By Cai U. Ordinario, October 3, 2023; Business Mirror

https://businessmirror.com.ph/2023/10/03/government-payment-of-fees-for-oda-grew-23-44/#:~:text=COMMITMENT%20fees%20paid%20by%20the,and%20Development%20Authority%20(Neda).

Commitment fees paid by the national government for loans it obtained from the country’s development partners grew 23.44 percent in 2022, according to the latest data released by the National Economic and Development Authority (Neda).

In its 2022 Official Development Assistance (ODA) Portfolio Review, Neda said the country’s commitment fees increased to $10.7 million in 2022 from the $8.67 million posted in 2021.

Neda said the proportion of commitment fees to the net ODA commitments was at 0.3 percent in 2022, the same share it had in 2021.

“A commitment fee is a levy or charge imposed by lenders to the borrowers on the undrawn scheduled availment of the loan. By paying this fee, the borrower demonstrates their commitment to taking the loan and compensates the lender for the cost of setting aside the funds,” Neda said in its report.

Neda said the project that posted the highest Commitment Fees in 2022 was the Malolos-Clark Railway Project, with a total commitment fee of $1.36 million.

The project is implemented by the Department of Transportation (DOTr) and funded by the Asian Development Bank (ADB).

Other projects that incurred high commitment fees were the Department of Public Works and Highways’s Metro Manila Flood Management Project with $970,000, and the Department of Agriculture’s Support to Parcelization of Lands for Individual Tilting (SPLIT) Project with $870,000.

The Manila Flood Management Project is funded by the World Bank and the Asian Infrastructure Investment Bank (AIIB), while the SPLIT project is solely funded by the World Bank.

The list includes the Department of Health’s Second Health System Enhancement to Address and Limit Covid-19 under the Asia Pacific Vaccine Access Facility Project-Additional Financing (HEAL 2-AF) with commitment fees reaching $820,000 and the DOTr’s South Commuter Railway Project with $790,000.

The HEAL 2 – AF is funded by the ADB and the AIIB, while the South Commuter Railway Project is solely funded by the ADB.

“Two of the loans financing the DOTr’s North-South Commuter Railway Project (Malolos-Clark Railway Project and South Commuter Railway Project of ADB) incurred some of the largest CFs in 2022, consistent with the project’s low financial performance as a repercussion of an inadequate budget cover for FY 2022,” Neda explained.

Meanwhile, Neda data showed that as of December 2022, the total active ODA in the country reached $32.4 billion.

This comprises a net commitment of $30.2 billion from 106 loans, and $2.2 billion from 320 grants.   The Neda said this figure is at par with the levels in 2020 at $29 billion and 2021 pegged at $30.15 billion.

The report stated that the ODA loans and grants were provided by 20 development partners (DP) and implemented by 84 partner agencies.

The data showed that the magnitude of the active ODA portfolio in 2022 grew by 0.5 percent from $32.24 billion in 2021.

“The magnitude of active loans as of December 2022 stood on par with the levels observed in both 2020 and 2021. Notably, the said figures represent a substantial increase compared to the pre-pandemic level recorded in 2019,” Neda said.

“(This) demonstrates a sustained level of overall commitments for the past three years that started to significantly rise in 2020 due to the influx of loans specifically for Covid-19 response and recovery,” it also said.

In terms of development partners, ADB emerged as the leading provider of ODA in the country, surpassing Japan which was the country’s top creditor for the preceding seven consecutive years.

The ODA provided by ADB accounts for a 33.47 percent share or $10.85 billion of the active ODA portfolio in 2022. ADB has also taken the lead in terms of new commitments in 2022, with a total of $2.51 billion composed of $2.5 billion for four loans and $10.2 million for seven grants.

Meanwhile, Japan secured the second spot with 30.75 percent worth $9.96 billion, followed by WB with $6.86 billion; China, $0.98 billion; and, Korea, $0.91 billion.

“Collectively, these top five development partners contributed about 91 percent of the combined amounts of ODA loans and grants as of December 2022,” Neda said.