PUBLIC ACCOUNTABILITY IN OFFICIAL DEVELOPMENT ASSISTANCE: THE
PHILIPPINES’ DELIVERING ON COMMITMENTS and ACHIEVING RESULTS1
The Philippines as a Recipient of Official Development Assistance
The Government of the Philippines has been a recipient of ODA for both
grants and concessional loans since 1957. Current ODA loans stand at about
US $10 billion—mainly for infrastructure, social development, and rural
development—with disbursements reaching about a billion dollars annually.
The Government of Japan through the Japan Bank for International
Cooperation (JBIC), the Asian Development Bank (ADB), and the World Bank
account for about 86 percent of these loans, although other bilaterals (the
Peoples’ Republic of China, South Korea, etc.) have in recent years
increased their levels of assistance. In addition, the Philippines obtains ODA
grants (both for capital and technical assistance) from donor countries and
agencies which include Japan, the United States, Germany, Australia,
Canada, Spain, South Korea, New Zealand, the European Union, France,
Sweden, and the UN System. Annual disbursements from grants reach about
US$400 million.
The Philippines is classified as a middle income economy, with the following
characteristics:
 Gross National Product growing at 5.7 percent in 2005 (in real 1985 prices)
and Gross Domestic Product at 5.1 percent.
 During the last five years, the economy grew at 4.4 percent annually, and is
expected to grow at 6.0 to 6.8 percent annually in the next three years.
 With population of 85 million, poverty incidence remains high at 24.7
percent in 2003, although this has declined from 27.5 percent in 2000.
The Enabling Environment for ODA
In 1996, the Philippine Congress passed the Official Development Assistance
Act, which exempted ODA from the foreign borrowings limit set under the
Foreign Borrowings Act. Beyond such exemption, the ODA Act provided for
oversight functions by Congress on the Governments’ use of ODA and the
holding of annual ODA performance reviews by the National Economic and
Development Authority (NEDA), which is the Government agency responsible
for socio-economic planning, investment programming, and monitoring and
evaluation.
Chiefly responsible for formulating the Medium-Term Philippine Development
Plan (MTPDP) and the Medium-Term Public Investment Program (MTPIP), the
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Paper presented by Mr. Rolando G. Tungpalan, Assistant Director-General, National Economic and
Development Authority, Philippines during the Council of Asian Liberals and Democrats (CALD) Conference on
Public Accountability in ODA, 27-29 April 2006 in Siem Reap, Cambodia.
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NEDA serves as focal point for ODA coordination, taking the lead role as
government counterpart in the preparation of the respective ODA partners’
country assistance strategy/programs and in the conduct of programming
consultations/negotiations.
In accordance with the MTPDP/MTPIP, government implementing agencies
submit to the NEDA proposed major development programs and projects for
appraisal and subsequent approval (or other dispositive actions) by the
Investment Coordination Committee (ICC) of the NEDA Board. The ICC is an
interagency cabinet-level body composed of the Secretaries of Finance,
Socio-Economic Planning, Budget and Management, among others. It
ascertains the priority and viability of every proposed major development
program or project.
As mandated in the ODA Act, the NEDA undertakes an annual ODA Review
of all ongoing ODA-funded projects and submits the resulting report to
Congress not later than June 30 each year, before Congress starts its regular
session. Supplementing the annual review are the quarterly or bi-monthly
project implementation reviews with the major ODA partners, the quarterly
Project Implementation Officers’ meetings, and the regular project facilitation
meetings of the Regional Project Monitoring and Evaluation Committees
(RPMCs) organized in all regions of the country.
Dimensions of Public Accountability in ODA
ODA constitutes public resources available to government for goods and
services for the public. Public accountability is associated with governance
but not limited to graft and corruption. Public accountability in ODA
encompasses the realms of planning, programming, and implementation,
and may meaningfully be adjudged during the various stages and processes
of decision-making. The key dimensions of public accountability deemed
relevant are as follows:
(i)
allocative efficiency, or spending on the right things
(ii)
operational efficiency, or spending things right; and
(iii)
effectiveness and sustainability, or achieving expected
development objectives and sustaining benefits and impact.
This paper draws from the Philippines’ experience as a recipient and a
borrower country in fostering public accountability in ODA, using the above
dimensions as framework.
Allocative Efficiency: Putting Resources on Development Priorities
The MTPDP defines the development priorities of Government, expressed in
terms of national and sectoral objectives. These are further translated in
measurable annual and multi-year output, and to some extent, outcome
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targets in a document referred to as Strategy Planning Matrices (SPM). The
major development projects (both public and public-private partnerships)
are contained in a companion document, the MTPIP. Starting with the
current medium-term Plan (2004-2010), mechanisms and processes have
been improved to functionally and operationally link the Plan/MTPIP with the
National Budget as well as the capital expenditure programs of state
enterprises (government owned or controlled corporations or GOCCs).
