INVESTMENT
COORDINATION COMMITTEE (ICC) RATIONALE, FUNCTIONS
I.
Rationale
This set of guidelines on project evaluation aims to provide standards
of procedures for the ICC in assessing development projects to ensure their
technical, financial, economic and social merits. The procedures are also formulated to achieve uniformity in and
set the basis for evaluation. An
appreciation of these procedures is deemed necessary in order for the proponents
to understand the various information requirements of the ICC as contained in
the ICC-PE forms and is envisioned to facilitate the processing of requests for
clearance.
These guidelines are
organized into eight (8) sections. The
first four (4) sections cover the procedures in undertaking the financial,
economic, technical and institutional evaluation of projects. Section VI provides the steps in undertaking
a sensitivity analysis of the selected parameters. The evaluation of technical assistance components of projects is
given in Section VII. Section VIII, on
the other hand, describes the procedures in conducting public consultations on
projects.
II.
Financial
Evaluation
These guidelines shall apply to revenue generating projects of
government agencies, government-owned and controlled corporations (GOCCs) and
private sector firms/entities whose projects qualify under the conditions set
for private sector access to ODA.
A special case of financial analysis is carried out for agricultural
projects where farm income analysis is undertaken. Please refer to Technical Annex A for specific guidelines.
A.
Objectives.
1.
To
assess the financial viability of a project and its ability to meet its
debt-service obligations, and
2.
To
determine, thru the GCMCC, the financial capability of government corporations
to finance their proposed projects.
B.
Procedures
1.
The
project proponents shall submit ICC-PE Forms 1 to 5, hereby attached as
Attachment 1.
2.
In
addition, the proponent, if a private enterprise, shall submit the following:
a.
projected
cash flow of the enterprise covering the entire project life including the year
prior to project implementation using the GCMCC format (Attachment 2) with the
addition of an account indicating the beginning cash balance; and
b.
the
audited financial statements covering a period of at least three (3) years
prior to implementation of the project, as applicable.
The major assumptions used
in the financial statements, (e.g., exchange rates, volume of sales, prices)
should be clearly stated.
3.
If
necessary and where applicable, the Secretariat may require the proponent to
submit a market study of the project.
This shall include a definition of the types and nature of the
products/services to be generated by the project, their specific and potential
markets, existing and projected demand and the resulting supply gaps.
4.
In
the financial analysis (using constant prices), contingency allowances may be
provided as follows:
a)
physical
contingency, which represents an allowance for increases in the quantity of
real goods and services utilized for the project;
b)
price
contingencies, for relative price changes, involving changes in the market
price structure for project inputs and outputs.
Physical contingencies are
usually estimated separately for each major cost component, and separately for
local and foreign costs. Normally, this
is 10% of direct cost, although higher allowance is possible for
complicated/lengthy works which are more vulnerable to design changes and
adverse external phenomena.
For price contingencies,
escalation rate is applied to major cost/benefit items, which is the projected
annual price change of the item net of the general inflation rate.
5.
For
local cost items, relative price changes can be projected from past trends in
the item’s price movement relative to inflation, or from forecast demand/supply
trends. For internationally traded
goods, price project can be sourced from international publications (especially
World Bank Commodity Price Projections or WBCPP).
Projections of relative
prices for local items need not extend beyond medium term (5 years). Local price relationships may be assumed
constant beyond the 2-year period.
Cash flows given in current
prices are converted to constant terms, thru the use of general price
deflators. The GNP Implicit Price Index
(IPIN) is the deflator for local costs, while the manufacturing unit value
(MUV) Index (IPIN) is the deflator for
local costs, while the manufacturing unit value (MUV) index (from the WBCPP) is
appropriate for foreign components.
6.
The
ICC-Secretariat shall determine the financial viability of projects from
either, or both, of the following viewpoints:
the “all capital” viewpoint and the “equity capital” viewpoint. The former looks at the discounted returns
to all real investment flows for the project as a whole, irrespective of
whether these come from equity or from loans.
The latter looks at the proponent’s (investor’s) equity contributions as
the investment, such that loans proceeds are treated as inflows, while loan
repayments are treated as outflows.
7.
In
both cases, the financial internal rate of return (FIRR) and the net present
value (NPV) shall be computed based on the validated submissions of the project
proponents of the benefit and cost streams.
For the project to be financially viable in the “all capital” invested
approach, the resulting FIRR should exceed the weighted average cost of capital
(WACC), while the NPV should be greater than zero using the same WACC as the
discount rate. The computation of the
WACC shall be described below.
Meanwhile, for the “equity
capital” approach, the resulting FIRR should exceed the cost of equity
contribution of the proponent while the NPV should be greater than zero using
cost of equity capital as discount rate.
8.
The
WACC is the weighted average of the yields net of tax on different sources of
funds of the proponents. This is
determined by calculating the relative weights of the capital resources and
multiplying them with the corresponding opportunity cost of capital for each of
the capital resource. The WACC is
mathematically represented in equation form by:
WACC = Pe X
Re / P1 X
R1
Where Pe = percentage of equity investment to
total
capital investment
Pc = percentage
of corporate funds
(i.e.,
internal cash generation
for
government corporation).
P1 = percentage
of loaned funds
Re = opportunity
cost of capital of equity funds
Rc = opportunity
cost of capital of
corporate
funds
R1 = effective
cost of loaned funds,
Pe +
Pc / P1 = 1
The use of
the WACC in financial analysis should be limited to cases where the project’s
risk is consistent with the overall
business risk of the company, and that the project will be financed from
a pool of funds with proportions indicated in the WACC.
Otherwise,
the equity capital approach is more appropriate, particularly
a.
when
capital markets are imperfect, where cost and availability of long term capital
is unpredictable, and prevailing financing sources are relied upon at any given
time; and
b.
when
the nature and scale of the project influences the sources and cost of
financing, such as in a case when foreign financing is tied to the project.
Conditions relevant to GOCCs
appear to warrant the application of the “equity capital” approach if the
sources of financing being considered come from abroad and may be viewed as
tied to the particular project at hand.
Since the “stockholder” of the GOCC is the economy-at-large, the cost of
equity capital is the opportunity cost of capital to the economy.
If the project involves
foreign sources of funds, the decision makers have to decide whether foreign
funds may be treated as tied to the project, in which case, the “equity
capital” viewpoint should be adopted.
Specific examples of the
appropriate approach to pursue are provided in Technical Annex B.
9.
The
proponent shall be guided by the projected foreign exchange rates as indicated
by the Secretariat, in converting foreign funds into their local currency
equivalent.
10.
