PHILIPPINES 2011 Philippines Development Forum Sofitel Philippine Plaza, Pasay City, Philippines February 26, 2011 Public Disclosure Authorized Background 1. The 2011 Philippines Development Forum (PDF) was held at the Sofitel Philippine Plaza, Pasay City, Philippines on February 26, 2011. The PDF is a multi-stakeholder forum that facilitates substantive policy dialogue on the country’s development agenda among participants from national and local government units, civil society, academia, private sector, and the international development partners. 2. As in past PDFs, the Government of the Philippines, led by the Department of Finance, organized and chaired the 2011 PDF. Finance Secretary Cesar Purisima served as the Chair of the meeting. The World Bank, represented by World Bank Country Director for the Philippines, Public Disclosure Authorized Mr. Bert Hofman, served as co-chair and co-organizer for the meeting. President Simeon Benigno Aquino delivered the closing remarks. Government representatives at the meeting included Cabinet secretaries and other high-level officials from various Government agencies. Twenty delegations* from multilateral and bilateral partners and agencies were represented. Representatives from a variety of national and international civil society organizations (CSOs), private sector, chambers of commerce, and other branches of Government attended. In total, about 300 participants attended. 3. Similar to previous PDFs, the meeting did not include a pledging session. Being the first PDF under the Aquino administration, the meeting discussed the draft 2011-2016 Philippines Development Plan (PDP) and the Government’s priorities. The 2011 PDF also set the stage for aligning of the PDF working groups with the new Cabinet cluster setup. Public Disclosure Authorized Overview of Agenda and Discussions 4. The overall theme of the 2011 PDF was “Implementing President Aquino’s Social Contract to Achieve Inclusive Growth” as operationalized in the PDP. National Economic Development Authority Secretary Cayetano Paderanga Jr. presented the key strategic areas outlined in the PDP. 5. After the overview session by Secretary Paderanga, specific presentations were made by representatives from each of three cabinet clusters: i) Governance and Security presented by Department of Budget and Management Secretary Florencio Abad, ii) Human Development presented by Department of Social Welfare and Development Secretary Corazon Soliman, and iii) Economy presented by Department of Finance Secretary Cesar Purisima. An open forum Public Disclosure Authorized followed after each discussion to allow government, development partners, CSOs, and other delegations to provide comments. *The 2011 PDF was attended by delegations from Australia, Austria, Canada, China, Finland, France, Germany, Italy, Japan, Korea, New Zealand, Spain, United Kingdom, and the United States of America. The international organizations which participated in the meeting included the Asian Development Bank, European Union, International Monetary Fund, Islamic Development Bank, various United Nations Agencies and the World Bank Group. 2011 Philippines Development Forum 6. During the meeting, the international development partners congratulated the Philippines for the strong growth in 2010 of 7.3 percent, the highest in over three decades. They also praised the clear articulation of President Aquino’s Social Contract through the PDP and assured Government that their respective country assistance strategies and programs for the Philippines would be fully aligned with the PDP. Participants from civil society, academe, and the business sectors also noted that the successful implementation of the PDP would require the active engagement of all parties. Key Messages 7. During the discussions, the PDF participants provided comments on the draft PDP and shared their views on how to address specific issues on governance and security, human development and the economy. The discussion on governance and security highlighted the importance of improving governance and the rule of law to respond to citizens’ needs for public services, accelerate poverty reduction, and improve the climate for public sector investment. Budget Secretary Florencio Abad emphasized that good governance is at the core of the President’s Social Contract and is a necessary foundation to ensure the success of the country’s development goals. 8. Many participants emphasized the importance of strengthening capacity for implementation at each level of government, including local government. They welcomed the initial steps taken as part of the 2011 budget and the Public Financial Management Roadmap to improve the efficiency, transparency and accountability of public finances. Development partners noted that local government units should be encouraged, through the Performance Challenge Fund and similar mechanisms, to make local budgets open, transparent and consultative. Development partners welcomed the efforts to tackle corruption and encouraged the Government to send strong signals by taking legal actions against graft and fraud, and systematically address the vulnerabilities in government departments. CSO representatives noted the need to focus on asset reform, greater access to information and better mechanisms for coordinating anticorruption programs. 9. The participants welcomed the efforts of the government to tackle corruption. They echoed the need for taking legal actions against cases of graft and fraud, diligently undertaking lifestyle checks for public officials, systematically addressing the vulnerabilities in government departments, and expanding opportunities for citizen participation. The government noted the importance of full transparency in the use of resources by national and local government agencies. 10. Several development partners noted the importance of providing sustainable livelihood and supporting economic integration of conflict-affected areas with centers of growth as some of the critical elements of sustaining peace in Mindanao, which at the same time contribute to inclusive growth. Many development partners expressed willingness to help the Government pursue the peace process and the development of Mindanao, especially those affected by armed conflict. The government representative from the Mindanao Development Agency proposed to 2 2011 Philippines Development Forum organize a Mindanao Development Forum to specifically discuss the development challenges of Mindanao, and to convene a technical working group to plan for the proposed Forum. 11. The presentation on human development focused on the importance of a convergence of government programs to achieve the country’s social development goals in the areas of health, education, social protection, and asset reform. The development partners expressed support for the Government’s efforts to fast-track the implementation of the Universal Health Care (UHC) as part of the commitment to the MDGs, implement the school-based management system to improve retention and participation rates of students and quality of education, and ensure the empowerment and protection of the poor, vulnerable and disadvantaged individuals from all types of risks through the proposed convergence framework. Many development partners welcomed the Government’s plan to extend the basic education cycle from 10 to 12 years and noted that the transition will require careful planning for implementation. They commended the Government for the priority given to the conditional cash transfers program, which has been placed at the heart of social protection policy. 12. Several development partners underscored the importance of universal access to reproductive health, including family planning, given that the current population growth rates of the Philippines will double every 33 years. A number of development partners noted that inclusive development can only be attained with gender equality and the economic, social and political empowerment of women. Overall, development partners commended the Government for the commitment to pursue gender responsive governance, mainstream climate change adaptation and disaster risk reduction, and strengthen public-private sector partnerships in social protection programs, thus contributing to achieving the MDGs. 13. Lastly, the presentation by Finance Secretary Cesar Purisima on the economy focused on priority thrusts of the Government to achieve rapid, investment-led growth that will create employment opportunities for the poor. Secretary Purisima also cited specific strategies to ensure fiscal sustainability, improve competitiveness and pursue Public Private Partnerships (PPPs). 14. During the discussion, the participants considered the Government’s focus on medium- term fiscal consolidation appropriate, given the need to create more fiscal space, which will strengthen the ability of the budget to respond effectively to future shocks. In order to achieve fiscal consolidation and scale up priority spending, Secretary Purisima noted the need for raising tax efforts through strengthening tax administration. 15. The participants acknowledged the PDP targets of a revenue-to-GDP ratio of about 19.6 percent by 2016 and reduced deficit and debt levels to at most 2 percent and below 50 percent respectively. To deliver on these targets while reducing corruption and improving equity, participants acknowledged that both tax policy measures and in-depth tax administration reform will be required in the medium term. 16. Development partners