As for ODA, where a donor/ financing institution operates on the basis of a
country program, the existing development cooperation with such partners
have been aligned with the MTPDP. This practically cuts out the once
pervasive practice of supplier- or even donor- driven projects. All proposed
projects are screened for their consistency with expressed government
priorities (available in print or electronic form in the website of NEDA), and
appraised for their socio-economic, financial, and operational viability by the
ICC. The ICC approval process further requires prior endorsement by the
respective Regional Development Councils (a multi-stakeholder coordinating
body established in every administrative region) consisting of government,
non-government, and private business sector representatives at the
subnational level.
During the past two years, the Government-chaired Philippine Development
Forum (PDF), erstwhile the World Bank-chaired Consultative Group (CG)
Meeting, has evolved into a viable mechanism for harmonizing and aligning
ODA to addressing the development challenges and priorities articulated in
the Plan. The periodic meetings of the working groups (representing key
thematic areas such as fiscal, local autonomy and decentralization) serve to
generate consensus among stakeholders (including ODA partners, civil
society, representatives of Congress, the academe) on actionable agenda in
support of the Plan. The Forum has broadened participation in the Plan
implementation process, deepened country ownership, and fostered greater
transparency and raised the benchmark for public accountability.
Operational Efficiency: Exacting Value For Money and Enhancing Greater
Productivity
Upon ascertaining consistency of proposed ODA funded projects with the
MTPDP/MTPIP, and screening to ensure viability and cost-efficiency of project
design, Government authorizes the ODA grant and/or loan financing.
Principal responsibility for implementing projects in accordance with ICCapproved scope, cost, and time frame is assumed by the concerned
government implementing agency. As a general policy, Government would
prefer untied ODA, as this allows for competitive and more transparent
procurement. The Procurement Act of 2003, which embodies international
standards and practices, has gained acceptance by major ODA partners,
namely the World Bank, the ADB, and the JBIC, that donor-specific
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procurement procedures have largely been eliminated. To the extent that
knowledge and skills on procurement have become more universal and
wide-spread, the potential for wider participation and more competitive bids
has begun to be realized.
As mandated by the ODA Act, the NEDA undertakes an annual review of the
physical implementation and disbursement performance of the ongoing
ODA portfolio. Findings are discussed with the respective implementing
agencies and the overall results taken up in the ICC and the NEDA Board
before the annual consolidated report is submitted to Congress. Quarterly
reviews jointly managed by NEDA and each of the three major ODA loans
partners are conducted, while NEDA convenes quarterly meetings with the
agency-designated Project Implementation Officers (PIOs). The PIOs are
have principal responsibility for ensuring efficient implementation of their
respective ongoing ODA portfolios. Complementing the central/national
level reviews are subnational project facilitation activities undertaken by the
RPMCs, which are chaired by the NEDA Regional Directors and include as
members government and non government representatives. The RPMCs
represent on-the-ground monitoring and evaluation network, giving
feedback on implementation progress and preventing or solving
implementation bottlenecks within their control and jurisdiction such as rightof-way acquisition and social acceptability.
This multiple but coherent approach to ODA portfolio management has
resulted in improvement of performance, turning around a regime of poor
absorptive capacity into satisfactory and sustained ODA disbursement
performance. Starting 2003, ODA (investment loans) have sustained over a
billion dollars in disbursements, while disbursement ratios improved from 10
percent in 2001 to 17 percent in 2005, amidst declining levels of ODA
commitments. (ODA commitments have declined as a result of portfolio
“clean ups” for projects or components of projects that have been de
prioritized and adherence to quality-at-entry parameters in approving
projects for ODA funding.)
While improvements in disbursements have yet to be matched by
improvements in the quality of expenditures, the mechanisms and processes
established by Government have revealed serious flaws in design
assumptions and weaknesses in implementation machineries of line agencies
(at times contrary to ODA partners’ appraisal and approved detailed
engineering and design). The empirical findings have provided the ICC and
implementing agencies with empirical basis from which to draw lessons. They
also allow the ICC to institute measures for reducing and even preventing
major concerns, such as
mid-course design changes or protracted
implementation schedules (due to conditions that could have been
addressed with proper project preparation and design) . These events in turn
result in cost overruns and inefficiencies .
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Effectiveness and Sustainability: Achieving Development Objectives and
Impact
Perhaps the most meaningful of the three dimensions of public accountability
in ODA is that which tells us whether and to what extent ODA is delivering the
end results. Are outputs produced by the project likely to achieve expected
outcomes throughout their economic life? Ensuring that a project is likely to
achieve its objectives at the time of ex ante appraisal, through its
implementation and operational phases, presents the ultimate level of public
accountability.
