The Philippines is a sovereign island country in Southeast Asia situated in the western Pacific Ocean. It is one of Asia’s two archipelagic states (along with Indonesia), comprised of more than 7,000 islands dividing the Pacific Ocean from the South China Sea. The country’s development performance during the past several decades had been less impressive than that of many of its East and Southeast Asian neighbors. In the 1950s and 1960s, the country had one of the highest per capita gross domestic products (GDPs) of about $612 in the region 1 ; however, the Philippines fell behind following the 1997 Asian financial crisis. Household incomes were stagnant and inequality remained high when the country was selected as eligible to develop an MCC compact in 2008. The Philippines successfully completed a three-year Threshold Program to improve revenue administration and anti-corruption efforts in 2009.
As part of its compact development process, MCC utilized an economic report published by the Asian Development Bank in 2007 to identify the binding constraints to economic growth in the country. The report identified a lack of fiscal space for growth-enhancing public investments, poor infrastructure – namely transport and energy, weak investor confidence due to poor governance and corruption concerns, and an inability of government to address market failures that led to a very narrow industrial base.
MCC and the Government of the Philippines signed a five-year, $434 million compact in September 2010 to address the constraints outlined above. The program aimed to lay the groundwork for sustained economic growth by improving critical road infrastructure in one of the country’s poorest regions; empowering citizen participation in local economic development activities, including managing community assets in a sustainable manner; and improving the effectiveness and integrity of revenue collection and administration to increase public investment and reduce tax evasion. The compact was implemented by MCA-Philippines, an institution established by the Government soon after compact signing as a condition of the MCC grant. 2
- Original Amount at Compact Signing:
- Amount spent:
September 23, 2010
- Entry Into Force:
May 25, 2011
May 25, 2016
Estimated benefits correspond to $434 million of compact funds, where cost benefit analysis was conducted.
- 125,822,000Estimated beneficiaries at the time of signing over 20 years
- $464,400,000Estimated net benefits at the time of signing over 20 years