21 February, 2017

Linking Development Finance with Results: A View from the Philippines

By Rolando Tungpalan
Undersecretary, National Economic and Development Authority, Philippines

It is estimated that realizing the ambitious Sustainable Development Goals will cost in the trillions of dollars, requiring significant resources from multiple sources, and then mobilising and channeling these resources in new and efficient ways. Based on these new challenges, the Addis Ababa Action Agenda (AAAA) called for governments to adopt Integrated National Financing Frameworks (INFFs) – long-term, ambitious plans that enable governments to link finance with results. The Development Finance Assessment (DFA), a tool designed to assist governments in creating INFFs, works by establishing a baseline in a country and then recommending prospective reforms. The Philippines’ National Economic and Development Authority conducted a development finance assessment, which served as an input in crafting its Ambisyon Natin 2040 (Our Ambition 2040), the country’s Long Term Vision document. Ambisyon 2040 sets the vision that “by 2040, the Philippines shall be a prosperous, predominantly middle-class society where no one is poor.”

The Philippines, a lower middle-income country, has rapidly expanded its economy. The services sector and industry have been key growth drivers, contributing to an average GDP growth of 6.2 percent during the last six years. Government spending, particularly on infrastructure, has likewise expanded. However, poverty and inequality remain a challenge. In order to address this, the government has tightened the link between planning, programming, budgeting and implementation through results-oriented public sector management reform. The Philippine Government conducted its Development Finance and Aid Assessment (DFAA) in 2014, which feeds into national development planning, strengthening of the fiscal framework and more transparent Public Financial Management (PFM) systems. The DFAA found that tax and non-tax revenues, a major source of development finance, increased substantially from 2000 to 2013. Also, consistent with the experience of other countries, Official Development Assistance (ODA) has gradually declined, relative to other sources. The DFAA report also provides a roadmap for policy reform, in this case recommending more effective domestic resource mobilisation, principally through more effective taxation and expenditure management. Critical findings like these help the government facilitate a more integrated management of multiple components of development finance towards achieving the national priorities set in the Philippine Development Plan (PDP), which incorporates the Sustainable Development Goals.

The Philippines is a proactive participant in the Global Partnership for Effective Development Co-operation’s monitoring rounds, and the country’s results show impressive progress in implementing the effective development co-operation principles. The various country development strategies, partnership strategies and operational business plans with development partners demonstrate alignment of the Philippine Development Plan with the development objectives and priorities. Development projects in the Philippines also reveal strong alignment with country results frameworks, such as the Results Matrices, which embodies an indicator framework for measuring the outcomes outlined in the PDP. The Philippine Government consults with civil society organizations as well as the private sector in the design, implementation and monitoring of development policies, illustrating active regard for inclusive partnerships. Institutions such as the National Competitiveness Council (NCC) and the Open Government Partnership (OGP) enable these multi-stakeholder partnerships, which further enhance the quality and relevance of public-private dialogues around development finance and policy implementation. The recently held Philippine Development Forum (PDF) highlighted the multi-stakeholder participation and engagement by government in addressing development challenges and priorities.

By tracking the development funding’s annual predictability, the Global Partnership’s monitoring framework can help governments and providers engage in forward-looking dialogue. Predictability enables more accurate and comprehensive information, and ensures closer alignment of financing with country-specific targets. According to the results of this indicator, the Philippines’ annual and mid-term predictability are high (98 percent and 76 percent, respectively) with minimal fluctuation compared to 2013 data. Mutual accountability is also critical, and the Philippines creates a space for this through bilateral arrangements such as joint country partnership strategies. The government and development partners meet periodically at the PDF to discuss progress of major commitments, lessons learned and ways forward, while the annual ODA reviews mandated by congress allow transparency on the effective and efficient use of ODA.

By undertaking the DFA’s roadmap toward developing and strengthening the building blocks of its INFF, embracing the co-operation principles of the Global Partnership, and participating in monitoring progress, the Philippines has gained recognition of being a model in the region. Although certain areas need strengthening and capacities have to be further improved, a clear understanding of challenges and weak areas is indicative of a thriving DFA. This, however, is deemed to be a long-term process, beginning with assessment and followed by refinement of objectives. For the Philippines, national priorities going forward are three-fold: continuing to adopt a multi-stakeholder approach in national and regional development, exploring innovative financing (including risk transfer instruments that can build resilience against climate change vulnerabilities) and addressing issues on the use of country systems.

By remaining an engaged member of the Global Partnership, the Philippine Government will be able to keep these priorities at the fore, while helping to enable peers and partners to reach their own national goals. The Second High-Level Meeting (HLM2) at the end of last year highlighted for the region the need for coherence between the Global Partnership, the SDGs and the Financing for Development agendas. It served to outline concrete ways in which effective development co-operation principles can enhance countries’ ability to finance their national development plans. HLM2 also highlighted the importance of cross-country exchanges on approaches to leveraging finance for country-level development priorities. There is a need to scale up knowledge sharing on leveraging finance for sustainable development in time to meet our ambitions for 2030. With HLM2 behind us, the new year is an opportunity to assess progress, for the Philippines, the Asia-Pacific region and the world, as we as a community seek to reach national goals through global co-operation.

(Photo credit: NEDA)

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DISCLAIMER: This blog is a forum for sharing the diverse views of its varied contributors on important and emerging issues of Effective Development Co-operation. The posts do not necessarily reflect the view of the Global Partnership, its Co-Chairs, Steering Committee members, or of the joint UNDP/OECD support team.