Press Releases

House approves measure to make foreign debts more effective; Salceda says ODAs good “when transparent and accountable.”

November 24th, 2021

The House of Representatives on Monday unanimously approved on third and final reading House Bill 10322, which seeks to ensure the effectiveness of Official Development Assistance (ODA) loans and grants. It received 166 affirmative votes. Representative Joey Sarte Salceda (Albay, 2nd district), Chairman of the House Committee on Ways and Means, is the principal author of the measure.

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 when estimating the present value of debt service on grants, if such yields are lower than the 10% fixed rate set by the National Economic and Development Authority (NEDA).

“ODAs are useful when they work for the people. When the terms are fair, the spending is efficient, and the process is accountable and transparent, ODAs are good. This measure aims to keep them good.” Salceda said.

“The fact that both the members of the Majority and the Makabayan bloc were authors of this proposal shows the unanimity with which the House regards making our debts work for the Filipino people,” Salceda added.

If enacted, the bill will also continue to require that the grant portion of the ODA consist of at least 25% of the aid package. It will also require that the ODA be administered with the specific objective of achieving sustained reduction of poverty and inequality.

The measure will also require studies on the project’s social and economic impact and the consultation of targeted groups. A Congressional Oversight Committee will also be created to monitor and ensure proper implementation of the proposed law and review ODA grants and loan agreements entered into by the National Government. It will have the authority to initiate independent impact studies on ODA-funded projects.

ODAs are concessional financing provided by multilateral banks or foreign governments to poorer countries to promote economic development.

Salceda said that he supported the measure as “the institutionalization of the Paris Declaration on aid effectiveness” in the Philippines.

The Paris Declaration of 2005 “gives a series of specific implementation measures and establishes a monitoring system to assess progress and ensure that donors and recipients hold each other accountable for their commitments.”

The fundamental principles of the declaration are:

(1) Ownership: Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.
(2) Alignment: Donor countries align behind these objectives and use local systems.
(3) Harmonisation: Donor countries coordinate, simplify procedures and share information to avoid duplication.
(4) Results: Developing countries and donors shift focus to development results and results get measured; and
(5) Mutual accountability: Donors and partners are accountable for development results

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