Report and Recommendation of the President to the Board of Directors

Project Number: 54022-001 August 2020

Proposed Policy-Based Loan Republic of the Philippines: Disaster Resilience Improvement Program

Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB’s Access to Information Policy after excluding information that is subject to exceptions to disclosure set forth in the policy.

CURRENCY EQUIVALENTS (as of 19 August 2020)

Currency unit – peso (₱) ₱1.00 = $0.02060 $1.00 = ₱48.54

ABBREVIATIONS

ADB – Asian Development Bank ASEAN

CARES Cat DDO CDF

– – – –

Association of Southeast Asian Nations COVID-19 Active Response and Expenditure Support catastrophe deferred drawdown option contingent disaster financing

COVID-19 – coronavirus disease DILG

DOF DOH DOLE DRF DRFI

– – – – – –

Department of the Interior and Local Government Department of Finance Department of Health Department of Labor and Employment Disaster Risk Financing Disaster Risk Financing and Insurance

DRR GDP

– –

disaster risk reduction gross domestic product

GSIS JICA Kalahi-CIDSS LGPMS-SGLG LGU

– – – –

Government Service Insurance System Japan International Cooperation Agency Kapit-Bisig Laban sa Kahirapan–Comprehensive and Integrated Delivery of Social Services Local Governance Performance Management System–Seal of Good Local Governance local government unit

NDRRMC – National Disaster Risk Reduction and Management Council PPE

PPPF – –

personal protective equipment post-program partnership framework

NOTE In this report, “$” refers to United States dollars.

Vice-President Ahmed M. Saeed, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Directors Jose Antonio R. Tan III, Public Management, Financial Sector, and

Trade Division (SEPF), SERD Kelly Bird, Philippines Country Office (PHCO), SERD

Team leaders Benita Ainabe, Financial Sector Specialist (Capital Markets), SEPF,

SERD Aekapol Chongvilaivan, Economist (Public Finance), SEPF, SERD Team members Meenakshi Ajmera, Principal Safeguards Specialist, Office of the

Director General (SEOD), SERD Sara Fatima Azfar; Senior Partnerships Specialist; Strategic Partnerships Division; Strategy, Policy and Partnerships Department Oscar Badiola, Senior Programs Officer, PHCO, SERD Eduardo Banzon, Principal Health Specialist, Health Sector Group, (SDSC), Sustainable Development and Climate Change Department (SDCC) Florissa Barot, Project Analyst, SEPF, SERD

Charlotte Benson, Principal Disaster Risk Management Specialist, Climate Change and Disaster Risk Management Division (SDCD), SDCC Elizabeth Burges-Sims, Senior Social Development Specialist (Gender and Development), Human and Social Development Division (SEHS), SERD Oliver Domagas, Senior Financial Control Specialist, Loan and Grant Disbursement Section, Controller’s Department Haidy Ear-Dupuy, Senior Social Development Specialist (Core Labor Standards), Safeguards Division (SDSS), SDCC David Elzinga, Senior Energy Specialist, Energy Sector Group, SDSC, SDCC Coral Fernandez Illescas, Principal Water Resources Specialist, Water Sector Group, SDSC, SDCC Anna Fink, Economist (Regional Cooperation), Regional Cooperation and Integration Thematic Group, Office of the Cluster Head (SDTC), SDCC Zaruhi Hayrapetyan, Social Development Specialist (Safeguards), SDSS, SDCC Cristina Lozano, Principal Country Specialist, PHCO, SERD Lila Mallory; Senior Procurement Specialist; Procurement Division 2; Procurement, Portfolio and Financial Management Department Delaney Miram, Project Analyst, SEPF, SERD Antoine Morel, Principal Environment Specialist, SEOD, SERD Takako Morita, Senior Counsel, Office of the General Counsel Christopher Morris, Principal Social Development Specialist, NGO and Civil Society Center

Go Nagata, Public Management Specialist (Taxation), Governance Thematic Group, SDTC, SDCC

Kaukab Naqvi, Senior Economist, Economic Analysis and Operational Support Division, Economic Research and Regional Cooperation Department Francesco Ricciardi, Environment Specialist, SDSS, SDCC Karen May Sanchez, Senior Project Assistant, SEPF, SERD Malika Shagazatova, Social Development Specialist (Gender and Development) Gender Equity Thematic Group, SDTC, SDCC Virinder Sharma, Sr., Urban Development Specialist, Urban Sector Group, SDSC, SDCC Samjhana Shrestha, Senior Economist, Rural Development and Food Security (Agriculture) Thematic Group, SDCC Sakiko Tanaka, Principal Social Sector Specialist, SEHS, SERD Robert Valkovic, Principal Transport Specialist, Transport Sector Group, SDSC, SDCC Michiel Van der Auwera, Senior Financial Sector Specialist (Social Security), Social Development Thematic Group, SDTC, SDCC

Peer reviewer Steven Goldfinch, Disaster Risk Management Specialist, SDCD, SDCC

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

PROGRAM AT A GLANCE

I. THE PROPOSAL 1

II. PROGRAM AND RATIONALE 1

A. Background and Development Constraints 1

B. Policy Reform and ADB’s Value Addition 5

C. Impacts of the Reform 9

D. Development Financing Needs and Budget Support 9

E. Implementation Arrangements 10

III. DUE DILIGENCE 10

IV. ASSURANCES AND CONDITIONS 12

V. RECOMMENDATION 12

APPENDIXES 1. Design and Monitoring Framework 13

2. List of Linked Documents 16

3. Development Policy Letter 17

4. Policy Matrix 19

Project Classification Information Status: Complete

PROGRAM AT A GLANCE

Source: Asian Development BankThis document must only be generated in eOps. 06072020121150715698 Generated Date: 06-Jul-2020 12:12:11 PM

1. Basic Data Project Number: 54022-001Project Name Disaster Resilience Improvement

ProgramDepartment/Division SERD/SEPF

Country Philippines Executing Agency Department of FinanceBorrower PhilippinesCountry Economic Indicators https://www.adb.org/Documents/LinkedD

ocs/?id=54022-001-CEIPortfolio at a Glance https://www.adb.org/Documents/LinkedD

ocs/?id=54022-001-PortAtaGlance

2. Sector Subsector(s) ADB Financing ($ million)Finance Insurance and contractual savings 150.00

Health Disease control of communicable disease 150.00

Public sector management Decentralization 100.00

Public administration 100.00

Total 500.00

3. Operational Priorities Climate Change InformationAddressing remaining poverty and reducing inequalities

Accelerating progress in gender equality

Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainabilityStrengthening governance and institutional capacity

Fostering regional cooperation and integration

GHG reductions (tons per annum) 0Climate Change impact on the Project

Low

ADB Financing

Adaptation ($ million) 56.78

Mitigation ($ million) 0.00

Cofinancing

Adaptation ($ million) 0.00

Mitigation ($ million) 0.00

Sustainable Development Goals Gender Equity and MainstreamingSDG 1.5, 1.a, 1.bSDG 3.3SDG 5.cSDG 6.aSDG 8.10SDG 9.1SDG 11.aSDG 13.aSDG 15.9SDG 16.6, 16.7SDG 17.17

Effective gender mainstreaming (EGM)

Poverty TargetingGeneral Intervention on Poverty

4. Risk Categorization: Complex .

5. Safeguard Categorization Environment: C Involuntary Resettlement: C Indigenous Peoples: C.

6. Financing

Modality and Sources Amount ($ million)

ADB 500.00 Sovereign Stand-Alone Policy-Based Lending (Regular Loan): Ordinary capital resources

500.00

Cofinancing 0.00 None 0.00

Counterpart 0.00 None 0.00

Total 500.00

Currency of ADB Financing: US Dollar

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed policy-based loan to the Republic of the Philippines for the Disaster Resilience Improvement Program.

