Philippines Compact

  • Grant Total: $433,087,647
  • Grant Committed: $385,072,220
  • Grant Expended: $385,072,218
  • Signed: September 23, 2010
  • Entry Into Force: May 25, 2011
  • Completed: May 25, 2016

In 2010, the Millennium Challenge Corporation’s Board of Directors approved a five-year, $434 million compact with the Government of the Republic of the Philippines aimed at reducing poverty through economic growth. 

The compact, which closed on May 25, 2016, supported reforms and investments to modernize the Bureau of Internal Revenue, expanded and improved a community-driven development project, Kalahi-CIDSS, and rehabilitated a secondary national road in Samar province.

In Developing Countries, Taxes Are an Opportunity for Growth

by Dana J. Hyde, MCC CEO
This blog post appears on Medium.com.

Kalahi-CIDSS

The Kalahi-CIDSS project improved lives, empowered communities, and encouraged economic growth in rural areas through small-scale, community-driven development projects.

The project provided the infrastructure and services for projects selected and managed by those communities, strengthened participation in governance activities at the village and city level, and improved the responsiveness of local government to community needs. The project built on and supported planning, implementation, and evaluation methods developed by the Philippines Department of Social Welfare and Development and the World Bank.

The project empowered communities to participate fully in development activities, addressed the needs they had identified and managed assets in a sustainable way. The project strengthened the link between community priorities and local governments’ development programs, and used investments in a transparent manner to increase accountability and reduce poverty. The grants for the sub-projects were provided directly to local communities, who were responsible for procuring goods and services and operating and maintaining purchased assets.

The Department of Social Welfare and Development implemented this project, overseen by a National Steering Committee that included representatives from government departments and NGOs and collaborated with local governments. 

Revenue Administration Reform Project

The Revenue Administration Reform Project encouraged good governance and economic growth by raising tax revenues, reducing tax evasion, and addressing revenue agent-related corruption. 

A lack of growth-enhancing investments in public infrastructure and social services is a key barrier to economic growth in the Philippines. This project increased the efficiency and sustainability of tax revenue collection through a redesign and computerization of business processes. The project aimed to narrow the gap between potential and actual collections by reducing the discretion of individual tax and customs collection officers, and to improve the predictability and impartiality with which revenue laws and regulations are enforced. Some of these activities were extensions of the Philippines’ threshold program activities that concluded in May 2009.

Secondary National Roads Development Project

The Secondary National Roads Development Project was designed to reduce transportation costs through the rehabilitation of an existing 222 kilometer road segment, increasing incomes and spurring economic growth. 

The project reduced vehicle operating costs and time for both passengers and goods, reduced road maintenance costs, and increased commerce in and between the provinces of Samar and Eastern Samar.

The project incorporated enhanced safety measures in the final road designs, including:

  • paved shoulders, sidewalk and curb construction in areas of high pedestrian activity, 
  • improved gateway treatments to indicate required lower speeds, and 
  • increased use of road narrowing, median islands, and traffic humps to slow traffic speeds.