By Russell Louis C. Ku, November 22, 2021; Business World
The House of Representatives approved a bill on third reading Monday that would reform the process of receiving official development assistance (ODA), improving transparency in implementing ODA-backed projects.
In a vote of 166-0 with no abstentions, legislators approved House Bill 10322 or the proposed ODA Effectiveness Act, which seeks to amend Republic Act 8182 or the Official Development Assistance Act of 1996.
The bill 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).
The bill will 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.
NEDA reported that the active ODA portfolio rose 42% to $30.39 billion in 2020 as the government ramped up foreign borrowing to finance its pandemic response.
Meanwhile, the government’s utilization of ODA — or actual spending relative to target — was 66.69% in 2020, up from 64.28% in 2019.