2. The proposed contingent disaster financing (CDF) program will provide the government with rapid access to resources to initiate disaster response and early recovery efforts and address the health and economic impacts of health-related emergencies with minimal delay. The program is aligned with the Philippine Development Plan, 2017–2022 in supporting the integration of disaster resilience in various sectors of the economy and increasing preparedness for health-related emergencies by upgrading healthcare facilities and building human resource capacity in the health system, particularly in light of the vulnerabilities exposed by the coronavirus disease (COVID-19) pandemic.1 The program is also aligned with the second strategic pillar of the Philippines country partnership strategy, 2018–2023, which promotes local economic development.2 The program supports Asian Development Bank (ADB) Strategy 2030 operational priorities on addressing remaining poverty and reducing inequalities (operational priority 1); accelerating progress in gender equality (operational priority 2); tackling climate change,3 building climate and disaster resilience, and enhancing environmental sustainability (operational priority 3); strengthening governance and institutional capacity (operational priority 6); and fostering regional cooperation and integration (operational priority 7).

II. PROGRAM AND RATIONALE

A. Background and Development Constraints

3. Disaster risk. The Philippines is widely regarded as one of the world’s most disaster-prone countries,4 with a high likelihood of its economy being severely impacted by disasters.5 It is located along the so-called Pacific Ring of Fire, making it susceptible to earthquakes and volcanic eruptions.6 The country also experiences frequent tropical cyclones (typhoons), floods, landslides, and droughts. Seventy-four percent of the population is vulnerable to multiple natural hazards. The average annual cost of disasters is estimated at 0.7%–1.0% of gross domestic product (GDP).7 Disaster risk modeling indicates that the country faces average annual losses of ₱43.5 billion due to earthquakes and ₱133.2 billion due to tropical cyclones.8 Most notable was Typhoon Yolanda (Haiyan; 2013) with over 6,000 fatalities, 16 million affected people, and losses of 4.7% of 2013 GDP. 9 More recently, Typhoon Ompong (Mangkhut; 2018), the Mindanao earthquakes (2019), Typhoon Tisoy (Kammuri; 2019), and the Taal volcano eruption (2020) have collectively affected about 6 million people with damages estimated at approximately

1 National Economic and Development Authority. 2017. Philippine Development Plan, 2017–2022. 2 Asian Development Bank (ADB). 2018. Country Partnership Strategy: Philippines, 2018–2023—High and Inclusive

Growth. Manila. This lending proposal was not included in ADB. 2018. Country Operations Business Plan: Philippines 2019–2021. Manila. The government requested ADB's financial assistance in a letter dated 27 February 2020.

3 Climate Change Assessment (accessible from the list of linked documents in Appendix 2). 4 Verisk Maplecroft. 2012. Natural Hazard Risk Atlas. https://maplecroft.com/about/news/nha_2012.html. 5 The United Nations Office for Disaster Risk Reduction’s Global Assessment Report on Disaster Risk Reduction.

2015. https://www.preventionweb.net/english/hyogo/gar/2015/en/gar-pdf/GAR2015_EN.pdf. 6 Sector Assessment (Summary): Public Sector Management (Disaster Risk Management) (accessible from the list of

linked documents in Appendix 2). 7 Government of the Philippines, National Disaster Coordination Council, ADB, United Nations. 2008. National

Assessment on the State of Disaster Risk Management in the Philippines. Final Report. Manila (October). 8 AIR Worldwide. 2016. Philippines Catastrophe Risk Model. Boston. 9 National Economic Development Authority. 2013. Reconstruction Assistance on Yolanda (RAY). Manila.

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₱44.13 billion.10 These events have worsened poverty, and the typhoon-prone provinces located along the eastern seaboard are among those with the highest poverty rates in the country.11

4. Recognizing these vulnerabilities, the government enacted the Philippine Disaster Risk Reduction and Management Act of 2010 (Republic Act No. 10121),12 which: (i) strengthened risk reduction and management by taking a whole-of-government approach; and (ii) institutionalized the Disaster Risk Reduction and Management Plan and associated appropriation of funds. The government adopted its Disaster Risk Financing and Insurance (DRFI) Strategy in 2015.

5. Public health management and the COVID-19 pandemic. The Philippines has made significant improvements in the health status of its people, with life expectancy at birth improving from 63.7 years in 1980 to 71.1 years in 2018.13 About half of the provinces in the Philippines are malaria-free, and the country has achieved the Millennium Development Goal for tuberculosis.14 Polio-free status was maintained for 3 decades before the disease returned in 2019 because of parents’ aversion to having their children vaccinated. The COVID-19 pandemic presents an unprecedented health challenge for the Philippines. The first case of COVID-19 was detected on 30 January 2020, and by March 2020 the rapidly increasing number of confirmed cases reflected the extent of community transmission. As of 13 August 2020, the number of COVID-19 cases was 147,526 with 2,426 deaths and 70,387 recovered. 15 The COVID-19 pandemic has put considerable stress on the health system, with exposed frontline health workers at particular risk of contracting the disease.

6. Government response to the COVID-19 pandemic. On 8 March 2020, Presidential Proclamation No. 922 was issued declaring a state of public health emergency throughout the Philippines due to COVID-19,16 which intensified government reporting and enforced quarantine, disease control, and prevention measures. This was followed by a temporary closure of schools in Metro Manila. Further, on 16 March 2020, Presidential Proclamation No. 929 was issued declaring a state of calamity nationwide, together with enhanced community quarantine in Luzon.17 On 24 March 2020, Congress enacted Republic Act No. 11469 or the Bayanihan to Heal as One Act, which enabled measures to address the COVID-19 pandemic. These included: (i) augmenting operational budgets, financial assistance programs, and food programs of national government agencies, the National Disaster Risk and Reduction Management Fund, and the Quick Response Funds of the Department of Health (DOH) and the Department of Social Welfare and Development; and (ii) authorizing local government units (LGUs) to utilize more than the mandated 5% allocated for their local disaster risk and reduction management funds, subject to funding from the national government. On 22 May 2020, Inter-Agency Task Force Resolution

10 Estimates provided by the National Disaster Risk Reduction and Management Council (NDRRMC), citing sources

from national government agencies. 11 These include some of the most vulnerable rural fishing and agricultural provinces—Albay, Camarines Sur,

Catanduanes, and Sorsogon in the Bicol region (Region V)—with a total population of 5.8 million, and the largely rural coastal provinces of Eastern and Western Samar and Leyte in the Eastern Visayas Region (Region VIII) with a total population of 4.0 million.

12 Republic Act No. 10121. http://www.ndrrmc.gov.ph/attachments/article/45/Republic_Act_10121.pdf 13 World Bank. World Development Indicators (accessed 6 February 2020). 14 World Health Organization. 2015. Global Tuberculosis Report 2015. Geneva. 15 https://www.worldometers.info/coronavirus/country/philippines/ 16 Proclamation No. 922. https://www.officialgazette.gov.ph/downloads/2020/03mar/20200308-PROC-922-RRD.pdf 17 Proclamation No. 929. https://www.officialgazette.gov.ph/downloads/2020/03mar/20200316-PROC-929-RRD.pdf;

Enhanced community quarantine is defined in the IATF Omnibus Guidelines On The Implementation Of Community Quarantine In The Philippines.