Under
the “all capital” analysis, the foreign exchange risk can be captured by adjusting
the WACC. Projected annual movements in
the peso rate against relevant currencies will be converted by the Secretariat
into corresponding percentage points adjustments in the WACC.
Under an “equity” capital
approach, repayments for foreign loans as outflows should be converted to peso
equivalent using projected exchange rates.
11.
For
public sector proponents, the GCMCC shall evaluate the ability of the
corporation to finance the investment cost (local component) and meet the
debt-service requirements of the project.
GCMCC shall then submit a formal evaluation to the ICC, indicating therein its recommendations,
findings and the bases for favorable endorsement of the GOCC’s project to the
Technical Board.
For private sector
proponents, the ICC Secretariat shall appraise the private firm’s capability to
shoulder the investment cost and assess its repayment capacity. This will be undertaken through the
following:
a.
Ability
of the corporation to finance the local investment cost of the project.
This shall be
determined by subtracting the capital requirements of ongoing projects and the
corporate debt-service from the internal cash generation (ICG) and comparing
the net with the local cost component of the proposed project. A net ICG greater than the local cost
component indicates that the corporation may be able to finance the project;
otherwise, it can be expected that it will resort to borrowings.
b.
Ability
of the corporation to service its principal amortization and interest payment.
This requires a
projection of the financial position of the company when the project is already
operational and when it is already amortizing its loan.
To determine the
effect of the project on the corporation’s financial position, the ICG of the
corporation should be positive after deducting the project’s interest and
principal repayments, together with other obligations falling due. Otherwise, the corporation, based on its own
operations may not be able to service fully or in part the project’s debt
service requirements and may have to resort to external funding.
12.
For
both public and private proponents, cash flows should also capture tax payments
(i.e., corporate taxes) inasmuch as the cost of capital measure is on an
after-tax basis.
13.
For
private firms, the financial evaluation shall be complemented by the estimation
of relevant financial ratios, with and without the project, based on submitted
balance sheets and income statements.
The ratios are contained in Technical Annex C.
III.
Economic
Evaluation
A.
Objective
To ascertain the project’s
desirability in terms of its net contribution to the economic and social
welfare of the country as a whole.
B.
Procedures
1.
Documents
submitted by proponent agencies for financial analysis shall be the take-off
point for economic analysis.
2.
The
steps involved in economic evaluation are as follows:
a. Identification of project costs and benefits. Since projects are usually evaluated in
terms of their effect on national income, costs and benefits identified must
necessarily reflect the additions to and reductions from national income as a
result of project implementation.
i.
Economic
Costs[1]. The basic guidelines in identifying the
costs of a project stems from the definition of cost itself, or activities that
involve use of real resources. Cost items
are usually classified into two (2) types:
capital costs and operating and maintenance costs which may include the
following:
Capital Costs –
land, detailed engineering and design; preparatory installation work; cost of
equipment; raw materials and supplies for construction; cost of buildings and
auxiliary installations; engineering and administrative cost during
construction, organization cost;;
Operating and
Maintenance Costs – raw materials and other supplies; energy and fuels; labor;
rent and insurance; depletion of natural resources.
ii.
Benefits. A benefit constitutes an increase in output
or savings in resource use. In the case
of transport projects for instance, the set of benefits may include: reduced vehicle operating costs; lower
maintenance costs; fewer accidents, savings in time for passenger and freight;
and in the case of developmental transport infrastructure, production
increases. Of these cases, only the
first two benefits and the last are easily quantifiable. However, to the extent possible, the effects
of other benefits on national income should be quantified (e.g., value of each
human life saved in terms of the capacity to earn during productive life).
iii.
Externalities
and Secondary Benefits. In several
cases, project effects – positive or negative – go beyond the limits of the
project, but are not reflected in the financial accounts of the project. If these effects, known as “externalities,”
involve a significant economic cost or confer a significant economic benefit,
these should be taken into account in estimating the overall economic impact of
the project.
The external economic impact
on the cost side may include increased pollution resulting from cement or a
chemical plant, or the adverse effects of an irrigation scheme on health and
fisheries. External economic benefits
may include improved recreational or tourist facilities provided by a water
storage dam. While it may not be
possible to measure all such effects, an attempt should be made to identify
them, and if they appear to be significant, to evaluate them.
Secondary benefits, on the
other hand, refer to the beneficial effects on activities which are
technologically linked to the project’s direct users, either forward as
consumers, or backward prove to be significant, they should, whenever possible,
be incorporated into the analysis.
b. Valuation of costs and benefits in
terms of economic prices. This
procedure involves adjustment of the financial prices of goods and services of
both costs and benefits to reflect economic values. Market prices may not be an acceptable measure of the true costs
and benefits due to distortions (i.e., taxes, subsidies, quotas, regulatory
measures, or monopolistic practices).
To deal with this problem, shadow prices are employed to measure the
value of a commodity from the economy’s viewpoint. Technical Annex D provides techniques for adjusting inputs from
financial statements to conform with concepts in economic evaluation.
The valuation of project costs and benefits should be in constant
prices at the current year’s level. In
the case of projects where price levels are not in current year’s levels,
appropriate price indices shall be applied to inflate or deflate prices
accordingly.
i.
Valuation
of Costs. Estimation of project costs
involves an analysis of the supply-demand situation of the project inputs and,
in the case of major projects, the corresponding price changes resulting from
the project’s implementation. General
procedures are as follows:
-
The
entire set of project inputs must be differentiated between those inputs that
reduce the supply to other users, and those inputs that would be supplied from
increased production.
-
For
inputs resulting in reduced supply to other users, the shadow price is the
market selling price appropriately adjusted for the value of rationed
components, the effect of monopoly power in buying or selling and the actual
price impact of the supply reduction.
-
If
the supply of inputs is obtained from
expanded production, the relevant cost estimate is the actual cost of
production.
-
If
some of the inputs are imported or are substitutes for exports, the foreign
exchange cost involved, corrected by the shadow price of foreign exchange,
should be estimated and any transport costs and trade service margin should be
added.
ii.
Valuation
of Benefits. Estimation of direct
benefits involves the following steps:
-
For
outputs leading to additional supply or reducing the output of other local
producers, the shadow price is the market price, corrected for the following: effects of any rationing, monopoly power of
some buyers, and actual price impact based on the size of the additional
supply.
-
For
goods that substitute for imports or add to exports, foreign exchange earnings
or savings involved are estimated and corrected by shadow price of foreign
exchange.
-
For
goods/services that are supplied freely, the value placed by users on the
facilities should be estimated, i.e., what they would pay if they were to
purchase the facilities. This would
likely involve some value judgment.[2]
c.
