WB ups loan ceiling to boost RP lending

WB ups loan ceiling to boost RP lending

MANILA (Bloomberg): The World Bank said on Monday it will lend as much as 90 percent of the cost of Philippine projects, the first time it has agreed to do so, boosting capital inflows into the Southeast Asian country by as much as US$300 million.

Previously, the World Bank limited financing to 60 percent to 70 percent of the cost, with the rest coming from the government.

"This will contribute to economic recovery," said Vinay Bhargava, the World Bank's country director for the Philippines.

The move, part of a recently concluded review of the bank's lending policies, may be applied to other Asian countries mired in recession, said Aloysius Ordu, World Bank portfolio manager for the Philippines.

The Asian economic crisis is causing tax revenue in Thailand, Indonesia, and the Philippines to decline. That's widening budget deficits and leaving governments less money to stimulate growth.

The Washington-based bank is the Philippines' third-largest source of aid after Japan and the Asian Development Bank. The projects it finances include programs to eradicate diseases and to channel credit to rural companies.

The Philippines has 32 projects costing $2.6 billion that the World Bank, a provider of long-term loans at below market interest rates, is financing. Of the amount, $1 billion has yet to be drawn.

The bank has disbursed $300 million to the Philippines this year. It expects to raise that to $500 million in 1999, which would boost the central bank's hard currency reserves, because of the review that identified ways to eliminate project bottlenecks.

Delays in the implementation of World Bank-financed projects resulted in a backlog of $230 million in loans that should have been drawn but weren't this year, according to figures from the National Economic and Development Authority, the Philippines' planning agency.