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no. 38 extended school closures,18 and was followed by a presidential announcement that face-to-face classes would be suspended until a COVID-19 vaccine becomes available.19

7. The government has initiated a comprehensive response to the COVID-19 pandemic with a fiscal stimulus program of $12.8 billion. On 23 April 2020, ADB approved the $1.5 billion COVID-19 Active Response and Expenditure Support (CARES) Program to support the government response.20 In May 2020, 900,000 units of personal protective equipment (PPE) were procured, 90-day forecasts for required PPE are regularly calculated, and local production of PPE has been initiated. Polymerase chain reaction and GeneXpert21 testing capacity has increased with a maximum of 36,567 daily tests performed by a total of 102 laboratories as of 11 August 2020, with capacity to administer up to 90,694 tests per day. The national health insurance agency, the Philippine Health Insurance Corporation, has expanded insurance coverage to include polymerase chain reaction testing, isolation services, and treatment of COVID-19. Income transfers have helped to provide basic livelihood support to families engaged in the informal sector. As of 12 August 2020, 24.5 million families had received emergency cash subsidies of ₱142.2 billion.22 Under the government’s small business wage Enhanced Community subsidy scheme, 3.1 million formal workers in small businesses unable to work during the Quarantine period received wage subsidies totaling ₱46 billion.23

8. Prior to the pandemic, the economy grew by 6.3% per year on average during 2010–2019, driven by robust domestic investment and strong performance in agriculture and construction. The economy was initially forecast to grow by 6.2% in 2020; however, with the COVID-19 outbreak, it is now forecast to contract by 3.8%.24 The real sector has been severely impacted as most businesses are unable to operate, together with significant disruptions to global supply chains and the sharp decline in tourist arrivals. Livelihoods have been adversely affected. The April 2020 labor force survey showed the unemployment rate at 17.7%. The pandemic will reverse the gains in poverty reduction. An additional 5.5 million Filipinos are expected to fall into poverty, with poverty incidence estimated to rise to 20.7% in 2020 (footnote 20). In its COVID-19 recovery planning, the government also needs to address the long-standing problem of income inequality. The degree of income inequality in the Philippines exceeds that of its regional peers, with the national average masking significant regional disparities within the country.25

9. Development constraints. The Philippines faces four development constraints. First, disaster resilience policy making and coordination at the national level are fragmented across multiple agencies, and there is insufficient support to build resilience in the most vulnerable provinces and urban areas. Second, there is inadequate integration of disaster risk reduction (DRR) and climate change adaptation in local government planning and infrastructure investment planning, which ultimately delays the achievement of the Sustainable Development Goals. Third, there are no clear and cohesive policy frameworks or protocols in the health and social assistance systems to prepare for and proactively respond to epidemics or pandemics such as COVID-19, although the government reacts with speed within its constraints. These undermine levels of preparedness, result in delays in early recovery and rehabilitation, and exacerbate the economic and social impacts of physical losses following a disaster. They also place a strain on the health

18 IATF Resolution No. 38. https://www.officialgazette.gov.ph/downloads/2020/05may/20200522-IATF-RESOLUTION-

NO-38.pdf 19 Philippine News Agency. https://www.pna.gov.ph/articles/1105226 20 ADB. 2020. COVID-19 Active Response and Expenditure Support Program. Manila. 21 https://www.cepheid.com/en/systems/GeneXpert-Family-of-Systems/GeneXpert-System 22 Department of Social Welfare and Development. https://www.dswd.gov.ph/ 23 DOF. https://www.dof.gov.ph/release-of-small-business-workers-subsidies-nearing-completion-says-dof/ 24 ADB. 2020. Asian Development Outlook Supplement 2020. Manila. 25 The Philippines’ Gini coefficient is 0.44, compared with 0.38 in Thailand, 0.39 in Indonesia, and 0.34 in Viet Nam.

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and social assistance systems, as allocated resources are inadequate for healthcare facilities, testing, and social services. Fourth, disaster risk financing capacity is insufficient, as evidenced by the limited use of traditional and innovative risk retention and risk transfer instruments. Post-disaster financing constraints restrict the opportunities to build back better and enhance resilience to future hazard events.

10. ADB engagement and lessons learned. ADB has extended significant post-disaster support to the Philippines dating back as far as Typhoon Sisang (Nina; 1987),26 with a total present value of rehabilitation and reconstruction of damaged public assets at $1.78 billion.27 However, support had been primarily reactive (ex post) and ADB began to explore viable risk transfer solutions for financing reconstruction, to enable the government to access rapid post-disaster liquidity and spread the costs of recovery and reconstruction over time.28 The speed of the response of the contingent financing instruments provided by the World Bank and Japan International Cooperation Agency (JICA) to the Philippines after Typhoons Yolanda and Ompong also demonstrated the importance of an instrument such as the CDF for disaster preparedness and response.29 The proposed CDF will form an integral part of the Philippines’ broader disaster risk financing framework under its DRFI Strategy, support rapid provision of liquidity for timely disaster and health emergency response, and help the government to manage the fiscal risk arising from disasters triggered by natural hazards and pandemics.30

11. As a policy-based instrument, the proposed program provides an opportunity for ADB to engage in policy dialogue with the government and also build on ongoing reform programs. ADB is currently engaged with the government to strengthen local governance in the Philippines,31 and is expanding support to the employment program of the Department of Labor and Employment (DOLE) to include child labor prevention programs, including addressing increased vulnerability to child labor resulting from the economic impact of disasters and pandemics on poor families. Through its reforms, the proposed program can also address disaster risk management and health policy bottlenecks in investment projects in these areas.32

12. Development partner coordination on disaster risk management. The Department of Finance (DOF) leads development partner coordination through its DRFI Strategy, as it seeks to refine its approach and achieve an adequate and cost-effective portfolio of disaster risk financing instruments. With development partner support, the government has taken further measures to improve its financial preparedness for disasters, utilizing contingent credit facilities and innovative insurance and insurance-linked securities. The World Bank and JICA have been active in this

26 ADB assistance includes $500.0 million emergency assistance loan for Typhoon Yolanda (ADB. 2013. Philippines:

Emergency Assistance for Relief and Recovery from Typhoon Yolanda. Manila); $374.1 million loan for KALAHI–CIDSS National Community-Driven Development Project (ADB. 2013. Philippines: KALAHI-CIDSS National Community-Driven Development Project. Manila); and $20.0 million grant financed by the Japan Fund for Poverty Reduction (ADB. 2013. Philippines: Emergency Assistance and Early Recovery for Poor Municipalities Affected by Typhoon Yolanda. Manila).

27 Nominal value adjusted for inflation, using United States Bureau of Labor Statistics January 2020 consumer price index data.

28 ADB. 2019. Contingent Disaster Financing under Policy-Based Lending in Response to Natural Hazards. Manila. 29 World Bank. 2011. Disaster Risk Management Development Loan with a Catastrophe Deferred Drawdown Option

(CAT-DDO). Manila; World Bank. 2015. Philippines – Disaster Risk Management Development Policy Loan with a CAT DDO. Manila; JICA. https://www.jica.go.jp/philippine/english/office/topics/news/140321.html

30 The proposed CDF will also complement other risk retention measures (such as annual contingency budgeting and budget reallocations) and risk transfer instruments (such as insurance, reinsurance, and insurance-linked securities).

31 ADB. 2019. Philippines: Local Governance Reform Program (Subprogram 1). Manila; ADB. 2020. Philippines: Local Governance Reform Project. Manila.

32 Independent Evaluation Department. 2018. Policy-Based Lending 2008–2017: Performance, Results, and Issues of Design. Manila: ADB. A dedicated city-level disaster insurance project may follow the Disaster Resilience Improvement Program reform which supports a GSIS pilot of the city-level insurance scheme.

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area. The World Bank provided a $500 million development policy loan facility with a catastrophe deferred drawdown option (Cat DDO) in 2011 and another $500 million Cat DDO in 2015, $496.25 million of which was released in October 2018 in response to Typhoon Ompong. The second Cat DDO closed in March 2020 (footnote 29). In 2014, JICA provided a ¥50 billion Post-Disaster Stand-by Loan (footnote 29).The government launched a pilot in August 2017, with technical support from the World Bank, to provide $206 million in modeled loss parametric insurance coverage through the Government Service Insurance System (GSIS) against losses from tropical cyclones and earthquakes to national government assets and 25 provinces located along the eastern seaboard. Premiums were funded through a ₱1 billion ($19.8 million) allocation in the 2017 General Appropriations Act, under the National Disaster Risk and Reduction Management Fund.33 In November 2019, the World Bank issued two tranches of 3-year catastrophe-linked bonds to provide the Philippines with financial protection of up to $75 million against losses from earthquakes and $150 million against losses from tropical cyclones.34 On 15 April 2020, the World Bank approved its $500 million Third Disaster Risk Management Development Policy Loan.35

