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In November 2011, the Government of the Republic of the Philippines and the United States Government agreed to a new Partnership for Growth (PFG) to address the binding constraints to economic growth and development in the Philippines. Established by President Obama, the PFG is a "whole-of-government" effort to unlock the growth potential of partner countries to become the next generation of emerging markets.
The Philippines is one of just four countries selected to join the PFG. The U.S. Government's partnership with the Philippines supports the priorities of the Philippine Development Plan to achieve inclusive and resilient economic growth. It supports institutional reform at the national and local levels to mobilize domestic and foreign investment.
Binding Constraints to Growth in the Philippines
Economic officials from both governments led an extensive analysis to determine the binding constraints to growth in the Philippines and provide a guide to maximize development intervention under the PFG. Based on this analysis, weak governance, constrained public finance, inadequate infrastructure, and weak human resources were identified as the most binding constraints to growth. Within these broad areas, poor regulatory quality, weak rule of law, lack of anti-corruption enforcement, inefficient revenue collection and administration, weak expenditure management, and weak human capacity development in health and education, were identified as critical areas that both governments can effectively address together.
PFG Goals and Objectives
Based on the constraints identified above, the PFG joint country action plan consists of development interventions around four inter-related themes: improving regulatory quality, strengthening rule of law and anti-corruption measures, improving fiscal performance, and promoting human capacity development.
Improving Regulatory Quality
To promote investment, trade, and private sector growth, PFG is designed to:
- Facilitate trade and investment
- Reduce regulatory bottlenecks, entry barriers, and discriminatory provisions to investment
- Improve competition policy
- Enhance Philippine participation in regional and international trade agreements
- Enhance human capacity for economic growth
Strengthening Rule of Law and Anti-Corruption Measures
To help ensure a speedy, predictable and consistent legal environment, and effective enforcement of anti-corruption laws, PFG will:
- Support efforts to improve judicial efficiency and accountability
- Reduce corruption opportunities and strengthen anti-corruption institutions
- Strengthen contract enforcement
- Strengthen Intellectual Property Rights (IPR) enforcement
- Enforce professional and ethical standards
Improving Fiscal Performance
To improve public finance, PFG will support measures that:
- Enhance revenue administration
- Minimize revenue loss and combat tax evasion and smuggling
- Improve expenditure management and fiscal accountability
Promoting Human Capacity Development
To promote human capacity development, PFG will support measures that:
- Strengthen education by improving education governance, strengthening higher education institutions, improving academia-industry linkages, incorporating science and technology into higher education, and improving reading skills at primary level
- Improve health by improving supply of integrated family health services, strengthening demand for essential health services, and improving health policies and systems
- Support community-led development and improved living conditions in poor rural areas
- Reduce poverty in Samar and Eastern Samar through infrastructure development
A Transformative Impact in the Philippines
PFG success requires strong and sustained levels of engagement from both the Government of the Philippines and the U.S. Government towards producing a transformative impact on economic growth. Since 2011, the Philippine Government has implemented major policy and institutional changes, including those identified in the joint Philippine-US action plan for the PFG. It has also strengthened its anti-corruption efforts. As a result, it has achieved remarkable improvements in its economy. Real GDP growth has averaged 6.7% per year from 2011-2014. The Philippines’ World Economic Forum Global Competitiveness ranking increased by 33 places from 2010-2014. From 2010 to 2014, the Philippines advanced 49 places in Transparency International’s Corruption Perceptions Index. in 2013 and 2014, three of the world's leading credit rating agencies upgraded the Philippines’ sovereign credit ratings to investment grade. The two governments continue to work together to ensure that the growth generated is inclusive, sustainable and resilient.
Major PFG accomplishments to date include: technical assistance is helping to enhance the Philippines' policy and institutional environment to improve the country’s eligibility to participate in the Trans-Pacific Partnership and comply with the requirements of regional and international trade agreements; to improve the efficiency of the judiciary by supporting the automation of the Court of Appeals, which handles 90% of all appealed cases in the country; and to introduce case management and court decongestion in the nation’s busiest court system. Two of three focus cities ranked numbers 2 and 6 in the 2014 national competitiveness ranking resulting from assistance to streamline business processes in those pilot cities. Assistance in modernizing the Bureau of Internal Revenue has helped to increase tax collection in 2013 by 15% over the 2012 level.
Government of the Philippines Partners
Department of Finance, National Economic and Development Authority, Department of Trade and Industry, Department of Justice, Department of Budget and Management, Department of Foreign Affairs, Supreme Court, Ombudsman, Commission on Audit, Department of the Interior and Local Government, Bangko Sentral ng Pilipinas, Department of Education, Department of Health, Department of Social Welfare and Development and Department of Public Works and Highways.
U.S. Government Partner Agencies and Program Implementation
PFG represents the enhanced engagement of eight USG agencies. The U.S. Agency for International Development and the Millennium Challenge Corporation account for the majority of PFG financial resources amounting to more than $739 million. The U.S. Government has launched 22 projects to implement the PFG. The Department of the Treasury, Department of Justice, Department of Labor, and the Department of State made significant commitments. The U.S. Treasury made possible the conversion of $31.8 million in GPH debt owed to USAID. USAID partnered with six Philippine financial institutions to make available up to $90 million for financing needs of small and medium enterprises in secondary cities and priority sectors.
Last updated: September 14, 2015