The House wants to improve the efficiency of foreign debts.
To ensure the effectiveness of Official Development Assistance (ODA) loans and grants, the chair of the House Committee on Ways and Means said on Tuesday that transparency and accountability mechanisms must be put in place.
House Bill 10322, sponsored by Albay Rep. Joey Salceda, aims to keep ODAs good by making terms fair, spending efficient, and the process accountable and transparent.
“ODAs are useful when they work for the people,” Salceda said after the bill was passed unanimously on third and final reading by the chamber with 166 affirmative votes.
When estimating the present value of debt service on grants, the measure, which was authored and approved by both majority and minority legislators, allows the yield on recently-issued government bonds to serve as the discount rate benchmark if such yields are lower than the 10% fixed rate set by the National Economic and Development Authority (NEDA).
“The fact that this proposal was co-authored by members of the Majority and the Makabayan bloc demonstrates the House’s unanimity in making our debts work for the Filipino people,” Salceda added.
If passed, the bill will keep the requirement that the grant portion of the ODA accounts for at least 25% of the total aid package.
It will also necessitate that ODA be administered with the specific goal of achieving long-term poverty and inequality reduction.
In addition, studies on the project’s social and economic impact will be required, as well as consultation with targeted groups.
A Congressional Oversight Committee will be established to monitor and ensure that the proposed law is properly implemented, as well as to review ODA grants and loan agreements entered into by the National Government.
The committee will be able to commission independent impact studies for ODA-funded projects.
ODAs are loans provided by multilateral banks or foreign governments to poorer countries to help them develop their economies.
Salceda defended the bill as the Philippines’ institutionalization of the Paris Declaration on Aid Effectiveness.
“A series of specific implementation measures and a monitoring system are established to assess progress and ensure that donors and recipients hold each other accountable for their commitments,” according to the Paris Declaration of 2005.
The declaration’s basic principles are as follows:
— Ownership: Developing countries design their own poverty reduction strategies, strengthen their institutions, and combat corruption.
— Alignment: Donor countries support these goals and employ local systems.
— Harmonization: To avoid duplication, donor countries coordinate, simplify procedures, and share information.
— Results: Developing countries and donors place a greater emphasis on development outcomes, which are then measured; and
— Mutual accountability: Development outcomes are held accountable by both donors and partners.