Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. CPF0000034 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP FRAMEWORK FOR THE PHILIPPINES FOR THE PERIOD JULY 2025 – JUNE 2031 May 5, 2025 Philippines, Malaysia, and Brunei Country Management Unit East Asia and the Pacific Region The International Finance Corporation East Asia and Pacific Department The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Performance and Learning Review was March 7, 2023 CURRENCY EQUIVALENTS (Exchange Rate Effective as of May 5, 2025) Currency Unit = Philippine Pesos (PHP) US$1 = PhP55.49 FISCAL YEAR January 1 – December 31 IBRD IFC MIGA Vice President: Manuela V. Ferro Riccardo Puliti Ed Mountfield Director: Zafer Mustafaoglu Kim-See Lim Sebnem Erol Madan Task Team Leaders: Dandan Chen Alexei Volkov Eugeniu Croitor Clarissa Crisostomo David Gonzalo J. Varela Edgar Janz ABBREVIATIONS AND ACRONYMS 4Ps Pantawid Pamilyang Pilipino Program DENR Department of Environment and ADB Asian Development Bank Natural Resources AGaP Australia-World Bank Growth and DEPDev Department of Economy, Planning, and Prosperity in the Philippines Development AI Artificial Intelligence DepEd Department of Education AIIB Asian Infrastructure Investment Bank DFAT Department of Foreign Affairs and ARTA Anti Red Tape Authority Trade ASA Advisory Services and Analytics DILG Department of the Interior and Local ASEAN Government Association of Southeast Asian Nations DOF Department of Finance ATI Agricultural Training Institute DOH Department of Health BARMM Bangsamoro Autonomous Region in Muslim Mindanao DP Development Partners BDO Banco de Oro DPL Development Policy Loan BEDP Basic Education Development Plan DRF Disaster Risk Financing BFP Bank Facilitated Procurement DSHUD Department of Human Settlements and BNTF Urban Development Bangsamoro Normalization Trust Fund DSWD Department of Social Welfare and BOC Bureau of Customs Development BOL Bangsamoro Organic Law EAP East Asia and Pacific BPS Basis Points EDCOM2 Second Congressional Commission on BRI Building Resilience Index Education BRT Bus Rapid Transit EEZ Exclusive Economic Zones BSP Bangko Sentral ng Pilipinas (Central ESF Environment and Social Framework Bank of the Philippines) EU European Union BTA Bangsamoro Transition Authority FAO Food and Agriculture Organization of BTMS Budget and Treasury Management the United Nations System FAPs Foreign-Assisted Projects Cat DDO Catastrophe Deferred Drawdown FLFP Female Labor Force Participation Option FM Financial Management CCDR Country Climate and Development Report GDP Gross Domestic Product CCT Conditional Cash Transfer GEF Growth Equity Fund CE Citizen Engagement GFC Global Financial Crisis CHED Commission on Higher Education GHG Greenhouse Gas CIF Climate Investment Fund GNI Gross National Income CLR Completion and Learning Review GOP Government of the Philippines CPF Country Partnership Framework GW Gigawatt CSA Climate Smart Agriculture HCI Human Capital Index CSO Civil Society Organization HLO High-level outcome DA Department of Agriculture IBRD International Bank for Reconstruction DBM Department of Budget and and Development Management IFC International Finance Corporation IP Indigenous Peoples IPF Investment Project Financing PhilGuarantee Philippine Guarantee Corporation ITC Independent Tower Companies PLR Performance Learning Review J-CAP Joint Capital Market Program PMR Partnership for Market Readiness JSDF Japan Social Development Fund PO Peoples’ Organization KAT Knowledge Advisory Team PPP Public-Private Partnerships KDC Knowledge Development Community R&D Research and Development KOICA Korea International Cooperation RRO Rapid Response Option Agency SCD Systematic Country Diagnostic LCMF Local Currency Mobilization Facility SCF Supply Chain Finance LFP Labor Force Participation SDG Sustainable Development Goal LGU Local Government Unit SFP Supplementary Feeding Program LMIC Lower-middle-income country SGLG Seal of Good Local Governance MAPS Methodology for Assessing SME Small and medium enterprise Procurement Systems SORT Systematic Operations Risk-Rating Tool MIGA Multilateral Investment Guarantee STEP Systematic Tracking of Exchanges in Agency Procurement MILF Moro Islamic Liberation Front TA Technical Assistance MPA Multiphased Programmatic Approach TFP Total Factor Productivity MSME Micro, small, and medium enterprise TPA Third Party Administration NCD Non-communicable diseases TRS Time Release Studies NCR National Capital Region TVET Technical Vocational Education and OSAPIEA Office of the Special Assistant to the Training President for Investment and Economic UBP Union Bank of the Philippines Affairs UD Union Digital P4R Program-for-Results UHC Universal Health Coverage PASA Programmatic Advisory Services and UMIC Upper-Middle-Income Country Analytics UNFPA United Nations Population Fund PBC Performance-Based-Condition UNICEF United Nations Children’s Fund PCERP Philippine COVID-19 Emergency UNRC United Nations Convention on the Response Program Rights of the Child PDP Philippine Development Plan WBG World Bank Group PEFA Public Expenditure and Financial WBG-GP WBG Guarantee Platform Accountability PFM WFP World Food Programme Public Financial Management Table of Contents INTRODUCTION .................................................................................................................................1 I. COUNTRY CONTEXT AND DEVELOPMENT PRIORITIES ..................................................................2 A. Social and Political Context .............................................................................................................. 