Measurement
of economic desirability, sensitivity analysis and selection of projects based
on economic feasibility indicators.
The indicator to be used for
estimating the economic desirability of projects shall be the economic internal
rate of return (EIRR), defined as the discount rate which equates the net
present social value (NPSV) of the benefits and costs of the project such that
the NPSV is zero and the benefit cost ratio (BCR) is one. The NPSV is the discounted net economic
benefit accruing to the project. The
decision rule is to accept projects where the NPV is greater than zero.
3.
The
ICC Secretariat shall provide the following parameters for estimating the
economic stream of costs and benefits:
a.
Shadow
Exchange Rate
The shadow exchange rate (SER) is applied to
correct the distortion in the prevailing exchange rate due to balance of
payments disequilibrium and the projection structure. The SER currently adopted is 1.20 of the prevailing exchange
rate, and shall be applied to all direct and indirect foreign exchange costs of
a project and those benefits which may expressed in foreign exchange,
particularly in the case of exports and/or import substitutes or savings.
b.
Shadow
Wage Rate
The
shadow wage rate (SWR) is used to reflect the true economic value of labor
employed in a project. The SWR is
applicable only to the unskilled labor component of wages paid and is currently
estimated at 60 percent of legislated wage rates.
c.
Shadow
Discount Rate
The
social discount rate (SDR) shall be used to discount the stream of economic
costs and benefits to their present values.
It is the rate at which the social value of project costs and benefits
decline over time. The SDR shall
likewise be used as the hurdle rate for a project’s EIRR. SDR currently used is 15 percent.
4.
In
addition to the EIRR, the ICC Secretariat shall compute for the domestic
resource cost (DRC) of tradeable goods as the output of the project, where
relevant. This will indicate the amount
of domestic resources used for every foreign exchange earned or saved from
production. The DRC shall apply in
projects that involve production of tradeable goods (e.g., coal, steel, sugar,
etc.)
IV.
Technical
Evaluation
A.
Objectives
1.
To
determine if the project is technically feasible, workable and that its
operations and maintenance can be locally sustained;
2.
To
ascertain if the proposed technology is cost effective; and
3.
To
ensure that the project does not adversely affect the environment and/or that
appropriate measures are taken to protect the environment.
B.
Procedures
1.
The
ICC Secretariat shall evaluate the technical aspects of the project, and may
consult with DOST in cases when the proposed technologies are untried, new, or
old/obsolete. Inputs or comments from
other experts, consultants from industry or academe may also be solicited as
necessary. The technical evaluation
shall cover, among others, the following:
a.
Issues
of technical design such as size, location, timing and technology package
proposed for the project (Refer to Technical Annex E for details);
b.
Advantages
and limitations of the technology used by the project;
c.
If
a new technology is applied; success rate in other countries;
d.
Applicability
of the new technology to Philippine conditions particularly to the proposed
project area;
e.
Environmental
impact that would arise out of using the proposed design of the project; and
V.
Social
Analysis
A.
Objective
To determine if the proposed
project is responsive to national objectives of poverty alleviation, employment
generation and income redistribution.
B.
Procedures
The ICC Secretariat shall,
whenever possible, take into consideration project benefits beyond those that
are simply financial and economic. If
the project is of interest mainly because of its social benefit, this section takes
on added importance. The Secretariat
should devote considerable attention to the analysis of socially desirable but
financially unviable projects. This
will be especially true for private non-profit firms whose projects may be
eligible for access to ODA.
The following aspects may be
considered in the qualitative assessment of the social benefits of the project:
1.
Income
Distribution. The extent to which the
income of the poorest sector o the rural population is improved as a result of
the project may be quantified.
Reference must be made to the relative improvement in comparison with
other groups in the country.
2.
Employment. The extent to which the project reduces
underemployment may be assessed. This
may be quantified in terms of work years created by the project, with
distinction made between permanent employment and employment during the
investment or construction phase. The
number of jobs created may be compared with the expected increase in the labor
force of the project area.
3.
Access
to Land. If the project includes a land
settlement or land reform element, the distribution of land rights with and
without the project should be demonstrated.
4.
Internal
Migration. It may be useful to note the
possible effect of the project on rural-urban migration.
5.
Nutrition
and Health. If the project is located
in an area where serious nutrition or health problems exist, or if the project
is directed toward groups with nutrition and health deficiencies, the expected
effects of the project on these problems might be mentioned. In some cases, the effect on nutrition may
be quantified in the daily intake of calories in protein that is expected as a
result of the project.
6.
Other
Indicators of the Quality of Life. Some
projects may have a significant effect on the quality of rural life through
improvements in access to domestic water supplies, electricity, schools, and
other facilities. These may be
mentioned and the quantities of the new amenities noted.
Technical Annex F presents some pointers for
social analysis for reference.
VI.
Institutional
Evaluation
A.
Objectives
1.
To
review and recommend improvement/revisions on the institutional arrangements
and linkages in order to ensure a more efficient implementation of the project.
2.
To
ascertain the ability of the project proponent(s) to implement the project as
proposed and scheduled.
B.
Procedures
1.
The
ICC Secretariat shall assess the capability of the project proponent(s) to
implement the project, per the proposed activities and as scheduled,
considering the following:
a.
The
internal arrangements within the project organization/implementing agency and
the external arrangements among the project proponent(s) or concerned agencies;
b.
The
feasibility of proceeding as scheduled based on the preparedness of all
concerned agencies; and
c.
When
relevant, the arrangements made to address the concern of those who may oppose
the project (e.g., environmental conservation groups and those who may be
relocated).
The above shall be
complemented with a review of the past performance of the proponent(s) on
related/similar projects.
2.
The
ICC shall recommend possible measures to improve the program of implementation.
VII.
Sensitivity
Analysis in Project Evaluation
A.
Objective
To
determine whether the project will remain feasible if changes in the assumptions
used in the calculation/projections were to take place according to the degree
in which they are likely to vary from the estimated or projected values.
B.
Procedures
1.
Financial
Evaluation
Case I : Increase
in projected costs by 10% and 20%
Case II : Decrease
in revenues by 10% and 20%
Case III : Combination
of Cases I and II
2.
Economic
Evaluation
The sensitivity parameters
above shall likewise be applied in the economic evaluation of projects. The basis will be the cost-benefit flows
(adjusted to economic terms).
Probability weights for the
above sensitivity analysis may later be assigned as validated by the
Secretariat.
3.
Sensitivity
analysis, when constant prices are used, involves testing of relative price
changes. Price contingencies should not
be applied to items for which sensitivity analysis will be performed.
