This is $ 200 million for the government’s education programs and $ 103.5 million for healthcare. The loan will carry longer maturity of 25 years and lower interest rates of 5.5 percent compared to commercial rates of 7.5 percent.

The DoF and the World Bank are working out details for both loans, which includes among others, technical assistance grants in aid of the Arroyo administration’s Millennium Development Goals or MDGs and a $ 40 million grant for healthcare.

The World Bank has indicated it will raise its annual loans as soon as reform measures show positive impact on the fiscal situation. In a previous interview, the bank’s country manager Joachim von Amsberg said that if reforms were implemented they would support the government with "larger commitments."

The National Government is planning to negotiate more funding assistance and low-interest rate loans from multilateral agencies such as the World Bank to limit commercial borrowings abroad. For 2006 the borrowing program is $ 4 billion. This is $ 3.1 billion commercial loans and $ 900 million official development assistance or ODA loans. Last January the NG sold $ 2.1 billion of ROPs.

The lower-than-programmed budget deficit in 2005 – P145 billion against projection of P180 billion – allowed the DoF leeway to negotiate for more grants and term loans.

Talks with the World Bank, for example, includes raising funding assistance from the usual $ 100-$ 150 million to $ 300-$ 400 million.

The World Bank has programmed $ 1.8 billion in new loans for the Philippines in the next three years starting in 2006, with the implementation of the expanded value-added tax law.

The new VAT law is expected to produce P75 billion this year to reduce the budget shortfall to P125 billion or 2.5 percent of gross domestic product.

The World Bank has encouraged the government to implement the full VAT law to give credibility to the fiscal reform programs and to achieve a balance budget sooner.