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Development Policy Support Program Cluster

sector: Public Sector Management | country: Philippines

A program cluster approach with prior expected actions enveloped by a medium-term framework with flexibility built into its design is an effective approach to supporting government reforms. It promotes continuous dialogue with the government on reforms and allows for program changes to effectively and efficiently respond to new or worsening risks to the economy and shifts in government policy priorities. This was demonstrated in subprogram 3, with the introduction of new measures to address heightened macroeconomic risks to the economy and help the government effectively provide a fiscal stimulus package in 2009.

Using numerical targets such as the tax revenue-to-gross domestic product (GDP) ratio as triggers, as initially done in subprogram 2, should be cautiously approached. Ambitious numerical targets that are not supported by a realistic reform timetable are likely to fail.

If necessary, triggers should be supported by technical assistance (TA), as were the subprogram 2 and 3 public financial management (PFM) triggers. During the review of subprogram 2 policy triggers, the government and ADB identified gaps in government budget execution, internal audit and controls, and reporting, acerbated by the underdevelopment of the government’s computerized accounts system. The government asked ADB for longer-term integrated TA to strengthen its PFM framework.

A program should have a well-defined exit strategy. This program was designed for implementation over 3 years with specified medium-term targets. It successfully closed upon completing subprogram 3. Without an exit strategy, the program risks reform fatigue and may encourage lax compliance with policy reforms. Introducing the post-program partnership framework during subprogram 3 proved to be effective in ensuring the sustainability of key reforms.

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