VIII.
Evaluation
of Technical Assistance Components
A.
Objective
To determine/evaluate
project components that may be eligible for separate technical assistance (TA)
funding.
B.
Procedures
1.
The
ICC Secretariat shall determine which components of the project may be
considered for separate technical assistance financing.
2.
In
general, financing for technical assistance involving pre-feasibility or
feasibility studies, project identification, sector survey, institution
building activities including training, shall be sourced from grants. On the other hand, consultancy/advisory
services related to construction activities, including detailed engineering,
shall be considered as part of the project capital cost and may be financed by
the project loan.
3.
Section
10 of E.O. 182 (Rationalizing Public Works Measures, Appropriating Funds for
Public Works, and for Other Purposes; dated 3 June 1987) which sets the
guidelines on the Use of Consultancy Services, shall be considered in the
review of the estimated amounts for hiring of consultants for the conduct of
feasibility studies, detailed engineering, and construction supervision.
a)
Farm
Enterprise Profit. The objective of
farm enterprise analysis is to determine the profitability of the individual
production activities or enterprises.
As such, it provides useful information for decision-making on which
activities to pursue, which to emphasize, and which to discard altogether. It also helps determine whether and how a
particular enterprise may be made more viable.
In terms of definition,
enterprise profit is simply the difference between gross value of production
and total cost of production.
b)
Farm
Enterprise Gross Value of Production.
Gross Value of Production. Gross
value of production is a measure of the value of output produced by the
enterprise, whether the output is sold, consumed on the farm, or stored for
consumption or sale in future accounting periods. All outputs are valued at their respective farm-gate prices
which, for each type or produce, is the weighted average that accounts for
variations in prices according to the grade of produce, time of sale, and
market outlet.
In cases where stocks are
carried over from one accounting period to another, gross value of production
is measured as the difference between the closing valuation of stocks plus
sales (where sales include output consumed on the farm) less the opening
valuation of stocks plus purchases.
c)
Farm
Enterprise Cost of Production. Total cost
production includes all variables and fixed costs associated with the
product. For enterprise income
analysis, it is easier to classify cost into labor, material and other charges.
i.
Labor
Labor cost is labor requirements (in mandays) multiplied by the
projected wage rates. Estimates of
labor requirements are derived from
labor input models; wage rates to be applied are those that are projected for
the area for the particular operations
involved.
At the enterprise level, farm family labor that goes into the
production activity, although not paid, is included in the computation of labor
cost in order to obtain an accurate assessment of the profitability of the
enterprise, particularly in comparison with other enterprises on the farm. Family labor is valued in the same way as
hired labor.
ii.
Materials
Materials include seed,
feed, fertilizer, insecticide, etc.
Costs are obtained by multiplying quantities required for each item by
their respective unit prices as delivered on the farm. Quantities of each input are obtained from
the material inputs model.
iii.
Other
Charges
Other charges are applied on
assets that have a useful life that exceeds the accounting period and are used
as a means of allocating the cost of the asset over the accounting periods of
its useful life. If the asset is used
in more than one production activity (enterprise) on the farm, a method of
allocating depreciation charges for particular accounting periods among these
enterprises would have to be developed.
The principal factor to consider is the extent of use of the asset in
each enterprise.
Interest is return on
borrowed capital. In the same manner
and for the same reason that an imputed cost of family labor is included in the
enterprise labor cost, an imputed interest
on (financial) capital supplied by the farm should also be included in the
enterprise interest cost.
4.
Net
Farm Income Analysis
Net farm income measures the
profitability of the farm as a whole for the accounting period under
consideration. It represents the “…reward
for the labor, capital, and management contributed by the farm…” during the
accounting period.
As in enterprise income
analysis, net income for the farm is obtained by deducting on a farm basis,
total cost of production from gross value of production. Because of the particular definition of net
farm income given above, however, its derivation is not a simple matter of
aggregating gross value of production of all enteprises, adding up costs of
production of all enterprises, and obtaining the difference. Accordingly, while the income analysis for
each enterprise servers as the principal inputs to net farm income analysis, a
number of adjustments would need to be made to accurately reflect the financial
situation of the farm as a whole.
a)
Net
Farm Income. Net farm income is the
difference between gross value of production and cost of production. It represents the return to the family for
their contribution of labor, capital and management. For purposes of analysis this can be disaggregated into family
labor income, investment income and management income.
The return on the family
labor would be the total of family labor costs imputed in the analysis of
individual enterprises. The return on
capital would be the interest expense also imputed on the family’s capital
contribution. Whatever is left over is
the return to the family for its risk-taking and management function, this is
equal to the total of the profits from all enterprises.
b)
Gross
Value of Production. For the farm as a
whole, gross value of production may differ from the sum of gross value of
production of all enterprises. The
principal factor that would account for such difference is inter-enterprise
transfers of intermediate outputs.
Specifically, in enterprise analysis, gross value of production of an
enterprise would include intermediate outputs produced by the enterprise (i.e.,
forage crops) and “sold” to another enterprise (e.g., livestock production) on
the same farm for use as input. From the
standpoint of the farm as a whole, however, to include both the intermediate
and the final products in the measurement of gross output would be
double-counting and would result in an overestimation of the farm’s gross value
of production. Accordingly, intermediate
outputs produced by the farm but which are consumed in the process of producing
another output are excluded in the estimation of gross value of production of
the farm. However, intermediate outputs
produced by the farm and sold to entities outside of the farm do form part of
the farm’s gross value of production.
c)
Costs
of Production. The farm’s cost of
production would also differ from the aggregate of all enterprises’ cost of
production because of a difference in treatment of the farm family’s labor and
(financial) capital inputs into the production activity. Specifically, in farm income analysis,
these items are treated not as cost but rather as investments of the farm
family, and are therefore excluded in the computation of the farm’s cost of
production.
5.
Farm
Budgets for Financial Resources
Like physical resource
budgets, farm budgets for financial resources have the objective of determining
whether, at all stages during the project life, the farm may reasonably be
expected to have at its disposal sufficient funds to meet all expenditures
required to generate projected outputs.
Budgeting for financial resources is thus directed towards testing for
the farm’s liquidity. If, at any point
in time, cash shortages should be expected to occur, the project should be so
designed that financial assistance is extended to the farmer during these
periods.