13. Development partner coordination in response to COVID-19. Since the onset of the COVID-19 pandemic in the Philippines, ADB has coordinated with the United Nations agencies and other development partners. Following the World Health Organization’s Strategic Preparedness and Response Plan for COVID-19, the Philippines has adopted a whole-of-society coordination mechanism, comprising the DOH, the World Health Organization, the National Disaster Risk Reduction and Management Council (NDRRMC), government stakeholders, the private sector, and nongovernment organizations such as the Philippine Red Cross. The government has also committed to working collectively with its neighbors in Association of Southeast Asian Nations (ASEAN).36

B. Policy Reform and ADB’s Value Addition

14. Proposed program. To complement ADB’s previous and ongoing support to the Philippines, including the CARES Program,37 the policy actions under the proposed program will strengthen disaster resilience of Philippine institutions and communities and the government’s response to pandemics through three reform areas: policy and institutional arrangements for disaster risk management and health-related emergencies, including social protection; resilience of national government assets and LGUs to disaster and climate risks; and disaster risk financing. The outcome of the program is that the disaster resilience and pandemic response of institutions and communities will be strengthened, and financial preparedness for disasters improved. The CARES Program supported the government’s COVID-19 Response Program, which included the provision of laboratories and health facilities, and expanded the essential unconditional cash transfer support to 18 million families. The Disaster Resilience Improvement Program supports medium-term pandemic response reforms beyond the government’s immediate COVID-19 needs supported by the CARES Program. The proposed program responds directly to the COVID-19 pandemic with support for urgent response measures required by the government to prepare for

33 This program was renewed with a ₱2 billion allocation in 2018 and discontinued at the end of 2019. 34 World Bank. https://www.worldbank.org/en/news/press-release/2019/11/25/world-bank-catastrophe-bond-transact-

ion-insures-the-republic-of-philippines-against-natural-disaster-related-losses-up-to-usd225-million. 35 World Bank. 2020. Philippines Third Disaster Risk Management Development Policy Loan. Manila. 36 Regional Cooperation and Integration for Disaster Resilience (accessible from the list of linked documents in

Appendix 2). 37 A comparison between health reforms supported by the Contingent Disaster Financing (CDF) loan, Disaster

Resilience Improvement Program and the Countercyclical Support Facility Loans, COVID-19 Active Response and Expenditure Support Program (accessible from the list of linked documents in Appendix 2).

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a worsened COVID-19 situation and control of the health-related impacts of the pandemic (para. 18).38 All prior actions were accomplished.

15. Reform area 1: Policy and institutional arrangements for disaster risk management, including social protection. Under this reform area, a consolidated bill to establish the Department of Disaster Resilience was submitted to Congress. The new department will merge the functions of the NDRRMC and Office of Civil Defense to develop policies and implement DRR and management programs. Creating one department will help to integrate efforts that address the concerns and needs of segments of the population with special needs or vulnerabilities such as women, children, the elderly, people with disabilities, and indigenous peoples with respect to disaster resilience and disaster management. It will also result in a speedier response by the government by considerably reducing coordination difficulties and bureaucratic inefficiencies.

16. Because disasters disproportionately affect women and children, their occurrence correlates with increases in child labor.39 To address this, DOLE implemented its Child Labor Prevention and Elimination Program (CLPEP). CLPEP profiled 275,614 children at risk of child labor in 2018 and 2019, and provided (i) referral services for mothers and child laborers to support services (such as education, employment, and medical assistance) and (ii) monitoring and removal from child labor. The DOLE Integrated Livelihood Program40 administers the livelihood assistance grants for CLPEP. Between 2019 and March 2020, the DOLE Integrated Livelihood Assistance Program provided ₱712.4 million of livelihood grants, a portion of which benefited 32,475 women. The DOLE has submitted a budget of ₱1.5 billion to the Department of Budget and Management for inclusion in the 2021 national budget, of which ₱145.5 million will be allocated for livelihood assistance to parents of child laborers. Providing essential livelihood support to poor families reduces their vulnerability to child labor resulting from the socioeconomic impact of disasters, including the COVID-19 pandemic.

17. The government has also developed an innovative and timely Risk Resiliency Program to establish climate- and disaster-resilient communities within 17 provinces and four major urban centers, all of which are highly vulnerable to drought, flooding, landslides, and storm surge.41 This program supports vulnerable agriculture and fishing communities, ensures resilience of critical infrastructure, and enhances knowledge and access to information through capacity building of national and local government agencies. To increase women’s adaptive and coping capacities, the Risk Resiliency Program allocated ₱37.5 million for 2020–2022 to create opportunities for women’s enterprises and empowerment in priority landscapes and provinces. Institutionalizing national and local government climate change and disaster risk policies will prioritize and expand investment in climate and disaster resilience, in line with the national DRFI Strategy.

18. Policy and institutional arrangements for health-related emergencies. In the absence of a globally and commercially available COVID-19 vaccine in the short term, a comprehensive and systematic approach to testing, as well as improvement in the country’s testing capacity,

38 ADB. 2020. ADB’s Comprehensive Response to the COVID-19 Pandemic: Policy Paper. Manila. 39 International Labour Organization. 2020. COVID-19 impact on child labour and forced labour: The response of the

IPEC+ Flagship Programme. Geneva 40 The DOLE Integrated Livelihood Program or Kabuhayan seeks to reduce the vulnerability to risks of the poor,

vulnerable, and marginalized workers by providing them with access to grant assistance for capacity building on livelihood ventures, either for individual or group undertakings. Eligible beneficiaries include marginalized fishing communities, women and youth, parents of child laborers, and elderly workers.

41 The 17 provinces are Masbate, Sorsogon, Negros Oriental, Samar, Sarangani, Surigao del Sur, Surigao del Norte, Dinagat Islands, Eastern Samar, Southern Leyte, Zamboanga del Norte, Lanao del Sur, Bukidnon, Maguindanao, North Cotabato, Sultan Kudarat, and Sulu. The four major urban centers are Metro Manila, Metro Cebu, Metro Iloilo, and Metro Davao.

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become critical factors in getting the economy back to normal. First, in March 2020, the government adopted the Philippine National Contingency Plan for COVID-19 that provides a framework to strengthen its capacity for detection, equip and train national rapid response teams, and strengthen infection prevention and control among healthcare workers. This includes training LGU healthcare workers on case investigation and contact tracing procedures to ensure effective case management and continuity of essential health services. Second, in April 2020, the government adopted a testing capacity policy to complement the establishment of a new molecular diagnostics laboratory (footnote 46). This will allow the government to establish guidelines for testing targets, including: (i) prioritizing the testing of frontline healthcare workers, of which 75% are women; (ii) allowing all subnational laboratories to allocate up to 30% of their daily testing capacity to healthcare workers; and (iii) testing procedures for complete lockdown scenarios. Third, in June 2020, the government prepared a draft of the Philippine Health Facility Development Plan, 2020–2040 to strengthen hospital resilience and inclusiveness and to better manage pandemics through healthcare facilities. Upgrading of government hospitals is under way, with a focus on capacities that will strengthen COVID-19 and other pandemic resilience. Finally, the Philippine Commission on Women issued guidelines that require government agencies to address COVID-19-related gender issues in their annual gender and development plans and budgets, collect disaggregated data on personnel and beneficiaries, prevent gender-based violence and discrimination against women, and regularly inform men and women about awareness programs to prevent the spread of COVID-19.

19. Reform area 2: Resilience of national government assets and local government units to disaster and climate risks. Under this reform area, the government has mainstreamed climate change adaptation and DRR in the comprehensive development plans of LGUs (provinces, cities, and municipalities). In addition, the government enhanced existing LGU assessment systems by: (i) developing the Local Resilience Readiness Monitoring Framework, the disaster audit component of the Local Governance Performance Management System–Seal of Good Local Governance (LGPMS-SGLG); and (ii) strengthening the assessment criteria in the LGPMS-SGLG through social protection mechanisms for gender and development plans to address violence against women and to introduce maternal care insurance packages.42 The LGPMS-SGLG enables LGUs to access the Performance Challenge Fund to finance their local development initiatives and other Department of the Interior and Local Government (DILG) programs. The Local Resilience Readiness Monitoring Framework serves as an assessment tool for evaluating LGUs and broadens the scope of disaster preparedness expected for long-term risk, imminent threats, and disaster recovery. It also serves as a way for LGUs to track their progress and for the DILG and development partners to provide more focused interventions to identify gaps and build local DRR capacity.

