Guest contribution - issue 25 - April 2005
By: Jeanne Frances I. Illo
Initiatives
The coordination of official development assistance (ODA) in the Philippines takes place between the Philippine government and donors, within the Philippine government, as well as among donors. Government-donor coordination takes the form of policy dialogues (the Philippine Development Forum, formerly Consultative Group, or CG) 1 or policy round-tables, annual or periodic programming, and annual portfolio reviews. Together with the Philippine government, major donors are seeking to harmonise their procurement procedures and guidelines for crosscutting themes (such as gender and development). Meanwhile, the government has begun to require the inclusion of a logical framework analysis in project proposals, and the use of results-based monitoring and evaluation (M&E).
Philippine laws require ODA assistance to be harmonised with the country’s development priorities, an annual review to be performed of ODA, and an annual ODA review report to be submitted to Congress. The Philippine development priorities are articulated in the Medium-Term Philippine Development Plan (MTPDP) and the Medium-Term Public Investment Plan (MTPIP). These plans are currently supplemented by Strategic Planning Matrices (SPM), which specify sector-agency priorities underpinning the President’s Ten-Point Agenda.
Strategies and structure
Three supervisory bodies play important roles in ODA coordination and management. The National Economic and Development Authority (NEDA) coordinates planning and programming, the Department of Finance (DOF) negotiates and manages loans, while the Department of Budget and Management (DBM) provides budget appropriations to cover loan ‘draw-downs’ and other expenses specified in loan agreements.
While the DOF is primarily responsible for negotiating and managing ODA loans, NEDA takes the lead in coordinating all types of ODA. NEDA coordinates the requests for assistance received from the various Philippine government agencies. The latter usually identify and prioritise projects and specify potential donors. The agencies submit proposals to NEDA for review and endorsement. At the present time, projects that cost at least five hundred million pesos (equal to some 7.1 million Euros) are referred to the Investment Coordination Committee (ICC).
NEDA consists of a Board and a Secretariat. Power rests with the Board, which is chaired by the President, and whose other members consist of the NEDA Director-General (concurrently the Socioeconomic Planning Secretary), secretaries of key departments, the Executive Secretary, and the Central Bank Governor. The Board is assisted in its operations by Cabinet-level interagency committees, including the ICC.
The Secretariat handles the day-to-day operations of NEDA. In particular, its Public Investment Staff lead in programming and project appraisal, while its Project Monitoring Staff (PMS) are responsible for ODA monitoring and lead the annual portfolio review with donors. Each group has assigned staff members to deal with multilateral and bilateral donor agencies. These offices interact with both donors and government agencies that are proposing or implementing foreign-assisted projects.
Aid modalities
The Philippines has adopted several ODA modalities. There are sector-wide reforms (i.e. in procurement, legal, health and education), programme-based ODA (i.e. poverty reduction, HIV/AIDS, Millennium Development Goals, good governance and gender mainstreaming), area-based programming, as well as project-specific ODA. Loans have also been negotiated to finance existing programmes that cannot be funded from domestic resources. Since 1999, the government has received two direct budget subsidy (DBS) loan packages for social services and another for diversified farm income. Unlike other loan portfolios, with utilisation rate lower than 42 percent, almost all of the DBS loans are used up.
Coordination processes: the ‘how’ of ODA coordination
The government sits down with ODA donors, both individually and collectively, to set development assistance priorities, negotiate fund requirements and review loan portfolios. With the exception of loan negotiations, NEDA leads many of the ODA coordination activities. Those that are initiated by donors generally involve NEDA or other counterpart Philippine agencies as co-convenors or resource persons. For its part, NEDA has begun to impose uniform requirements for appraising and monitoring ODA projects and programmes. It is not clear, however, whether the results of ODA harmonisation or coordination efforts will apply to the largest donors. Meanwhile, low implementation performance of ODA projects points to capacity weaknesses among Philippine government agencies.
These generalisations mask the fact that the logic, government-donor dynamics, and resistance to coordination efforts vary. These are illustrated by some examples of how the Philippine government (in the shape of NEDA) and aid donors coordinate ODA.
Assuming joint leadership
Policy dialogues that are jointly convened by a donor and its counterpart Philippine agency are donor creations. Now described as ‘joint government-donor forums’, they serve as venues at which the participants can discuss broad policy reform issues.
The Philippine counterpart generally provides secretarial support. Theoretically, the Philippine government and the donor serve as co-chairs and jointly set the agenda, but the latter often has its own agenda to push. For instance, the UNDP has actively promoted the Millennium Development Goals not just before the executive, but also before the Philippine Congress. The Consultative Group (CG) has lobbied to have the population issue included on the agenda of the Philippine Development Forum, or, in the case of earlier Consultative Group meetings held in-country, corruption discussed as a major problem or constraint on development.
One of the consequences of holding CG meetings in-country was a shift in the leadership and ‘ownership’ of the process. Instead of the donors (represented by the World Bank) driving the process on their own, the Philippine government (in the shape of the Department of Finance) assumed joint leadership by convening sessions, setting the agenda and identifying the groups to be invited. However, the Philippine Development Forum continues to be perceived as a donor-driven activity.