The analysis of the farm
budget for financial resources provides information that would be useful for
another purpose: that of determining whether, to what extent, and at what stage
the farms in the project area may be expected to make a financial contribution
to the operation and maintenance of the project. As such, farm financial budget analysis also inputs into the
subsequent stage of budget preparation for the project as a whole.
a)
Basic
Elements. Since the objective of the
analysis is to assess the farm’s liquidity position at each accounting period
during the lifetime of the project, only those transactions that affect the
farm’s cash position in each of these accounting periods are entered into the
budget for financial resources. Given
this, the basic elements of the budget are cash inflows, cash outflows, surplus
or deficit, and a running balance.
Under
cash inflows, transactions that would improve the cash position of the farm are
recorded. Principally, these would
involve cash sales of farm produce as well as loan proceeds (including those
from informal sources) and cash grants.
Farm produce consumed on the farm are thus not included. Also, if the farm should make any sale on
credit, the sale would enter into the budget for financial resources not when
the sale is made but rather when the payment is received. Where relevant, cash income from other
sources would be included.
Cash
outflows represent transactions that reduce the amount of cash available to the
farm. These involve cash payments for
goods and services obtained, amortization and interest payments on loans
received, tax payments, etc.
For
each accounting period, cash outflows are deducted from cash inflows to produce
either a cash surplus (net inflow) or deficit (net outflow). Even more significant than the surplus or
deficit for each period is the running cash balance, which shows the expected
cumulative cash position of the farm as of the end of any accounting
period. As the running cash balance
shows the total amount of cash that the farm may be expected to have at its
disposal as of the end of any accounting period, it serves as an indicator of
the amount and the timing of credit intervention that may have to be designed
into the project if the farms are to achieve projected outputs. This is important because the timing and the
magnitude of necessary interventions are crucial to a project’s success or
failure.
b)
Accounting
Period. The time element also has a
bearing on the choice of accounting periods for which budgets for financial
resources of a farm should be prepared.
Normally, as in farm income analysis, the analysis of farm budgets for
financial resources is carried out for each year of the project life. Because of certain peculiar characteristics
of agricultural production activities (particularly crop production which has a
strong seasonal character), and considering that venturing into new activities
or expanding existing activities usually call for relatively larger cash
outflows in the earlier periods because of capital outlays, it would be
advisable, at least for the first three years of the project life, to carry out
projections of farm budgets for financial resources for at least each quarter
of the year. This enables the project
to detect and provide for expected seasonal cash imbalances that may occur
during the project’s early years; it can, for instance, extend production
credit to farmers. Thereafter, a solid
basis for the farm’s cash balance may be expected to have been laid, at which
point annual budgets should suffice.
c)
Farm-Household
Relationship. Following the business
entity concept, the farm budget for financial resources should be prepared for
the farm as a production entity. Under
this concept, cash inflows and outflows resulting from activities of the farm
household that do not have a direct bearing on the farm’s production operation
should not enter into consideration.
Theoretically, this is the correct approach to take, and there are
instances, as in corporate farming, plantation farming, where this should be
done.
In the large majority of
cases, however, particularly in developing countries, the distinction between
the farm as a producing entity and the farm as a household barely exists; in
reality, no such distinction is made.
Recognition of this fact can be crucial to a project’s success or
failure. If household receipts and
expenditures are not taken into account in the preparation and analysis of the
farm’s budget for financial resources, the project may fail to correctly
anticipate the emergence of cash flow problems, as a result of which, required
assistance will either not be forthcoming or its delivery delayed.
In general, where small
farms are involved, the farm budget for financial resources should be include
both farm and household cash transactions.
TECHNICAL ANNEX A
FINANCIAL
ANALYSIS OF AGRICULTURAL PROJECTS
This section focuses on the specific tools used for the
financial analysis of agricultural development projects. It particularly deals with:
a)
farm
income analysis including the analysis of farm enterprise income and net farm
income, and
b)
farm
budgets for financial resources.
1.
Farm
Income Analysis
In the case of an
agricultural development project, farm income analysis is carried out to
determine the profitability of the project in agricultural project analysis
because the outcome will determine whether and to what extent farmers may be
expected to actively participate in the project.
Farm income analysis is
essentially similar to standard income analysis. The basic objective is to determine the incremental returns that
the farm households may be expected to generate as a result of the incremental
inputs that they would be bound to put in as a result of the project. The biggest difference between standard and
farm income analysis is that farm income sometimes includes noncash income, fro
example, vegetables produced and consumed by the farm family.
2.
Farm
Enterprise Income Analysis
In cases
where farms produce a single output, farm income analysis involves assessment
of financial performance with respect to only that single output. It is probably more usual, however, for
farms to produce more than one output, e.g., more than one crop or livestock or
both. In such case, it is helpful to
treat each production activity as a separate enterprise, carry out a financial
analysis for each of the enterprise, and at a later stage, combine all these
into an analysis of the entire farm.
Such
procedure enables the conduct of farm income analysis in a more systematic
manner and allows for a comparative assessment of the relative profitability of
the various production activities in the farm.
land and water tenure
arrangements, resettlement issues and local and organizational arrangements
which require sociological and/or anthropological expertise.
3.
Attention
should be paid to involving women in the planning and implementation of
development projects. Consideration
should be given to gender issues at the initial screening stage as well as at
the preparation and appraisal stages.
Particular attention should be given to gender composition when
considering the division of labor, access to and utilization of resources,
decision-making processes, distribution of income and benefits, time allocation
and legal status of women, and the impact that these factors will have on
project success.
4.
For
many types of projects, appraisal requires adequate date on demographic
patterns including growth of different population strate and migration
flows. Where a project affects a large
number of people, it may be useful to assess its impact on population patterns,
including spatial distribution.
5.
The
ICC Secretariat shall advise the proponent on the alternative/possible source
of financing for the TA components of the project.
VIII.
Conduct
of Public Consultations on Proposed Project
A.
Objectives
1.
To
determine the socio-political impact of the project.
2.
To
determine the extent of private sector competition resulting from the project.
3.
To
verify information and statistics provided by the project proponents.
B.
Procedures
1.
All
region-based projects shall be supported by an RDC Resolution stating that the
project is a priority in the province(s) and region and that concerned local parties
particularly beneficiaries have been made aware of the project and have no
objections.
2.
Public
consultations regarding projects will only be undertaken after the projects
have been determined to be economically viable, in order to save on time and resources.
TECHNICAL ANNEX B
Financial
analysis of projects can be seen from two viewpoints: (1) the “all capital”
approach or the weighted average cost of capital (WACC) approach where it looks
on the overall financial viability taking into consideration the costs of all
capital resources and (2) the “equity capital” approach which considers only
the equity contribution as investment.
Financial
institutions usually apply the WACC approach in analyzing the financial
viability of the project as they decide on how much and in what form their
exposure would be. This paper discusses
the treatment of WACC in project evaluation.