20. Reform area 3: Disaster risk financing. Under this reform area, the GSIS approved the establishment of a voluntary city-level parametric disaster insurance scheme on a pilot basis for earthquake and typhoon cover, with the possibility of an additional flood risk model. The pilot scheme will help inform the city-level insurance scheme before it is mainstreamed, as the GSIS intends to learn from such an experiment on a smaller scale. The pilot will target the 17 cities engaged under the ADB-led proposed Philippine City Disaster Insurance Pool project, across Metro Manila, Mindanao, Visayas, and Luzon.43 This pilot insurance scheme will be the first of its kind in Southeast Asia and will help inform similar ADB-designed projects in the future. The parametric disaster insurance scheme provides participating cities with timely financial resources

42 Assessment criteria for provinces and cities include a gender and development (GAD) focal point system, an updated

GAD code, a GAD database, GAD accomplishment reports, plans, and budget; and for cities, 100% of barangays with Violence Against Women and Children desks and reports.

43 ADB. 2018. Concept Paper: Philippines: City Disaster Insurance Pool Project. Manila.

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for early economic recovery. It bolsters their fiscal resilience, and provides predictable payout expectations and a solution to narrow the funding gap between available resources and post-disaster response costs for severe events. Finally, in light of the January 2020 eruption of the Taal volcano, the GSIS extended its indemnity disaster insurance coverage to include storm surge and volcanic eruptions. GSIS engages in institutional dialogue through its members forum to address arising gender issues as part of its client-focused gender and development mandate.

21. Post-program partnership framework. To ensure the continuity of reforms through structured policy dialogue, the program incorporates a post-program partnership framework (PPPF). The framework will support climate tagging of expenditures and DRR tagging of national agency and LGU budgets, including expenditures that relate to gender and women’s considerations in the implementation of programs and policies. It will support the update of: (i) the National Disaster Risk Reduction and Management Plan, 2011–2028; (ii) the Climate Change Adaptation, Mitigation, and Disaster Risk Reduction Road Map to reflect revisions to the National Disaster Risk Reduction and Management Plan; and (iii) the National Climate Change Action Plan, including efforts to improve the resilience of healthcare systems to address disease outbreaks. In addition, the PPPF will help implement the government’s testing capacity policy, including data sharing with its neighbors in ASEAN. A comprehensive gender-responsive and socially inclusive training module and a training-of-trainers program will be rolled out to state universities and colleges. The government will develop an enhanced project development and evaluation manual of the National Economic and Development Authority to incorporate climate and disaster risk parameters in project preparation and appraisal. Finally, the program will support the implementation of a city-level parametric disaster insurance scheme covering earthquake and typhoons, with a target to recruit up to 20 cities per year during 2021–2023, and to build the capacities of LGU beneficiaries to address gender and social inclusion issues in the use of insurance proceeds. ADB will secure funding for the technical assistance that will support priority activities during 2020–2023.

22. ADB’s value addition in disaster risk management. The proposed program fulfills the dual objectives of supporting fundamental DRR reforms and providing quick-disbursing financing for disaster preparedness and response (recovery and reconstruction). Working closely with development partners, ADB has provided substantial inputs to several damage, loss, and post-disaster needs assessments of natural hazards, which formed the basis for all ADB assistance. A $1 million technical assistance grant supported the assessment of DRF needs of 17 cities across four regions in the country, DRF capacity building of local DRR and management offices, and a parametric insurance pool design.44 ADB provided legal support, financial structuring, actuarial and economic modeling, and the development of an asset exposure database for a city-level parametric disaster insurance scheme. ADB has also supported several knowledge-sharing initiatives through national workshops, and the ASEAN and Asia-Pacific Economic Cooperation conferences participated in by Philippine representatives from cities selected to pilot the parametric disaster insurance scheme and national government agencies. ADB’s support for the Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS) program has been instrumental in building capacity of local communities in the aftermath of disasters (footnote 26).

23. ADB’s value addition in COVID-19 response. ADB has mobilized significant advisory and financial support for the government’s pandemic response. In addition to the $1.5 billion CARES Program loan (footnote 20), ADB approved: (i) $200 million of additional financing to the Social Protection Support Project to support emergency cash assistance to poor and vulnerable

44 ADB. 2018. Philippine City Disaster Insurance Pool Rationale and Design. Manila.

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households;45 (ii) a $3 million Asia Pacific Disaster Response Fund grant to procure and establish a modern laboratory at the J.B. Lingad Memorial Regional Hospital in San Fernando City, Pampanga;46 (iii) the $5 million Bayan Bayanihan emergency grant for food distribution;47 and (iv) policy advisory support on the design of wage subsidies, setting up a social unemployment insurance scheme, and tax and financial relief for small- and medium-sized enterprises. ADB is carrying out a survey of business establishments to collect quantitative data on output, employment, and revenues. This will support a better understanding of the pandemic’s impact on the economy and enable ADB to help the government design an effective recovery strategy. ADB will provide a bespoke coordination and monitoring framework to support effective implementation of the CARES Program and establish synergies with ADB CARES programs for other developing member countries.

C. Impacts of the Reform

24. The impact of the program is aligned with the Philippine Development Plan, 2017–2022 (footnote 1) with regard to reduced vulnerability to climate change and disaster risk, strengthened integration of disaster resilience in various sectors of the economy, and improved access to healthcare. The impact of the program is demonstrated through the performance indicators in the design and monitoring framework.48 The program impact assessment concludes that the reform achieved under the program is expected to mitigate $692.4 million–$1,275.7 million of damage and losses from natural hazards at present value, accrued during 2020ꟷ2025.49 Meanwhile, the COVID-19 pandemic is estimated to cause economic losses of about $25.6 billion or 7.7% of GDP in 2020. The benefits result from the government’s rapid access to resources that would enable the government to initiate a timely response, thereby mitigating the indirect economic and social impact of disasters and pandemics.

D. Development Financing Needs and Budget Support

25. The government has requested a loan of $500 million from ADB’s ordinary capital resources to help finance the program. The loan will have a 15-year term, including a grace period of 3 years; an annual interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; and such other terms and conditions set forth in the loan agreement. The government has chosen option 1 of the CDF policy where, upon loan effectiveness, the committed CDF amount will be available for disbursement immediately after a disaster occurs.50

The government will pay a one-time front-end fee of 0.25% of the committed loan amount, which may be financed out of the loan proceeds. If the undisbursed loan amount is renewed for an additional 3-year loan availability period (up to four times), the borrower will pay a fee of 0.25% of the renewal amount (up to the undisbursed loan balance) each time, which may also be financed out of the loan proceeds. The loan size is based on the Philippines’ development financing needs. Because of the COVID-19 pandemic, overall financing needs will reach record levels, with the government requiring $58 billion for 2020.

45 ADB. Philippines: Social Protection Support Project; ADB. 2020. ADB Approves $200 Million Loan to Support the

Philippines' Poor Amid COVID-19. News release. 27 April. 46 ADB. 2020. Philippines: COVID-19 Emergency Response. Manila. 47 ADB. 2020. Philippines: Implementing a Rapid Emergency Supplies Provision (RESP) Assistance to Design a

Sustainable Solution for COVID-19 Impact Areas in the National Capital Region, Through a Public–Private Collaboration. Manila; ADB. 2020. ADB Launches $5 Million Project to Provide Food Supplies to Philippine Households Hard Hit by COVID-19. News release. 1 April.

48 The design and monitoring framework is in Appendix 1. 49 The reduction in losses does not explicitly capture the economic benefits of reforms in the context of COVID-19.

Although GDP might have included these impacts at the macro level, they are not being captured through the proposed program. As such, the range of expected benefits is conservative.

