Calamity declaration triggered World Bank loan, says budget chief

Malacanang on Saturday welcomed the release of a $500-million (P22 billion) loan from the World Bank for the speedy rehabilitation of southern areas devastated by Tropical Storm “Sendong.”

“We thank the World Bank for its support in this time of calamity,” Secretary Ricky Carandang, head of the Presidential Communications Development and Strategic Planning Office, said in a text message.

“This is the first time the World Bank is providing this catastrophe drawdown facility. It’s a gesture of support by the World Bank for the Aquino administration,” said Budget Secretary Florencio Abad.

“The agreement to loan  was signed when (President Aquino) was in the US last September,” Abad said in a text message.

The budget secretary said the Philippines access to the loan was triggered by President Aquino’s declaration of a state of national calamity after he visited the massively affected cities of Cagayan de Oro, Iligan and Dumaguete.

“The trigger to access it is a declaration of national calamity which was done after Sendong. After that we formally applied for it and it was recently released in full,” Abad said.

The loan would be used wisely, Abad assured the public.

“There is a requirement for reporting on releases and disbursements that is normally tighter than with regular funds of government,” he said.

Over a thousand people were reported killed and tens of thousands more were left homeless in central and northern Mindanao after floods spawned by Sendong caused rivers to overflow. The worst hit were riverside areas of Iligan and Cagayan de Oro cities, where floods brought brought down from the mountains a deadly cascade of illegally cut logs that smashed homes and bridges along the way.

Abad said the allocation of the WB fund would be based on priorities for rehabilitation set by the National Disaster and Risk Reduction Management Council (NDRRMC).

Abad on Friday said the Catastrophe Drawdown Option was a highly concessional loan with a little over one percent interest annually, payable in 25 years and with a grace period of 10 years.

He said the loan would be used to repair and rehabilitate post-harvest facilities, irrigation systems, fishing ports and boats.

Carandang said that loan proceeds would not be used to fund the government’s relocation of affected residents in northern Mindanao.

“The President prefers to use our own internally generated funds as much as possible,” Carandang said.

President Aquino had ordered that no resident of the geohazard areas affected by the massive floods would be allowed to return to the vulnerable locations.

The Department of Budget and Management recently announced the release of more than P240 million for the construction of core shelters for more than 3,000 displaced families in Iligan City.

A 10-hectare relocation site away from the flood-prone and landslide-prone areas had also been identified.

In addition, Social Welfare Secretary Corazon Soliman said the government had turned over P7.3 million to the military’s National Development Support Command for the construction of bunk houses in Cagayan de Oro.