MANILA. The World Bank (WB) has extended for one year or until June 2009 its current Country Assistance Strategy (CAS) to the Philippines.

WB Philippines Acting Country Director Jehan Arulpragasam, however, said the overall CAS lending amount will be determined by fiscal reform progress while the composition of lending will be determined by progress in reforms in specific agencies.

If fiscal reforms continue to be deepened on a sustainable basis, the Bank could lend to as much as $ 1.7 billion in fiscal year 2008-2009.

Arulpragasam said "sustained economic stability is key to achieving the twin objectives of the extended CAS" namely economic growth and social inclusion.

He said "payoffs from recent fiscal reforms should serve as an inspiration for perseverance on this critical agenda."

Arulpragasam said they "have seen significant progress in the last two years despite the complex and dynamic political environment" but pointed out that "the challenge for the next few years will be to build on recent fiscal reform progress and extend the reform commitment to areas where there has been less progress in recent years."

"Decisive steps to strengthen tax administration will, therefore, be one of the major challenges. This is why, efficient and fair tax administration requires everyone's full support," he added.

CAS was eyed to respond to the government's development agenda by relying more official development assistance (ODA) instead of commercial borrowing due to lower costs and its potential to promote key reforms. This was originally planned to be implemented from June 2005-June 2008.

In 2005-2006, the government showed an improved fiscal performance that prompted the WB to increase its support from US$ 100 million to $200 million per year to US$410 million for 2006 and US$395 million for 2007.

In addition to the higher assistance for FY 2007, WB also included a US$250-million Development Policy Loan (DPL), the first policy-based lending in eight years.

While transactions volume of the International Finance Corporations (IFC), the private sector arm of the WB Group, was also increased to US$130 million in FY 2007 and is expected to grow to US$200 million.