2 B. Recent Economic Developments and Outlook ................................................................................ 2 C. Poverty, Shared Prosperity, and Livability ....................................................................................... 5 D. Key Development Challenges .......................................................................................................... 6 II. WBG COUNTRY PARTNERSHIP FRAMEWORK ..............................................................................9 A. Selectivity ............................................................................................................................................. 9 B. Proposed WBG Country Partnership Framework............................................................................... 11 C. Outcome Areas and Engagement Approaches ................................................................................... 12 CPF Outcome 1: Improved Access to Quality Health and Education ................................................. 12 CPF Outcome 2: More Private Sector Jobs......................................................................................... 14 CPF Outcome 3: Stronger Socioeconomic Resilience......................................................................... 17 D. Integrated Priorities ....................................................................................................................... 19 III. CPF IMPLEMENTATION............................................................................................................. 20 A. Scope .............................................................................................................................................. 20 B. Operationalizing the CPF................................................................................................................ 21 IV. RISK MANAGEMENT ................................................................................................................ 24 Annex 1. CPF Results Framework............................................................................................................... 26 Annex 2. Systematic Country Diagnostic Update Summary ....................................................................... 34 Annex 3. Stakeholder Consultations Summary........................................................................................... 39 Annex 4: Indicative IBRD Financing FY26 and FY27 .................................................................................... 42 List of Tables Table 1: Key Macroeconomic Indicators (2021-2031) .................................................................................. 4 Table 2: CPF Alignment with WBG Corporate Outcome Areas................................................................... 12 Table 3: Development Partner Engagement in CPF Sectors ....................................................................... 23 Table 4: Systematic Operations Risk Rating ................................................................................................ 25 List of Figures Figure 1: CPF Outcome Areas and Indicators.............................................................................................. 11 Figure 2: Engagement Approach for Improved Access to Quality Health and Education .......................... 13 Figure 3: Engagement Approach for More Private Sector Jobs .................................................................. 15 Figure 4: Engagement Approach for Stronger Socioeconomic Resilience .................................................. 18 INTRODUCTION 1. The Philippines is on the verge of achieving upper-middle-income country (UMIC) status, following 15 years of strong, job-rich, and pro-poor growth. The country’s economic expansion has been robust, with real GDP growth rising from 3.7 percent (1990–2010) to 5.2 percent (2010–2023), while per capita income growth accelerated from 1.5 to 3.5 percent. Since 2010, this faster growth has aligned with regional peers, matching Indonesia’s performance and trailing only Viet Nam. This economic momentum has translated into 11.7 million additional jobs, with job creation outpacing labor force growth and unemployment and underemployment rates reaching historic lows. As a result, the Philippines has seen a significant reduction in poverty, reinforcing the impact of its job-driven growth. 2. Despite its remarkable recent progress, approaching the national ambition of a middle-class economy free of poverty requires the Philippines to grow faster and create better jobs. As it transitions to UMIC status, the country faces challenges in sustaining growth, reducing poverty, and expanding its middle class. While the economic outlook remains positive, potential GDP growth is projected to slow by one percentage point over the next two decades due to current trends in capital accumulation and productivity growth. With a population of 117.3 million and a median age of 25, the Philippines has a demographic advantage but human capital challenges persist. Income inequality, though slightly reduced, remains among the highest in the East Asia and Pacific (EAP) region. Some regions recovering from long- standing conflicts continue to experience high poverty rates. The Philippines is one of the world’s most disaster-prone countries and the archipelagic geography raises the cost of connectivity and service delivery. To sustain high growth and create quality jobs, the Philippines needs a strong policy reform agenda that expands economic opportunities and enhances human capital, paving the way for a nation of upper-middle-income households. 