THE World Bank is keen on significantly increasing its loans to the Philippines in the next two years as the bank only extended loans worth $250 million last year, according to a bank official.

World Bank country director Bert Hofman said the bank is bent on increasing the amount of loans it extended to the Philippines this year to more than $800 million to be able to meet its credit limit of $1.7 billion for two years.

"In 2007, we only extended $250 million worth of loans. This is way below my credit limit here in the Philippines of $1.7 billion every two years," Hofman said in an interview.

This year, the World Bank also intends to help the government implement conditional cash transfers (CCTs) to approximately 300,000 families nationwide this year by shouldering a portion of the needed funds for the project.

Hofman said the government’s estimates showed that CCT programs need around P5 billion a year. However, he said the amount only covers the 300,000 families estimated for 2008 and could even increase since the number of families identified for this year only represents around 3 percent of the population.

"If you want to cover all poor families, you will end up with higher numbers. [This is the reason we expect the 300,000 figure] to grow over time," Hofman said.

The Washington-based lending agency also intends to finance the public side of the Manila Light Rail Transit 1 South Extension project, which is a model public-private partnership project of the government.

Hofman said the whole project would cost around $250 million to $300 million. The private side of the project, he said, will still have to be bidded out. "We’re in very high hopes with regard to this project. This will become a model for many other public-private partnerships to come," Hofman said.

Also included in the projects the bank intends to fund this year is the expansion of the Kalahi-CIDDS project. Hofman said that through the Kalahi-CIDDS, the bank and the government are able to empower communities and create long-term solutions to development issues in the country.

Meanwhile, apart from the more than $800 million worth of loans this year, Hofman said, the bank will also extend financing through the bank’s food facility that is specifically targeted for food-production-related projects.

Hofman said the $150 million worth of food facility aims to help the Department of Agriculture (DA) make policy changes and create projects that would boost agriculture production to combat the food crisis.

The bank official said the DA and the World Bank are already negotiating on the possible projects that would be financed by the facility.

However, Hofman said that, initially, the DA and the bank would like exploring policy changes that would cater to rice distribution and importation, while agriculture production projects will mainly focus on putting up irrigation facilities and rural roads.

"The Department of Agriculture has ambitious plans. The ballpark figure for the facility is pegged at $150 million but what is more important is the actual disbursement [or drawing of funds] from the facility," Hofman said.

Earlier, the bank said assistance to the Philippines is also based on its fiscal performance. The bank even said that the $1.7-billion high end of its loan extensions to the country will continue if the government is able to continue its fiscal reforms. Initially, the bank allotted $1.8 billion as indicative funding for projects for the Philippines under the Country Assistance Strategy (CAS) from 2005 to 2008. The bank earlier said that aiming to sustain the country’s economic gains should be fueled by the payoffs from the recent fiscal reforms implemented by the government.

In its CAS Progress Report, the bank stressed that maintaining sound fiscal policy remains vital to achieving the twin development goals of economic growth and social inclusion. The bank said fiscal reforms, particularly the positive efforts of the government on the tax effort, will not only reduce risks to macroeconomic stability but also generate resources to deliver social and infrastructure services.

The possible increase will be used particularly for the extension of the bank’s current CAS to June 2009 from the initially planned end date of June 2008.