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.