50 ADB. 2019. Contingent Disaster Financing under Policy-Based Lending in Response to Natural Hazards. Manila.

10

E. Implementation Arrangements

26. Institutional arrangements. The DOF will be the program’s executing agency and will oversee and coordinate the timely implementation of the program. The implementing agencies are the National Economic and Development Authority, DILG, the Department of Environment and Natural Resources, DOLE, the Office of Civil Defense (which serves as the implementing arm of the NDRRMC), the Climate Change Commission, GSIS, the Philippine Commission on Women, and the DOH. The program will be completed in 2023. Renewal of the program is subject to reconfirmation of the adequacy of the macroeconomic environment, the Philippines’ continued progress toward the PPPF, and an updated PPPF with mutually agreed objectives for the subsequent availability period. The renewal may also be affected by changes in country classification during the program period.

27. Disbursement triggers and approach. Disbursement triggers will not be applied retroactively. For natural hazards, withdrawal requests will be deferred until the President of the Philippines has declared a state of calamity in accordance with Republic Act No. 10121 (first paragraph, Section 16) or taken equivalent measures. For health-related emergencies, withdrawal requests will be deferred until one of the following three conditions is satisfied: (i) the borrower has enacted a law in response to a public health emergency; (ii) the President of the Philippines has declared a state of public health emergency in accordance with Republic Act No. 11332, Section 7; or (iii) the President of the Philippines has issued a proclamation or an executive order (or other equivalent Presidential instruments) declaring or describing a worsening health situation,51 or imposing an enhanced community quarantine or its functional equivalent. The President of the Philippines may authorize the Inter Agency Task Force for the Management of Emerging Infectious Diseases to impose an enhanced community quarantine or its functional equivalent, and under such a circumstance, a resolution by the Task Force will be deemed equivalent to imposition by the President himself/herself. The terms “imposing”, “impose”, or “imposition” in this paragraph shall refer to (i) a new imposition, (ii) a reinstatement after a period of a break, or (iii) an extension of an enhanced community quarantine, which is imposed after the date of the Loan Agreement. The government may withdraw the loan proceeds partially or entirely, depending on its assessment of the severity of the disaster or health-related emergency and resulting need. Only a single withdrawal may be requested per disaster or health emergency event, and the request must be received by ADB within 90 days of the declaration of a state of calamity or emergency. Any unutilized funds at the conclusion of the loan availability period may be disbursed to the Philippines under the deferred disbursement option, subject to ADB reconfirming the Philippines’ continuation of policy actions and the PPPF through submission of a progress report. Funds will be spent through national budget processes for eligible items. Proceeds of the CDF will be withdrawn in accordance with ADB’s Loan Disbursement Handbook (2017, as amended from time to time). ADB will periodically monitor the continuing implementation of the policy targets and the PPPF during the availability period.

III. DUE DILIGENCE

28. Safeguards. In compliance with ADB’s Safeguard Policy Statement (2009), the program is classified category C for environment, involuntary resettlement, and indigenous peoples safeguards. The program is not expected to have any environmental or social safeguards impacts within the meaning of the Safeguard Policy Statement.

29. Gender. The program is categorized effective gender mainstreaming. Women are disproportionately affected by climate change and disasters because of gendered vulnerabilities.

51 The list of proclamations and executive orders can be found in the Official Gazette.

11

As such, women and children are 14 times more likely to succumb to disasters compared to men.52 Key issues Filipino women face during disasters are: (i) increased vulnerability to gender-based violence (footnote 52) (in normal times, one in four women aged 15–49 has experienced physical, sexual or emotional violence committed by their husband or partner);53 (ii) compromised sexual and reproductive health services, and psychosocial counseling; (iii) a lack of gender-responsive facilities and products; (iv) increased unpaid care and community work; and (v) limited mobility and skills typically taught to men, such as swimming and climbing, thereby hindering their self-rescue and self-defense capabilities. With this, children of vulnerable women are more likely to drop out of school and become child laborers to help the family to survive through an emergency. The program addresses these issues through legislation, creating the Department of Disaster Resilience, which, among others, addresses the needs of segments with increased vulnerabilities, such as women, children, the elderly, persons with disabilities, and indigenous peoples.

30. The program also provides guidance for all national government agencies to integrate measures to address COVID-19-related gender issues in their annual gender and development plans and budgets, and to allocate budgets to create opportunities for women’s enterprises and empowerment as part of the government’s Risk Resiliency Program. This includes dialogue to address gender issues in government-issued indemnity insurance policies, prioritizing testing of frontline healthcare workers (of which 75% are women), and directing all subnational laboratories to allocate 20%–30% of their daily testing capacity to healthcare workers and training LGU healthcare workers in case management and contact tracing procedures. DOLE is implementing its Child Labor Prevention and Elimination Program, providing livelihood assistance to mothers and families of child laborers who are particularly vulnerable during disasters and pandemics. The government is also enhancing performance indicators for LGUs, which include gender and development mechanisms to encompass LGUs’ existing hazard profiles and disaster risks.

31. Governance. While the 2016 Public Expenditure and Financial Accountability report is being updated, the government has set an aggressive reform agenda to promote better governance. The framework of the Public Financial Management Reform Roadmap, 2017–2022 aims to strengthen the foundation of the public financial management system.54 Key reforms aim to improve costing, cash management, planning and budgeting, and procurement. The government's performance relative to international fiscal transparency standards and indicators of corruption has improved. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government, including the DOF.

32. Poverty and social. The program supports sound policy frameworks at the national and local government level, based on pro-poor and gender-sensitive development strategies, to support poverty eradication. The government’s policies ensure mobilization of resources from various sources to provide adequate and predictable financing for disaster insurance for the poor and vulnerable. The policies also build resilience of the poor and vulnerable by reducing their exposure and vulnerability to extreme weather and geophysical events; epidemics; pandemics; and other economic, social, and environmental shocks. These policies, combined with the delivery

52 United Nations Office for Disaster Risk Reduction. 2016. UNISDR head calls for more women in disaster risk

reduction. 53 Philippine Statistics Authority. 2018. One In Four Women Have Ever Experienced Spousal Violence (Preliminary

results from the 2017 National Demographic and Health Survey). 54 DBM Bulletin. January–March 2017. PFM Corner: Development of the PFM Reform Roadmap 2017-2022 Gets the

Green Light. Manila.

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mechanism of the social protection system (the Pantawid Pamilyang Pilipino Program), will ensure that post-disaster humanitarian efforts are better targeted and channeled faster.

33. Major risks and mitigating measures are summarized in the table and described in detail in the risk assessment and risk management plan.54

Summary of Risks and Mitigating Measures Risks Mitigation Measures

Repeated or major external shocks (e.g., disasters, pandemics, economic downturns) severely impact the economy

A number of ADB programs support the government in improving resilience to economic and pandemic shocks (footnotes 20 and 31). The proposed program will help the government to strengthen disaster resilience and improve the response to, prevention and mitigation of COVID-19 and future pandemics.

Staff constraints at national government agencies and LGUs because of competing priorities delay the strategic planning and/or implementation of reforms

Technical assistance from ADB will support the PPPF.a ADB and the executing and implementing agencies will monitor reform progress regularly and through the PPPF progress reports.

Uncertainty of catastrophe model used in the city-level parametric disaster insurance scheme

An appropriate parametric trigger structure that uses simulated risk models, which are based on both historical and the latest scientific understanding of tropical cyclones and earthquakes, will be selected.

Operational risk and limited human capacity to properly account for climate- and disaster-related costs

Technical assistance from ADB will improve the capacity of national government agencies and LGUs to ensure accurate tagging of disaster risk reduction and climate change adaptation budgets and expenditure.

ADB = Asian Development Bank, COVID-19 = coronavirus disease, LGU = local government unit, PPPF = post-program partnership framework. a A technical assistance application to the Asia-Pacific Climate Finance Fund is in progress. Source: Asian Development Bank.

IV. ASSURANCES AND CONDITIONS

34. The government and the DOF have assured ADB that implementation of the program shall conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the loan documents. No disbursement shall be made under the loan agreement unless ADB is satisfied that a qualifying disaster event or pre-agreed health-related trigger has occurred or that the conditions for the deferred disbursement option have been met.

