The World Bank has downgraded the implementation progress of the loan-funded Philippines Digital Infrastructure Project due to delayed budget cover.

In a Sept. 22 implementation status and results report, the World Bank assigned a “moderately satisfactory” overall implementation progress rating to the project, a downgrade from “satisfactory” previously.

The progress toward achieving the project development objective (PDO), which is “to improve climate-resilient, secure, and inclusive broadband connectivity,” was also lowered by the Washington-based multilateral lender to “moderately satisfactory” from “satisfactory.”

Its overall risk rating remained “substantial.”

According to the World Bank, “the pace of implementation has been affected by the extended process of obtaining budget cover.”

“Preparation for key project initiatives is well advanced and is ready to move forward as the budget cover has been in place since Sept. 15, 2025.”

Because of this holdup, the entire $287.24-million loan approved by the World Bank in October last year remains undisbursed.

The investment project financing (IPF) became effective in February this year and will close in December 2028.

The World Bank financing is allocated as follows: $50.94 million for the backbone network; $92.46 million for the middle-mile network; $78.09 million for the access, or last-mile, network; $43.63 million for network security; and $22.12 million for project management support.

This project is being implemented by the Department of Information and Communications Technology (DICT). On top of the World Bank loan, the national government will shell out counterpart funding of $1.64 million, or over ₱93 million.

Last month, Budget Secretary Amenah F. Pangandaman assured that big-ticket foreign-assisted programs and projects will no longer suffer setbacks, given the budget cover included in the proposed ₱6.793-trillion 2026 national budget.

“Loan proceeds and the Philippine government’s counterpart financing are already incorporated in the respective budgets of the implementing agencies,” Pangandaman had told Manila Bulletin.

Based on 2026 budget documents, a total of ₱283.3 billion in foreign-assisted projects will be funded under next year’s spending plan.

Of this amount, over ₱82 billion in counterpart government funds will support ₱201.3 billion in loan proceeds.

Next year’s allocation for foreign-assisted projects is more than four times larger than this year’s just over ₱66 billion, which consists of ₱30.7 billion in counterpart public funds and ₱35.3 billion in loan proceeds.

It also helps that unprogrammed appropriations (UAs) in the 2026 budget proposal dropped to ₱249.9 billion, from ₱363.4 billion this year and ₱531.4 billion last year.

Since UAs are not covered by regular budget financing, they can only be funded by excess or new tax and non-tax revenues, as well as foreign loans for specific projects and programs.

Last May, the World Bank also pointed to the lack of budget cover as a reason for slow progress in the Department of Education’s (DepEd) Teacher Effectiveness and Competencies Enhancement Project (TEACEP).

In 2023, the Philippines borrowed $110 million for this DepEd project, which aims to improve the quality and equity of instruction from kindergarten to Grade 6 (K-6) in selected poorer regions of the country. As of May this year, only $7.99 million, or 7.26 percent of total loan proceeds, had been disbursed ahead of this World Bank IPF’s closing date in mid-2028.

“The project has faced delayed implementation, due to delays in the issuance of the 2024 special allotment release order (SARO) and the notice of cash allocation (NCA), which were released only in August and November 2024, respectively. These financial constraints have necessitated the rescheduling of several key activities to 2025,” the World Bank had said.

Another World Bank-assisted project flagged for the same issue was the Philippines Seismic Risk Reduction and Resilience Project, which aims to better prepare Metro Manila for earthquakes, especially when the so-called “The Big One” strikes.

When this IPF was approved in 2021, the Department of Public Works and Highways (DPWH), its implementing agency, targeted not only the retrofitting of over 400 government buildings—including health centers and schools—to improve safety and seismic resilience, but also the strengthening of the agency’s capacity to prepare for and respond to earthquake emergencies.

World Bank estimates show that “The Big One”—a magnitude-7.2 earthquake feared to strike along West Valley Fault—could cause about 48,000 fatalities and $48 billion in economic losses.

In its previous report in November last year, the World Bank lamented “the persistent lack of budget cover” for the project. As of May, only a little over one-fifth, or $60.27 million, of the $300-million loan obtained by the previous Duterte administration had been disbursed.