TREATMENT OF WEIGHTED
AVERAGE COST OF CAPITAL (WACC)
IN PROJECT EVALUATION
The
WACC approach is one way of estimating the overall opportunity cost of capital
used in the financial evaluation of the
project. The WACC is determined, as the
term implies, by calculating the relative weights of the capital resources and
multiplying them with the corresponding opportunity cost of capital for each of
the capital resource. The WACC is
mathematically represented in equation form by:
WACC = Pe*Re
/ P1*R1 equation 1
Where Pe = percentage of equity investment to total
capital investment (i.e., government budgetary appropriation)
Pc = percentage
of corporate funds (i.e., internal cash generation for government corporation)
to total capital investment
P1 = percentage
of loan to total capital investment
Re = opportunity
cost of capital of equity
Rc = opportunity
cost of capital of corporate funds
R1 = effective
cost of borrowing
Such that Pe / Pc / P1 = 1
For purposes of consistency,
WACC should be used for nominal or “current” price analysis since the cost of
capital is normally expressed in nominal terms. For example, interest rate of a loan is usually expressed in its
nominal rate and normally fixed over the period regardless of the inflation
rate.
Adjustments in the nominal
interest rate as stated in loan documents should be made to include other
financial charges such as commitment fees, front-end fees, and the like. A more appropriate approach is to use the
effective cost of borrowing instead of merely the nominal interest rate as
stated in loan documents.
In order to get the WACC
using constant price analysis, there is a need to compute the real WACC net of
the effects of inflation, by using the following relationship:
Real WACC = 1
+ nominal WACC equation
2
-
1
1 /
inflation rate
This equation can only be
used if the inflation rate remains constant over the project life.
As discussed in the book of
Cesar Saldana entitled “Financial Management in the Philippine Setting;” the
WACC should only be used when (a) the project’s risk is consistent with the
overall business risk of the company, and (b) the project is to be financed
from a pool of funds with the proportions indicated in the WACC.
Limitation of the WACC
As seen in equation 1, the WACC is a linear function in
the form of
x = A x + A
x + . . . A x
1 1 2
2 n n
Mathematically, it is
incorrect to use a linear function or represent a non-linear function of the
form
Y = B y / B
y 2 n nn
1 1 2 2
+ . . . / B
y
An example of a non-linear
function is the formula used in discounting cash flow which is basically the
same equation for calculating the NPV.
This equation is mathematically expressed as
1 1
-1 2 2 – 2 n n - n
PV = C (1 +
r) + C (1
+ r) / . . . C
(1 / r)
1 =
r = r = r
which means constant
Assuming that r 2 n
Interest rate is applied
over the period N, the linear function
x is not equivalent to, but can
approximate, the value or r.
Below is an example of an incorrect use of a linear
function into a non-linear equation.
Assume that a project has two sources of funds namely:
Fund 1
Amount 60
Opportunity cost of
capital 15%
per annum
Fund 2
Amount 40
Opportunity cost of
Capital 20%
per annum
Using equation 1, the WACC = 60 (.15)
/ 40 (.20) = .17
100
100
In the discounting (NPV) approach, the future value of
the investment at the end of period 10 should be at least
10
PV = 100
(1.17) = 480.6826 to cover the
opportunity costs of capital
However, if one is to analyze the FV of each investment
component, the total investment on the project should have at least a future
rate of
10 10
FV = 60 (1.15) / 40
(1.20) = 490.4029
at the end of period 10.
Another example of mathematical inconsistency in the use
of WACC can be seen in Annex 1. Given
the project profile, and the streams of costs and benefits, the project seems
to be financially viable using Case 1.
The computed IRR indicated in Case 1 (10.31%) is greater than the
computed WACC of the project, and the NPV computed at the WACC of 10% is
positive (17.428). Intuitively, the
project can cover the interest expense and principal repayments of the loan
and, at the same time, be able to realize earnings more than the opportunity
cost of equity investment. Using the
WACC approach, one can conclude that the project is acceptable, albeit
marginally.
In Case 2 however, we examine the return on equity
investment of the project. This is done
by computing the net cash flows from the investors’ point of view. Outflows from the investors during the
investment phase are derived by adding investment and interest costs, and
deducting loan proceeds from the sum.
Inflows to investors, meanwhile are derived by subtracting the
repayments of interest and principal from benefits. The net investors’ cash flow are then discounted; and the IRR on
equity investment is that discount rate which yields zero on NPV. Note that the IRR is computed to be 15.16%,
which is lower than the required opportunity cost of equity. The equity capital approach can also be used
to examine alternative financing schemes available in order to maximize the
discounted returns to equity.
It can also be shown that in general, if a project is
feasible from the “equity capital” viewpoint, that is IRR on equity is greater
than the equity cost of capital, the project is also feasible from the WACC
approach.
Although there are mathematical inconsistencies in the
calculation of WACC, it still provides a good approximate of the overall
opportunity cost of capital of the project.
Cases which yield inconsistent conclusions, as shown in Case 2 are
relatively uncommon. However, one
should be aware of the limitations of the WACC approach in making investment
decisions on the project. It is
desirable, therefore, to perform an in-depth analysis such as sensitivity
analysis on the estimates of costs and benefits of the project before making
such investment decisions.
In summary, both the “all capital” and the WACC
approaches can be used in determining the financial approaches can be used in
determining the financial viability of the project. It should be noted, however, that for public sector projects, the
economic analysis is more important in deciding on the true worth of a project. The financial analysis is conducted to explore
the financing options for the project.
TECHNICAL ANNEX C
FINANCIAL RATIOS
a.
Current
Liabilities
Total Liabilities
The ratio indicates the
amount of the liabilities that need to be serviced during the
operating/accounting period relative to the company’s total obligations, which
could affect its ability to finance the project.
b.
Current
Assets
Current Liabilities
The ratio shows the amount of resources, in terms of cash
and those which can be converted to cash within the accounting period, to meet
the obligation which will fall due during the same period. This complements the above ratio as
liabilities are compared with available resources.
c.
Total
Liabilities
Total
Assets
The ratio shows the relative amount of its
assets financed by loans and other forms of obligation and indebtedness vis.
Equity and retained earnings. It is
important to determine the corporate leverage so as to know whether the firm
can safely accommodate the loan component of the proposed project.
d.
Debt-Service
Payments
Net Income Before Interest and Taxes
The ratio indicates the extent to which
existing financing costs eat into the annual income of the enterprise. It will show whether the corporation has
been or is able to meet the existing financial obligations from its income or
partially from its equity.
e.
