan repayment period for land buyers.
    "If you include interest, the total amount of external
assistance needed annually should not exceed 200 mln dlrs," the
sources said. "That volume of aid does not appear difficult."
    They said Japan, the World Bank and the ADB are expected to
provide most of the financing while the Philippines' 12
bilateral aid donors would contribute the rest.
    The World Bank sources said lending to the Philippines is
designed to support its balance of payments position while the
government aims for a target of six to seven pct annual gross
national product growth.
    "Brazil did not do this homework," one said. "They pushed
ahead with a recovery program without ensuring backing for
their balance of payments position. Manila is being more
cautious and aims at soft borrowings which, it is hoped, will
be outstripped by annual growth rates and eventually result in
the country emerging from debt in five or six years."
    Philippine foreign debt is currently 27.8 billion dlrs.
 REUTER