V. RECOMMENDATION

35. I am satisfied that the proposed policy-based loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve the loan of $500,000,000 to the Republic of the Philippines for the Disaster Resilience Improvement Program, from ADB’s ordinary capital resources, in regular terms, with interest to be determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; for a term of 15 years, including a grace period of 3 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft loan agreement presented to the Board.

Masatsugu Asakawa President

20 August 2020

54 Risk Assessment and Risk Management Plan (accessible from the list of linked documents in Appendix 2).

Appendix 1 13

DESIGN AND MONITORING FRAMEWORK

Country’s Overarching Development Objective Vulnerability to climate change and disaster risk reduced, integration of disaster resilience in various sectors of the economy strengthened, and access to healthcare improved (Philippine Development Plan 2017–2022)a

Results Chain Performance Indicators with

Targets and Baselines

Data Sources and Reporting

Mechanisms Risks

Effect of the Reform Disaster resilience and pandemic response of institutions and communities strengthened, and financial preparedness for disasters improved

By September 2023: a. At least 40% of government agencies’ expenditures are climate and gender tagged, and at least 40% of national agencies’ budget are DRR tagged (2020 baseline: Not available) b. Parametric insurance policies for earthquake and/or typhoon cover purchased by 20 cities, with payouts providing near-immediate financial resources for early recovery costs (2020 baseline: 0) c. A dedicated Department of Disaster Resilience established (2020 baseline: Multi-agency approach) d. 40% of national government agencies included COVID-19-related gender measures in their annual gender and development plans and budgets (2020 baseline: Not applicable) e. Philippine National Contingency Plan for COVID-19 implemented (2019 baseline: Plan did not exist)

a. DBM annual reports

b. GSIS annual reporting on number of individual policies issued c. Official gazette d. PCW and DBM annual reports e. DOH report

Repeated or major external shocks (e.g., disasters, pandemics, economic downturns) severely impact the economy Major low-frequency catastrophic events and major adverse changes in assumptions because of climate change progressions cause uncertainty in catastrophe model

Reform Areas 1. Policy and institutional arrangements for disaster risk management and health-related emergencies, including social protection

Prior Actions By July 2020: 1a. A consolidated bill for the establishment of the Department of Disaster Resilience, which addresses the concerns and needs of segments with vulnerabilities,b submitted to the Congress of the Philippines

1a. Filing available online on website of the House of Representatives

14 Appendix 1

Results Chain Performance Indicators with

Targets and Baselines

Data Sources and Reporting

Mechanisms Risks

2. Resilience of national government assets and LGUs to disaster and climate risks 3. Disaster risk financing

(2019 baseline: No consolidated filing) 1b. 275,614 children at risk of child labor profiled under the CLPEP, and ₱145.5 million budget for parents of child laborers submitted to DBM for inclusion in the 2021 national budget (2019 baseline: CLPEP scheme did not exist) 1c. COVID-19 testing capacity policy, which prioritizes testing of frontline healthcare workers, adopted (2019 baseline: COVID-19 testing capacity policy did not exist) 1d. Guidelines on implementing plans and programs that respond to the gendered impactsc of COVID-19 issued (2019 baseline: guidelines did not exist) 2a. New guidelines for integrating disaster risk reduction and climate change action in CDPs and training tool developed (2019 baseline: No guidelines and no training tool) 2b. Local Governance Performance Management System–Seal of Good Local Governance with gender-responsive measuresd and Local Resilience Readiness Monitoring Framework adopted (2019 baseline: Gender-responsive measures in system and Local Risk Resilience Readiness and Monitoring Framework did not exist) 3a. GSIS city-level parametric disaster insurance scheme for earthquake and/or typhoon cover approved (2019 baseline: City-level parametric

1b. DOLE CLPEP annual reports 1c. DOH report 1d. PCW memorandum circular 2a. DILG guidelines 2b. DILG memorandum circulars 3a. GSIS Insurance Core Business Sector memo

Appendix 1 15

Results Chain Performance Indicators with

Targets and Baselines

Data Sources and Reporting

Mechanisms Risks

insurance scheme did not exist) 3b. Additional hazards (volcanic eruption and storm surge) included in GSIS indemnity disaster insurance coverage, in alignment with its gender and development mandate (2019 baseline: Insurance policy did not include volcanic eruption and storm surge)

3b. Official GSIS policy memo

Budget Support

ADB: $500,000,000 (loan)

ADB = Asian Development Bank, CDP = Comprehensive Development Plan, CLPEP = Child Labor Prevention and Elimination Program, COVID-19 = coronavirus disease, DBM = Department of Budget and Management, DILG = Department of the Interior and Local Government, DILP = DOLE Integrated Livelihood Assistance Program, DOH = Department of Health, DOLE = Department of Labor and Employment, DRR = disaster risk reduction, GSIS = Government Service Insurance System, LGU = local government unit, NDC = nationally determined contribution, PCW = Philippine Commission on Women. a National Economic and Development Authority. 2017. Philippine Development Plan 2017–2022. b In this context, segments with vulnerabilities refers to women, children, the elderly, persons with disabilities, and

indigenous peoples. c In this context, gendered impacts of COVID-19 include discrimination against women and gender-based violence,

dissemination of information to female and male stakeholders, health and psychosocial needs, and the work environment of frontline female healthcare workers.

d In this context, gender-responsive measures include social protection assessment criteria for mechanisms for gender and development, violence against women and their children, and maternal care insurance packages.

Source: Asian Development Bank.

16 Appendix 2

LIST OF LINKED DOCUMENTS http://www.adb.org/Documents/RRPs/?id=54022-001-3

1. Loan Agreement

2. Sector Assessment (Summary): Public Sector Management (Disaster Risk Management)

3. Contribution to the ADB Results Framework

4. Development Coordination

5. Country Economic Indicators

6. International Monetary Fund Assessment Letter

7. Summary Poverty Reduction and Social Strategy

8. Risk Assessment and Risk Management Plan

9. List of Ineligible Items

Supplementary Documents

10. Climate Change Assessment

11. Program Impact Assessment

12. Regional Cooperation and Integration for Disaster Resilience

13. Sector Assessment (Summary): Health (COVID-19-related)

14. A Comparison between Health Reforms Supported by the Contingent Disaster Financing loan, Disaster Resilience Improvement Program and the Countercyclical Support Facility Loans, COVID-19 Active Response and Expenditure Support Program

Appendix 3 17

DEVELOPMENT POLICY LETTER

18 Appendix 3

Appendix 4 19

POLICY MATRIX

Prior Actions Accomplished by July 2020 Post-Program Partnership Framework Targets from September 2020–September 2023

Reform area 1: Policy and institutional arrangements for disaster risk management and health-related emergencies, including social protection

1. To improve disaster resilience policymaking and coordination at the national level, the government submitted a bill to Congress to establish the Department of Disaster Resilience, which (i) merges the functions of the NDRRMC and OCD to develop policies and implement disaster risk reduction and management programs, and (ii) addresses the concerns and needs of segments with special needs or vulnerabilities such as women, children, the elderly, persons with disabilities, and indigenous peoples, with respect to disaster resilience and disaster management. (OCD/NDRRMC)

2. To reduce the vulnerability of women and children at risk of child labor resulting from the socioeconomic impact of disasters (including the COVID-19 pandemic) on poor families, the government implemented its Child Labor Prevention and Elimination Program, which: (i) profiled 275,614 children at risk of child labor in 2018 and 2019; (ii) provided referral services to mothers and child laborers for support services,a and for monitoring and removal from child labor; and (iii) provided livelihood grants administered by the DILPb for which DOLE submitted an allocation of ₱1.5 billion ($29.4 million) to DBM for inclusion in the 2021 national budget, of which ₱145.5 million ($2.94 million) will be allocated for livelihood assistance to parents of child laborers. Between 2019 and March 2020, the DILP provided ₱712.4 million ($14.4 million) of livelihood grants, a portion of which benefited 32,475 women. (DOLE)

