Lower disbursements plague foreign aid

IMPLEMENTATION ISSUES, including delayed bidding, weak local government participation and policy flip-flops, reduced the use of aid from foreign donors last year, according to an annual report the National Economic and Development Authority (NEDA) released yesterday.

The amount of official development assistance (ODA) the country got last year was down by nearly 1% to $9.61 billion from $9.7 billion in 2009, the NEDA said in its report.

ODA disbursements dropped 35% to $1.59 billion last year from $2.44 billion in 2009.

The ODA loans were supposed to finance 81 projects and 10 programs, worth $7.9 billion and $1.7 billion, respectively.

Of these projects and programs, however, only 72 are ongoing, while 15 were closed and use of four projects loans have yet to start.

In a statement, NEDA blamed low disbursement rates — actual disbursements as a percentage of the target outlay — with at least 18 ODA-funded initiatives having disbursement rates of below 50%.

The NEDA report cited various reasons for the below-50% disbursement rate, including:

* delayed procurement and bidding issues (involving the New Communications, Navigation and Surveillance/Air Traffic Management; Mindanao Roads Improvement Project; Judicial Reform Support Project; and National Road Improvement Management Project Phase II);
* change in disbursement targets, request for fund reallocation and noncompliance with procedures for loan releases (Credit for Better Health Care and Manila Third Sewage Project);
* problems with project contractor (Help for Catubig Agricultural Advancement Project, Stage 1);
* low demand for sub-projects (Second Cordillera Highland Agricultural Resource Management Project);
* unresolved issues on data sharing and delayed finalization of activities (National Sector Support for Health Reform);
* delayed start-up (Health Sector Reform Project and the Mindanao Rural Development Project Phase II);
* sub-projects were proposed to be covered by additional financing (Laguna de Bay Institutional Strengthening and Community Participation Project);
* delay in fund releases to review proposals for community grants (KALAHI-CIDSS anti-poverty project);
* bad weather (Central Mindanao Road Project);
* delayed submission of progress billing (Urgent Bridges Construction Project Stage 1; North Rail Project Phase 1 Section 1); and
* low interest rates (Logistics Infrastructure Development Project).

Funding for six other programs and projects, with a cumulative amount of $568 million, was not disbursed, due to cost-sharing issues between the national and local governments, documentation problems and delayed start.

These loans included: the Angat Water Utilization and Aqueduct Improvement Project ($116.6 million); the Agrarian Reform Communities Project II ($30 million); the Second Cordillera Highland Agricultural Resource Management Project ($10 million); and the Credit Facility for the Environmental Management Project ($10 million).

The Tulay ng Pangulo sa Kaunlaran ($212.8 million) and Tulay ng Pangulo para sa Magsasaka ($188.68 million) projects, meanwhile, were suspended for reasons the NEDA did not disclose. The two projects were supposed to install a fly-over system and long-span bridges in urban areas.

NEDA Deputy Director-General for Investment Programming Rolando G. Tungpalan said via text: “Every project at risk is subjected to a catch-up plan with a view to hurdle the obstacles.” — Antonio Siegfrid O. Alegado, Businessworld