The government has negotiated another $400-million conditional cash transfer (CCT) or subsidy from the World Bank (WB), a senior finance official has confirmed.

Finance Undersecretary for International Finance Rosalia de Leon said they have just completed talks with the World Bank for the cash subsidy, which will be disbursed over a spread of five years.

De Leon said the next step is to get an approval from the Bangko Sentral ng Pilipinas (BSP). All dollar-denominated and other loans in foreign currencies are required to pass through BSP scrutiny for its potential impact on the balance of payments – the sum of the country’s current and capital accounts.

The government is also hoping to receive another $100 million cash subsidy from the Asian Development Bank (ADB). The recently approved $500-million short-term fiscal stimulus loan under ADB’s Countercyclical Support Facility has its own CCT component which will be implemented this year.

This is the second CCT from the World Bank – the first loan called the Food Crisis Response Development Policy Operation was approved in December amounting to $200 million as program assistance to support the government’s efforts to meet high food prices in the short and long term.

In May last year the World Bank created a Global Food Crisis Response Program to provide quick support to countries that were affected by sharp increases in food prices.

In the Philippines, the CCT is part of the World Bank’s social protection programs to stabilize domestic food prices and mitigate the impact of high food prices on poor households.

The last CCT provided modest food, health and educational subsidies to the poorest of the poor in return for sending their children to school, attending health centers, and having regular prenatal and postnatal care for mothers.

Under the program, the DoF serves as the primary liaison with the World Bank on budget support, while policy dialogue, implementation, monitoring and evaluation will be undertaken by the Department of Social Welfare and Development.

In January this year, the ADB released a study that CCT programs and social policy complements each other. However for CCTs to be effective, it has to be transparent with constant program monitoring.

For 2009, the national budget provides only P5 billion for CCT, but this is higher compared to P300 million in 2008. The International Monetary Fund said governments should program more subsidies to help the poor cope with high food and fuel prices.

CCTs are loans although these are also called cash subsidies.