Net
Profit Before Tax
Sales
The ratio shows the profit margin of the firm. This shows the ability of management to
control/maintain/improve its cost and revenue structures while it responds to
internal and external factors which impinge on the operation of the enterprise
(e.g., operating expenses, collection efficiency, demand for the
product/services).
f.
Net
Profit Before Interest and Taxes
Assets
The ratio measures the rate of
return to the assets of the firm. It
shows the ability and efficiency of the enterprise to generate revenues from
its available resources.
TECHNICAL ANNEX D
ADJUSTMENTS TO INPUTS FROM
FINANCIAL STATEMENTS
FOR ECONOMIC ANALYSIS
Confusion
between financial and economic analysis arises because the same discounted cash
flows measures applied in financial
analysis to estimate returns to a project proponent are applied to economic
analysis in estimating returns to the economy.
The following three (3) very important distinctions between financial
and economic analyses must be born in mind:
1.
In
economic analysis, taxes and subsidies are treated as transfer payments. The new income generated by a project
includes any taxes the project can bear during production and any sales taxes buyers
are willing to pay when they purchase the project’s product. These taxes, which are part of the total
project benefit, are transferred to the government, which acts on behalf of the
society as a whole, and are not treated as costs. Conversely, a government subsidy is an expenditure of resources
that the economy incurs to operate the project.
2.
In
financial analysis, market prices are normally used. In economic analysis, however, some market prices may be changed
to accurately reflect social or economic values. These adjusted prices are called “shadow” or “accounting” prices,
intended to better approximate efficiency prices or “opportunity costs,” the
amount we must give up if we transfer a resource from its present use to the
project.
3.
In
economic analysis, interest on capital is never separated and deducted from the
gross return because it is part of the total return to the capital available to
the society as a whole and because it is that total return, including interest,
that economic analysis is designed to estimate. In financial analysis, interest paid to the entity from whose
point of view the financial analysis is being done is not treated as a cost
because the interest is part of the total return to the equity capital
contributed by the entity.
SUNK
COSTS
A project may require the use of
facilities in existence prior to appraisal of the project. The cost of such facilities are “sunk costs”
and thus should not be included in the project cost, provided that these facilities
have no alternative use, and their use in the project involves no opportunity
cost.
In some cases, a project is part of
a sequence of related investments.
While a project that uses excess capacity created by an earlier project
may well show high returns, such returns may also arise if a project is
designed in a way that allows it to capture benefits originally expected from
an earlier project. For instance, a
rehabilitation and modernization project for an irrigation system may include
as benefits yield increases expected from the original project. Hence, in all such cases, it would be
desirable to also indicate the net return on the entire project, including sunk
costs, in order to show whether the original decision to provide the facilities
was fell founded.
DEPRECIATION
The financial accounts of a project
include provision for depreciation on the basis of prevailing accounting
prices. For purposes of economic
analysis, the important factor is the stream of real investment required for
realizing and maintaining project benefits at the assumed levels. Apart from the initial investment, this may
require repairs, maintenance and replacement during the project’s life. The time profile and magnitude of these
expenditures does not generally coincide with the time profile of depreciation
in the financial accounts of the project.
Moreover, at the end of the project’s life, the assets created may have
some residual value, even though they may be fully depreciated in the financial
accounts. Hence, economic analysis
requires that depreciation provisions be excluded and that expenditures for
repairs, maintenance and replacement and the salvage value of assets at the end
of the project life be taken into account.
FINANCIAL
CHARGES, INTEREST AND AMORTIZATION
In general, financing of the project
is not relevant to the economic evaluation phase of project preparation. Amortizations, interests, and other charges
are financial items specific to the terms of financing and are independent of
the economic value of the project. To
ensure that only feasible projects are financed, investments should be
subjected to cost-benefit analysis removed from financing considerations. Only after a project is determined feasible
should terms of financing be incorporated to evaluate possible additional
benefits derived from relative favorable (e.g., concessional) loan terms.
TECHNICAL ANNEX E
ISSUES OF TECHNICAL DESIGN
The range of types of projects and
technological alternatives is wide and very little can be said by way of
generalization. Many issues of
technical design are specific to a project.
Nevertheless, certain broad issues relevant to many, if not all,
projects can be identified. These can
be grouped into the following four categories:
1. Size. The size, scale, or scope of a project is
almost always variable that must be determined in the course of project
preparation. Whatever the sectoral
focus, a bias in favor of bigness on the part of planners has to be guarded
against. Absence of a proven technology
package may dictate a phased approach, starting with research or adaptive work
and continuing with a pilot project that is scaled up subsequently as
experience warrants. Finally, financial
considerations, such as the burden of recurrent costs to operate the project
once it is completed, may determine project size.
2. Location.
Issues affecting the choice of
location can be as diverse as those affecting size. In most instances, site selection entails a trade-off among
various considerations.
-
For
industrial projects, location may be dependent on proximity to needed raw
materials, a primary source of energy, principal markets or suitable
infrastructure.
-
For
agricultural development projects, the quality of soils, pattern of rainfall,
structure of landholdings, and availability of ground or surface water will
determine site selection.
-
For
social projects, population densities and service areas will determine the
number and location of school buildings or of health and family planning
clinics.
In some cases, a project’s location may
reflect a deliberate government policy to decentralize industrial investment
away from the nation’s capital, to open up an underdeveloped region, or to
protect a fragile environment from further encroachment.
3. Timing. Issues on the timing of project investment may
be less obvious than those of scale and location and therefore more likely to
be neglected. Timing is often confused
with preparedness or state of readiness.
Projects should not only be put forward because they are “ready” – there
should be an explicit determination of appropriateness of timing of the
projects. The decision to invest should
be guided by the projects. The decision to invest should be guided by
the project’s first year EIRR, rather than the overall return on the investment
to determine whether a project is premature (demand for output, state of
technology is not yet sufficiently advanced to make it economically justified
or financially viable) or too late (overall contribution or benefit would have
been greater had it been undertaken earlier).
4.
Technology
Package. Technology selected for a
project should be suited to the development objectives of the project, to
intended users, and to local conditions – including the availability and cost
of local capital, raw materials and labor, as well as the size of markets and
the actual and potential capacity for local planning and implementation. This implies that the technology chosen need
not be the most modern that is available internationally, nor the traditional
one widely used in the country; it can be selected, and perhaps designed,
specifically to meet the objectives of the project.
a.