Influencing programming
During the annual programming exercises initiated by donors, NEDA presents its country assistance strategy and the year’s investment requirements to the donor agency in question. The meeting is chaired by NEDA and discusses a set of proposed projects that the donor agency (represented by a team, or ‘mission’, from headquarters) has already reviewed. At the end of the two-day meeting, the mission states what its government (if bilateral) or organisation (if multilateral) is or is not willing and able to fund, based on its own priorities. Particularly during annual programming of multilateral agencies, the Philippine government is expected to provide ‘the substance’, while the donor sets the process or time line.
The influence that the Philippine government can exert on donor programmes depends on how well its agencies or local government units have prepared their substantive inputs, that is, assessments, sector analyses and project priorities. Without clear priorities, the agencies or government units would end up adopting the priorities of donors. Similarly, without the priorities spelled out in the Philippine Strategic Planning Matrices (SPM), donors and proponent agencies could easily ‘harmonise’ or justify proposed projects with the ‘visionary’ MTPDP. Now, the Philippine government can accept a proposed project only if it is in the SPM and MTPIP. Otherwise, it can encourage the donor to consider the other priorities in the plan documents.
Negotiating harmonised ODA systems and procedures
Annual ODA reviews are usually initiated by NEDA (led by the Project Management Staff), along with the Department of Finance, the Department of Budget and Management and implementing agencies, and involve meetings with individual donors. NEDA also conducts a joint portfolio review with the country’s three largest creditors—Japan Bank for International Cooperation, the World Bank, and the Asian Development Bank—to discuss common implementation issues and how these can be addressed. While reviews have made clear the need for harmonised systems (for procurement, reporting and M&E), bilateral donors tend to resist these, constrained as they are by their own government policies. There is little that the Philippine government can do about this. Nonetheless, harmonisation is gaining some momentum because of the global ODA agenda, and the results are being incorporated in planned projects.
Instituting uniform requirements for all ODA projects
NEDA has decided to require all ODA project proposals to have a logical framework analysis (‘logframe’) and a results-based M&E plan. All government agencies are aware of the ‘logframe’ and its application. However, the Investment Coordination Committee (ICC) continues to rely on the project assessment report, rather than the logical framework analysis, in its evaluation or appraisal of project proposals.
Beginning in 1999, NEDA also instituted results-based M&E, urging foreign-assisted projects and programmes to look beyond inputs and outputs. Some agencies have already developed in-house capacity and systems for results-based monitoring and evaluation, but most agencies have yet to build these competences. Because expertise in project planning and M&E is often vested in project management offices, which are staffed by staff working on short-term contracts, these capacities are lost to the agency once the project ends.
Lessons learned
The Philippine case highlights the following lessons and the key capacities needed to achieve results. First, donor country assistance or development frameworks reflect, to a large extent, the development priorities of the Philippines. This has been facilitated by the global debate and concern for the alignment of ODA with the recipient country’s priorities, and by the considerable planning capacity in the Philippines. ODA planning and negotiation will improve, however, if the country has clear long-term plans and priorities as well as a medium-term plan. In addition, NEDA, other supervisory bodies and implementing agencies need to develop the capacity to learn from past projects and to use these during negotiations. Of particular importance is to recognise at an early stage which proposed projects are likely to fail.
Second, the efforts made by NEDA to introduce new planning and M&E systems require Philippine agencies to build competences in these areas. This generally means NEDA Project Management Staff running training sessions for the technical staff of implementing agencies. Peer learning has been possible thanks to NEDA’s ability not just to use the systems, but also to transfer the requisite knowledge and skills to others. This raises a recurring question though: how can this and similar capacities be retained in government, given the low pay and incentives?
Third, the implementation of ODA projects has been hampered by many factors, including structures that weaken implementation incentives, and different systems or procedures or procurement and reporting requirements. The existence of project management offices creates a perverse incentive to unduly prolong project implementation. Meanwhile, confusing procurement procedures can delay project completion. Efforts to harmonise systems and procedures benefit from the ongoing global debate among ODA donors. This debate particularly helps recipient countries that have little political clout vis-à-vis their largest donors or creditors, who may insist on the continued use of their own systems in projects they fund.
Finally, there is a strong anti-corruption campaign and domestic support for civil society participation in policy dialogues, transparency in the procurement process, and accountability for ODA loans. These create pressure for reform in procurement procedures and systems, and the inclusion of non-government stakeholders in talks and supervision, particularly of ODA loans.
By Jeanne Frances I. Illo, research associate of the Institute of Philippine Culture, Ateneo de Manila University (jillo@ateneo.edu) 2. Inputs were also provided by Kyo Naka, Deputy resident Representative, UNDP, Phillipines (kyo.naka@undp.org).
1) Chaired by the World Bank, these used to be primarily pledging sessions of donors active in the Philippines. Until 1999, these meetings took place outside the country. Starting in 2000, these were held in the Philippines, and were jointly chaired by the World Bank and the Department of Finance.
2) Article written with inputs from the directors of NEDA, Public Investment Staff, Project Monitoring Staff, and Social Development Staff, and a former NEDA Deputy Director General. Also interviewed were key directors at DBM and DOF, the executive directors of the Program Management Office responsible for coordinating and overseeing the country’s judicial reform programme, and the National Commission on the Role of Filipino Women. Heads of or senior officials from donor agencies and high-ranking members of research and training institutions were likewise interviewed.
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