P25-b loan for cash subsidy eyed

The Social Welfare Department is negotiating for a loan of up to P25 billion from the World Bank to support the conditional cash transfer program called Pantawid Pamilyang Pilipino.

Social Welfare Secretary Esperanza Cabral, in a forum on conditional cash transfers at the Asian Institute of Management in Makati City, said the amount would be needed to sustain the subsidy program, which is presently financed by the national government.

Cabral said P5 billion would be needed yearly to sustain the subsidy program for the poorest households over the next five years. The department’s budget would increase 100 percent to P10.5 billion from P4.8 billion in 2008.

She said that instead of extending a program loan to finance the government’s fiscal deficit, the bank is willing to specifically support the subsidy program.

Bert Hofman, World Bank country director for the Philippines, said the bank is open to supporting the conditional cash transfer program, which as a social safety net has proven effective in providing immediate relief to poor families in other countries such as those in Latin America.

“Conditional cash transfer as a social safety net helps households manage risk,” added Margaret Grosh, lead economist for the World Bank’s Social Protection unit.

Under the program, cash grants amounting to P500 a month for health and nutrition expenses and P300 a month for educational expenses of each child are given to qualified households. A family with three qualified children could get up to P1,400 monthly.

The department is targetting up to 963,000 children beneficiaries in 321,000 households in a total of 26 provinces and 12 cities nationwide from 2008 to 2013.

But the target beneficiaries represent only 7 percent of the 4.7 million poor households in the Philippines.

From the original target of 20,000 households, President Arroyo asked the Social Welfare Department to expand the conditional cash transfer program to cover 321,000 households after food and fuel prices shot up in the first half of 2008.

At present, beneficiaries are selected through computerized “proxy means test” that ranks poor households based on their household characteristics.

Cabral said the conditional cash transfer is not a dole-out. “Our program which we call Pantawid Pamilyang Pilipino enhances the role of parents and helps them accomplish their duties and responsibilities to their children. The program encourages them to invest in the future, in particular in the health and education of their children and in the nutrition and food for their families,” she said.

Participants in the forum, however, cited the need to improve the targetting system of the program and reduce the leakage in subsidies.

There were studies in the past which found a 40-percent leakage in related subsidy programs intended for the poor such as the food-for-school program and the National Food Authority’s subsidized rice program.

Cabral said initial results of the conditional cash transfer program involving 6,000 families in poor communities in Agusan del Sur, Misamis Occidental, Pasay and Caloocan in January 2008 led to improved use of educational and health services among the poor.–Roderick T. dela Cruz, Manila Standard Today