1. To enable informed policy decisions and prioritize climate investments, the government will upgrade its climate budget tagging policy to include tracking of (i) expenditures and program convergence budgeting of national government agencies and LGUs as informed by the NCRMF and NDC and (ii) expenditures that relate to gender and women’s considerations in the implementation of government programs and policies. (DBM, DILG, CCC, OCD/NDRRMC, DENR Cabinet Cluster on CCAM-DRR)

2. To support the families of child laborers in recovering from the socioeconomic impact of disasters (including the COVID-19 pandemic), to prevent child laborers from further engaging in child labor, and to prevent at-risk children from becoming child laborers, the government will implement its livelihood assistance program in 2021 after budget approval. (DOLE)

3. To better track DRR and public health emergency spending, the government will mandate DRR and health emergency budget tagging of all national agency and LGU budgets. (DBM, DILG, CCC, OCD/NDRRMC)

4. To enable enhanced and gender-responsive disaster preparedness,

the government will update the NDRRMP, 2011–2028. The government will also update (i) the CCAM-DRR Roadmap 2018–2022 to reflect revisions to the NDRRMP and (ii) the National Climate Change Action Plan to increase the resilience of healthcare systems to cope better during pandemics. (OCD/NDRRMC, DENR Cabinet Cluster on CCAM-DRR)

20 Appendix 4

Prior Actions Accomplished by July 2020 Post-Program Partnership Framework Targets from September 2020– September 2023

3. To establish climate- and disaster-resilient communities and to support equitable and sustainable development, DENR: (i) implemented the CCAM-DRR Roadmap 2018–2022 by establishing guidelines for the Risk Resiliency Program to create climate- and disaster-resilient communities within 17 climate-vulnerable provinces and 4 major urban centers; and (ii) allocated ₱37.5 million from 2020–2022 to create opportunities for women’s enterprises and empowerment in priority landscapes and provinces. (DENR Cabinet Cluster on CCAM-DRR)

4. To scale up country readiness and response operations, the government adopted the Philippine National Contingency Plan for COVID-19, which provides a framework to: (i) strengthen capacity for detection; (ii) equip and train national rapid-response teams; (iii) strengthen infection prevention and control among healthcare workers, including training LGU healthcare workers on case investigation and contract tracing procedures; and (iv) ensure case management and continuity of essential health services. (DOH)

5. To define minimum health system capacity standards for pandemic preparedness and response strategies, and to implement the requirement for mandatory COVID-19 reporting, the government adopted a testing capacity policy, which established guidelines for: (i) testing targets; (ii) segment of the population to be tested including prioritizing testing of frontline healthcare workers; (iii) directing all subnational laboratories to allocate 20–30% of their daily testing capacity to healthcare workers, and (iv) testing procedures for complete lockdown scenarios. (DOH)

5. To strengthen testing capacity and build human resource capacity across national government agencies and local governments, ahead of the development of a globally and commercially available COVID-19 vaccine, the government will implement its testing capacity policy throughout the country. (DOH)

6. To strengthen COVID-19 pandemic preparedness and reduce the impact of COVID-19 in the country and the region, the government will implement the monitoring and surveillance plans of the Philippine National Contingency Plan for COVID-19, disaggregated by sex and age, and will establish an agreement on sharing surveillance information with ASEAN neighbors. (DOH)

7. To strengthen pandemic preparedness and response at the LGU

level, the government will amend the local disaster risk reduction and management plans of LGUs to include business continuity planning for public health emergencies. (OCD/NDRRMC)

Appendix 4 21

Prior Actions Accomplished by July 2020 Post-Program Partnership Framework Targets from September 2020– September 2023

6. To strengthen hospital resilience and inclusiveness and to better manage pandemics through healthcare facilities, the government prepared a draft of the Philippine Health Facility Development Plan 2020–2040, which (i) analyzes the required health facilities and medical equipment to support universal health coverage, and (ii) guides the government decision makers to ensure that local health infrastructure plans are aligned with the Universal Health Care Act (2019). (DOH)

7. To strengthen gender mainstreaming in COVID-19 response, the

government issued guidelines for all national government agencies and instrumentalities to integrate measures to address COVID-19-related gender issues and concerns in their annual gender and development plans and budgets. (PCW)

Reform area 2: Resilience of national government assets and LGUs to disaster and climate risks

8. To mainstream climate change adaptation and DRR in LGU planning, the government (i) drafted new guidelines for DRR and climate change action in CDP, which include database integration, documents required for mainstreaming, and authorities to ensure implementation and (ii) developed a training tool for DILG field officers. (DILG)

9. To improve the disaster preparedness of cities and municipalities, and strengthen women’s resilience to disasters through social protection, the government enhanced existing assessment systems by (i) developing the Local Resilience Readiness Monitoring Framework, which is the disaster audit component of the LGPMS-SGLG and (ii) strengthening the assessment criteria in the LGPMS-SGLG through mechanisms for gender and development, violence against women, and maternal care insurance packages. (DILG)

8. To build the capacity of LGUs to implement the guidelines for DRR and climate change action in the CDP, the government will institutionalize a comprehensive gender-responsive and socially inclusive training module. (DILG)

9. To effectively measure the impact of disasters on women, the government will institutionalize gender analysis in the conduct of early recovery and post-disaster needs assessments. (OCD)

10. To strengthen the use of performance information for data-driven

interventions in local DRR and management, the government will conduct regular nationwide LGU assessments using progressive and relevant parameters. (DILG)

11. To enhance the resilience of public investments, the government

will incorporate climate and disaster risk parameters in project preparation and appraisal. (NEDA)

22 Appendix 4

ASEAN = Association of Southeast Asian Nations, CCAM-DRR = Climate Change Adaptation, Mitigation and Disaster Risk Reduction, CCC = Climate Change Commission, CDP = comprehensive development plans, COVID-19 = coronavirus disease, DBM = Department of Budget and Management, DENR = Department of Environment and Natural Resources, DILG = Department of the Interior and Local Government, DILP = DOLE Integrated Livelihood Program, DOH = Department of Health, DOLE = Department of Labor and Employment, DRR = disaster risk reduction, GSIS = Government Service Insurance System, LGPMS-SGLG = Local Governance Performance Management System – Seal of Good Local Governance, LGU = local government unit, NCRMF = National Climate Risk Management Framework, NDC = nationally determined contributions, NDRRMC = National Disaster Risk Reduction and Management Council, NDRRMP = National Disaster Risk Reduction and Management Plan, NEDA = National Economic and Development Authority, OCD = Office of Civil Defense, PCW = Philippine Commission on Women, a Support services include membership in the Pantawid Pamilyang Pilipino Program, educational assistance, medical assistance, skills training, ID assistance, and

employment facilitation. b The DOLE Integrated Livelihood Program (DILP) or Kabuhayan seeks to reduce vulnerability of the poor and marginalized workers by providing access to grant assistance

for capacity building on livelihood ventures, either for individual or group undertakings. Eligible DILP beneficiaries include marginalized fishing communities, women and youth, parents of child laborers, and elderly workers.

Prior Actions Accomplished by July 2020 Post-Program Partnership Framework Targets from September 2020– September 2023

Reform area 3: Disaster risk financing

10. To provide an additional source of disaster risk financing and quicker local economic recovery, GSIS approved the establishment of a voluntary city-level parametric disaster insurance scheme for earthquake and typhoon cover, using a parametric trigger structure, with scope to include an additional flood risk model. (GSIS)

11. To broaden the scope of existing disaster risk financing, the government included additional hazard coverage of volcanic eruption and storm surge under the GSIS indemnity insurance policy, which is also aligned with GSIS’s client-focused gender and development mandate to facilitate extensive information dissemination and dialogue to address gender issues. (GSIS)

12. To improve fiscal resilience of local governments and narrow the funding gap between available resources and post-disaster response costs for severe events, the GSIS will (i) implement a city-level parametric disaster insurance scheme covering earthquake and typhoons, with a view to recruit up to 20 cities per year between 2021 and 2023, and (ii) build the capacities of LGU beneficiaries to address gender and social inclusion issues in the use of insurance proceeds. (GSIS)