The ICC approval process embodies a Results Monitoring and Evaluation
(RME) system that each proponent agency must establish. The RME involves
presenting a proposed project in terms of a results framework (adopted from
the logical framework) explicitly defining outcome and output indicators and
targets (with baseline values). The logframe (referred to as ICC Form 6),
should be updated by the implementing agency within the first year of
project implementation: subsequently, the implementing agency is required
to report annually on progress using the logframe indicators until the project is
completed. During the initial years of operations, the operating entity is
required to provide NEDA with RME reports, and where relevant, postevaluation studies may have to be conducted.
While adjudged most important, managing and measuring ODA for these
end results have not gained much headway. Actual operationalization of
RME after ICC approval has barely been carried out by the implementing
agency. Capacity for RME remains weak and not many resources have been
allocated for this. However, the renewed focus on managing for results is
creating a strong performance orientation in the bureaucracy that provides
the enabling environment for focusing on and delivering results. These include
the Paris Declaration of 2005 on Harmonization, Alignment, and Managing for
Results; and the current MTPDP and SPM involving government agencies to
publicly report their performance in terms of output and outcome indicators.
Current reforms in public sector management, particularly in public
expenditure management, have introduced instruments and mechanisms
that foster greater transparency and accountability for performance. In the
case of the national budget, the Department of Budget and Management
(DBM) and the NEDA are jointly working on operationally linking the Plan (the
priorities) and the national budget (public resources) and establishing
agency-performance indicators. For the forthcoming budget preparation for
CY 2007, budgets will be justified in terms of agencies’ Major Final Outputs
(MFO) while agencies’ performance will be measured using the
Organizational Performance Indicator Framework (OPIF).
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Challenges and Opportunities
The extent to which public accountability in ODA has raised public
awareness, broadened participation, and actually delivering on expected
results or outcomes may vary, but we are surely moving towards narrowing
the incidence of spending on the “wrong” things and reducing inefficiencies.
For one, some bilateral ODA grants remain tied assistance, maintaining their
own systems and procedures and lacking in transparency. However, this
situation is expected to improve as pressures for country ownership,
alignment and harmonization have mounted upon the donor community.
It is now easier to draw support from the donor community as the
MTPDP/MTPIP have become not a mere wish list but a clear articulation of
what Government sets out to achieve over the medium term. As pointed
earlier, ODA assistance has been less donor- or supplier-driven and more
aligned to the country’s priorities.
With government procurement and financial management systems now
attuned to international standards and practices, the major ODA sources
have begun to adopt these systems and procedures rather than imposing
theirs (although donors have likewise begun to harmonize and simplify
procedures, one of the key commitments embodied in the Paris Declaration).
The results orientation of many ODA agencies as well as the Philippine
Government has helped shape the infrastructure (and the bureaucratic
culture) to measure performance in terms of development outputs and
outcomes, and thus exact accountability at various levels. Sustained
performance reporting, however, has yet to be realized as capacity within
the bureaucracy on performance management needs to be further
developed and put to actual use.
As systems and procedures are strengthened and institutionalized,
information on ODA programs and projects are now accessible in print and
on the web (see for instance the NEDA website at www.neda,gov.ph). The
public launch of major reports (such as The Philippine Progress on the
Millennium Development Goals and the Philippine Socio-economic Report)
displays the clear commitment of Government to fully disclose progress (or
lack of it) on major programs and projects, many of which are supported by
ODA. Localization of both plans and reporting further allows for wider
participation in the development process.
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Conclusion
Public accountability in ODA is enhanced when recipient governments
provide mechanisms and instruments that are characterized by
transparency, coherence, effective controls and incentives, broad based
participation, and measurability. Public accountability in ODA is achieved
when there are strong institutions tasked to formulate the development plan
and investment program, mobilize and allocate resources to the country’s
development priorities, implement programs and projects, monitor and report
on performance, and carry out sanctions or reward good performance.
The Philippines has gained the confidence of the donor community on the
use of ODA as seen from the following:
 alignment of ODA assistance to the MTPDP/MTPIP
 adoption by ODA partners of Philippine Government laws and rules on
public procurement and financial reporting
 support by ODA partners for sectorwide programs (rather than just projects)
 budget support ODA
The recent Philippine Development Forum (PDF) involving various
stakeholders and the donor community in the Philippines cited the specific
gains achieved relative to commitments agreed to during last year’s PDF. No
less than the President and the Vice president of the Philippines reaffirmed
Government’s commitment to meeting the objectives of the Plan and
mobilizing and allocating resources to priority programs and projects.
Indeed, the positive statements from the heads of multilateral and bilateral
ODA partners during the PDF constitute a credible seal of good
housekeeping. The next hurdle is to secure that same seal from the people
themselves, the ultimate beneficiaries of development.
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