As requested by the Philippines, the World Bank has extended by two more years its soon-to-lapse loan for a big-ticket infrastructure project aimed at mitigating flooding in Metro Manila, which had been plagued by delays and underspending due to government inefficiency.

Official documents showed that on behalf of the Philippine government, Finance Secretary Ralph G. Recto on Nov. 14 signed and agreed with the Washington-based multilateral lender's amendments to the loan agreement for its original $207.6-million financing for the Metro Manila Flood Management Project.

As Manila Bulletin earlier reported, the Department of Finance (DOF) back in August asked the World Bank to prolong the originally seven-year loan implementation period until Nov. 30, 2026, as it was scheduled to lapse on Nov. 30 of this year.

To recall, the Philippines in 2017 borrowed a combined $415.2 million from the World Bank and the China-led Asian Infrastructure Investment Bank (AIIB) to bankroll the bulk of cost for this project that should protect 1.7 million Filipinos living near 56 "potentially critical" drainage systems across 11,110 hectares of flood-prone areas in the National Capital Region (NCR).

Through the national budget, the government would shell out the remaining $84.8 million for this $500-million flood control project being jointly implemented by the Department of Environment and Natural Resources (DENR), the Department of Public Works and Highways (DPWH), and the Metropolitan Manila Development Authority (MMDA).

But implementation had been sluggish—starting from project design, as well as determining the number and location of drainage and pumping station sites; it did not help that red tape delayed procurement.

Since project rollout was prolonged, the bigger implication is that the Philippines missed its original goal to finish this year to make targeted areas free of water within 24 hours after a major rainfall.

Had this World Bank and AIIB-backed project been implemented as scheduled, flooding experienced in the aftermath of recent strong typhoons that battered Metro Manila could have been avoided.

On top of the two-year loan extension, the World Bank likewise agreed to the Philippine government's proposal to slash $22.7 million from the lender's counterpart financing, bringing the allotted loan to $184.9 million effective August 7 of this year.

"The commitment charges on the cancelled amount of the loan also cease to accrue from August 7, 2024," World Bank country director for the Philippines, Malaysia and Brunei Zafer Mustafaoglu said in the amended loan document.

As of September 2024, merely 27 percent or $110.5-million worth of these World Bank and AIIB loans have been disbursed close to seven years of project implementation.

In the loan restructuring paper previously seen by Manila Bulletin, the government sought to partially cancel $22.7 million each from the World Bank and AIIB financing for this project.

The loan amendment also limited the project to the following: "carrying out neighborhood-level activities, near the pumping stations and waterways and drainage channels... through improved solid waste collection services, community mobilization and awareness raising, and neighborhood upgrading; [and] conducting feasibility studies, preparing detailed design for, and construction of a centralized material recovery facility, and rehabilitation and improvement of existing decentralized material recovery facilities.

It was likewise downscaled to "metropolitan-wide activities for improved solid waste management, including a large-scale metro-wide information, education and communication campaign, the development and installation of an integrated management information system, and preparation of a solid waste master plan for Metro Manila," the adjusted project description showed.

Despite scaling back the loan terms, the Philippines will continue to repay these concessional or low-interest loans over a 25-year period, inclusive of a 14-year grace period under the original agreement in 2017.

While loan restructuring documents had partly blamed the prolonged COVID-19 pandemic for the slow rollout, the World Bank lamented that "frequent changes within the MMDA leadership (five chairmen in five years) further impacted procurement and disbursements."

"The sum of these challenges set project implementation back by roughly two years" even as inroads were made starting 2022 when the economy reopened from the most stringent pandemic restrictions, the World Bank had noted.

It had also helped that the two lenders initiated an action plan to speed up this project.

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