While
the search may often lead to a choice that occupies an intermediate position on
the scale of technical complexity, there are situations in which the advantages
of the most sophisticated, modern or high technology are so great as to
override all other factors. This is
true for capital projects whose impact may be felt nationwide (i.e., remote
sensing by earth satellites for national resource surveys, installation of
microwave radio system or coaxial cables for long distance communications,
electric power generation, large scale development of mineral deposits,
offshore oil exploration, deep well drilling, and enhanced oil recovery).
b.
At
the other end of the scale of complexity, projects with localized impact such
as maintenance of rural roads, construction of rural schools, or provision of
tertiary irrigation ditches call for a highly labor-intensive approach that
entails difficult managerial and logistical problems in handling large numbers
of workers.
c.
The
following range of considerations that may enter into the choice of technology
package should be:
i.
The
tradeoffs between imported and domestically produced technology, between capital-
and labor-intensive technology, and between new investment, maintenance, and
operating costs.
ii.
The
interdependence between choice of technology and administrative and
institutional feasibility.
iii.
The
way the choice of users, as well as environmental concerns, influence technical
design.
iv.
The
impact, intended and otherwise, of the policies of governments and of aid
agencies on technical design.
v.
The
role of economic and financial analysis in elucidating the choice of
technology.
vi.
The
opportunities that the choice of technology provides for developing local
resources and capabilities.
TECHNICAL ANNEX F
ELEMENTS
OF SOCIAL ANALYSIS
1.
The
sociocultural and demographic characteristics of the project population, its
size and social structure, including ethnic, tribal and class composition.
2.
The
way in which the project population has organized itself to carry out
productive activities, including the structure of households and families,
availability of labor, ownership of land, and access to and control of resources.
3.
The
project’s cultural acceptability; that is, its capacity both for adapting to
and for bringing about desirable changes in people’s behavior and in how they
perceive their needs.
4.
The
strategy necessary to elicit commitment from the project population and to
ensure their sustained participation from design through successful
implementation, operation, and maintenance.
IDENTIFICATION AND
INVOLVEMENT OF
TARGET GROUPS AND SOCIAL AND
DISTRIBUTIONAL ANALYSIS
1.
The
target groups intended to benefit from the project and the main agents in its
implementation should be carefully specified at the outset whenever possible
and appropriate.
2.
The
early specification of intended target groups should be followed by a
qualitative analyis of the distributional effects of the project. To the extent possible, the distributional
analysis would attempt to assess the project impact on various relevant
groups. The analysis should further clarify
the groups and individuals who may benefit or may be harmed by the project,
including positive and negative employment effects. In certain cases, there may be adverse social effects on some
groups even when objectives for the target groups are fully met. The appraisal should assess these adverse
effects and consider means for alleviating them.
3.
Socio-cultural
conditions, structures and traditions need to be analyzed in order to identify
possible constraints to successful project implementation. This may involve such issues as
ANNEX A
ICC COURSES OF ACTION FOR PUBLIC SECTOR
PROJECTS
|
RANGE |
ICC SECRETARIAT EVALUATION |
ICC (TB & CC) REVIEW |
ICC NOTATION |
NEDA BOARD APPROVAL |
|
1. total
project cost > = P300 M
irrespective of financing |
/ |
/ |
/ |
/ |
|
2. total
project cost , P300 M - with foreign borrowings > = $8 M -
with foreign borrowings < =$8 M - with foreign grant aid |
/ / / |
/ |
/ * |
/ / * |
* case to case basis (e.g., projects with major policy issues.
** exchange rates for conversion of currency units shall be
provided by the Central Bank
/ Incurred strictly for BOP and/or budgetary support.
/ Includes:
a) single or multi-purpose projects;
b) programs/project packages consisting of inter-related or
interdependent projects;
c)
individual
capital forming project component of program/sector loans which can be treated
as separate and distinct activities.
/ Projects with major policy
issues or mixed financing shall require ICC notation and NEDA Board approval.
/ Technical assistance
projects (excluding pre-investment studies) proposed for ODA financing, costing
$1 million or less, shall automatically
be endorsed for ODA funding.
/ Private sector access to
concessional ODA financing under on-lending arrangements and/or national
government financing guarantees shall include projects to be implemented under
BOT/BOO/BT schemes.
ODA fund allocations for NGO
activities come in 3 modes:
Mode I: Donor governments provide funds directly to
local NGCs through their existing local NGO facilities.
Mode II: Funds are coursed by the donors through GOP
for availment by NGOs.
Mode III: Foreign NGOs provide funds directly to local
NGOs. GOP evaluation and approval are
not required for funding of project/s.
Evaluation of projects will generally be on a “no objection” basis.
Proposals of accredited NGOs for ODA funding which
do not fall under any on-going program or project should follow the same
procedures adopted for the projects of the public sector. However, proposals which fall under any
on-going program or project should be evaluated and acted upon by the concerned
implementing agency.
ANNEX A
COURSES OF ACTION TO BE
UNDERTAKEN FOR PROJECTS & PROGRAMS OF THE NATIONAL GOVERNMENT
|
|
NEDA SECRETARIAT
EVALUATION |
ICC REVIEW (TB & CC) |
ICC NOTATION |
NEDA BOARD APPROVAL |
|
PUBLIC
SECTOR PROJECTS |
|
|
|
|
|
1.
PROGRAM ASSISTANCE 1/ |
X |
|
X |
X |
|
2.
CAPITAL ASSISTANCE 2/ |
|
|
|
|
|
2.1
TOTAL PROJECT COST >=P300 M |
X |
X |
|
X |
|
(MAJOR CAPITAL PROJECTS) |
|
|
|
|
|
2.2
TOTAL PROJECT COST < P300 M |
|
|
|
|
|
a. WITH FOREIGN BORROWINGS |
|
|
|
|
|
1) FOREIGN BORROWINGS >=$5 M |
X |
X |
|
X |
|
2) FOREIGN BORROWINGS < $5 M |
X |
|
X |
X |
|
b. WITH FOREIGN GRANTS 3/ |
X |
|
|
|
|
3. TECHNICAL ASSISTANCE 4/ |
X |
|
|
|
|
|
|
|
|
|
|
PRIVATE
SECTOR PROJECTS SEEKING |
X |
X |
|
X |
|
CONCESSIONAL ODA FINANCING 5/ |
|
|
|
|
|
|
|
|
|
|
|
NGO
PROJECTS FOR ODA FUNDING 6/ |
|
|
|
|
|
|
|
|
|
|
|
1. UNDER MODE I |
X 7/ |
|
|
|
|
2. UNDER MODE II (FOR NEW PROPOSALS ONLY) 8/ |
X |
|
|
|
|
|
|
|
|
|
