OPINION: US MCC AID WITH STRINGS ATTACHED
MANILA, SEPTEMBER 27, 2010 (MALAYA) BY BENJAMIN E. DIOKNO 'The aid has strings attached; but they are by and large non-binding. As a civilized nation and freedom-loving people, we have to embrace free trade, economic freedom, good governance and adherence to human rights as national goals for sustainable development. Perhaps these goals are also consistent with US business interests in the country but that is of secondary importance.�
THE Philippines will be the recipient of the US-run Millennium Challenge Corp. $434-million aid (roughly P19.1 billion) stretched over a period of five years. Some cause-oriented groups criticized the "strings attached" to the aid, saying these conditions, namely, open trade, economic freedom, good governance, and adherence to human rights, do not guaranty an end to poverty among Filipinos but are designed to protect US business interests in the country.
The aid has strings attached; but they are by and large non-binding. As a civilized nation and freedom-loving people, we have to embrace free trade, economic freedom, good governance and adherence to human rights as national goals for sustainable development. Perhaps these goals are also consistent with US business interests in the country but that is of secondary importance.
Some critics will say that the $434-million, five-year aid is not big enough compared to the $7 billion programs already committed by the US-run Millennium Challenge Corp. (There are two types of MCC grants � large 5-year compacts and small thresholds programs. To date, some $7 billion compact programs and $495 million in policy improvement programs have been committed.)
Some critics will say that only $389 million of the $434 million aid will flow into real programs and projects �$214.4 million for secondary roads improvement, $120 million for small-scale development projects in poor communities, and $54.4 million for BIR revenue improvement projects. The remainder, some $45 million, will flow back to the US in terms of administrative and supervisory handling of the project.
So what? Beggars can�t be choosers. For sure, the $389-million net assistance is not big enough � approximately an annual flow of $77.8 million or P3.4 billion for the next five years. The amount is a measly 0.2 percent of a P1.5-trillion national budget.
But aid is aid is aid; $389 million is less than $434 but it is definitely better than zero. And since money is fungible, the $389 million (or P17.1 billion) that will be used to finance the MCC projects may then be reallocated for other priority projects.
Projects are worthwhile and carefully selected
From the national perspective, it is difficult to disagree with the selection of the projects.
Some $214.4 million (P9.4 billion) has been allocated for the Secondary National Roads Development Project. According to the MCC fact sheet, the "Secondary National Roads Development Project is designed to reduce transportation costs through the rehabilitation of an existing 222-kilometer road segment. By bringing about savings in vehicle operating costs and time for both passengers and goods, and by reducing road maintenance costs, the investment will increase commerce in and between the provinces of Samar and Eastern Samar, and ultimately increase incomes."
Some $120 million (P5.3 billion) will go to rural roads, water and other projects in poor communities. According to the MCC fact sheet "the Kalahi-CIDSS project will improve lives in rural areas by targeting communities where poverty exceeds the national average for small-scale, community-driven development projects. The project does this through the direct provision of infrastructure and services associated with community-selected and managed sub-projects, strengthened community participation in development and governance activities at the village and municipal level, and improved responsiveness of local government to community needs. The project will build on and support the participatory planning, implementation, and evaluation methodology developed by the Philippines Department of Social Welfare and Development in collaboration with the World Bank."
The grant will sustain funding for an existing program. "The grants for the community sub-projects will be provided directly to the local communities, which are responsible, the procurement of goods and services for their sub-project, and, in most cases, the operation and maintenance of the physical assets," according to MCC.
Finally, some $54.4 million (P2.4 billion) will be spent for the Revenue Administration Reform Project. The MCC fact sheet states that the "Project addresses the need to raise tax revenues and reduce tax evasion and revenue agent-related corruption. A key constraint to economic growth in the Philippines is the lack of growth- enhancing investments in public goods such as infrastructure and social services. This project will focus on increasing the efficiency and sustainability of revenue collection through a redesign and computerization of business processes."
The remainder of the project funds, some $45 million (P2 billion) has been set aside for administration � $37 million for administrative and oversight costs of the projects and $8.26 million for monitoring and evaluation of the compact.
Control greed, implement projects transparently
By and large, these projects are expected to improve the lives of poor Filipinos. The MCC grant may not be sizable, but it is large enough to attract the attention of opportunistic businessmen and civil society organizations and corrupt bureaucrats and politicians. The challenge for the Aquino government is to make sure that greed does not win, that opportunism does not happen.
Another challenge for the government is how to ensure that MCC projects are completed on time, that they are implemented transparently, and that the benefits of these projects go to the intended beneficiaries.
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Chief News Editor: Sol Jose Vanzi
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