3. The WBG’s partnership with the Government of the Philippines (GOP) has deepened in recent years, fostering a strong and dynamic engagement centered on key policy priorities. During the COVID- 19 crisis, the WBG collaborated closely with the government to design and implement response programs. Since then, the partnership has strengthened, with the WBG providing strategic support for key development priorities, including post-pandemic economic recovery. As a result of this deepened engagement, the World Bank’s portfolio has expanded significantly. Annual new commitments surged from US$377.6 million in FY18 to US$2.85 billion in FY25, while the average size of World Bank-financed projects scaled up from US$189 million to US$458 million for greater development impact. IFC’s investment portfolio doubled over the course of the previous CPF and is expected to grow further, reflecting IFC’s aims to ramp up its new commitments to around US$1 billion per year in the second half of the CPF period. The WBG partnership with the government remains dynamic and impactful, driven by a combination of financing and knowledge support. The WBG continues to offer innovative development solutions to help the Philippines navigate emerging challenges and sustain its progress. 4. The new WBG Country Partnership Framework (CPF) will support the Philippines in advancing three key areas essential for sustaining growth, improving lives, and enhancing resilience. The CPF aligns with the country’s goal of achieving upper-middle-income status and its long-term vision, Ambisyon Natin 2040, which envisions a prosperous and inclusive society. From FY26-31, the WBG will deepen its engagement in the Philippines and support the country’s efforts to achieve: (i) improved access to quality health and education; (ii) more private sector jobs; and (iii) stronger socioeconomic resilience. To accelerate progress and sustain reforms, the WBG will also support efforts to build a more efficient public sector. Through a strategic and focused portfolio of financing operations and knowledge products, the WBG aims to drive large-scale impact on the Philippines’ development priorities. 1 I. COUNTRY CONTEXT AND DEVELOPMENT PRIORITIES A. Social and Political Context 5. The Philippines remains committed to inclusive growth, emphasizing job creation and poverty reduction. The administration has maintained a focus on inclusive growth with prudent macroeconomic and fiscal management. The Philippine Development Plan (PDP) 2023-2028 aims for the country to achieve upper-middle-income status by 2025-2026, focusing on improving infrastructure, human capital, and reducing poverty and inequality through job creation, education, healthcare, and expanded social services. It also emphasizes improving the business environment, digital transformation, and environmental sustainability. 6. Decentralization has increased fiscal transfers to local governments, highlighting both their role in development and their constrained capacity. The 2022 "Mandanas Ruling” increased the share that local government units (LGUs) receive from national tax collections. This strengthened decrentralization and empowered local government to drive growth, particularly in agriculture, social work, healthcare, small infrastructure, and disaster risk reduction. The national government supports LGU capacity development in areas such as public financial management, planning, and budgeting. The Growth Equity Fund (GEF) helps address spatial inequalities and LGUs can accelerate local infrastructure investment through a mix of resources and commercial finance. 7. The Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) has seen significant progress in reducing poverty and conflict but remains fragile. The passage of the Bangsamoro Organic Law (BOL) in 2019 established the autonomous region and defined its governance structure. The Bangsamoro Transition Authority (BTA) was appointed as the interim government, initially until 2022 and further extended to 2025, to support the transition process. Notable declines in poverty and a sharp reduction in conflict have been observed, demonstrating a positive shift towards greater stability in BARMM, despite fragility and weak institutional capacity. In October 2025, BARMM will hold regional elections covering parliamentary, provincial, and municipal positions. These elections are expected to be highly competitive, with members of the BTA and other local government officials vying for leadership roles, marking a significant step in the political evolution of the region. B. Recent Economic Developments and Outlook 8. Over the past two decades, the Philippines has demonstrated remarkable economic progress. Gross National Income (GNI) per capita tripled to US$4,230 by 2023, driven by capital accumulation, employment growth, and, to a lesser extent, productivity gains. The pandemic severely impacted the country, leading to a 9.5 percent economic contraction in 2020. Despite this setback, national output returned to pre-pandemic levels by 2022, with post-pandemic GDP growth averaging 6.1 percent from 2021 to 2024, close to the pre-pandemic average of 6.3 percent from 2011 to 2019. The pandemic, however, caused economic scarring with lasting effects on potential output, including firm closures, learning losses, and gaps in health service delivery. It also underscored structural issues such as underinvestment in both human and physical capital, while the resulting increase in the public debt-to- GDP ratio has constrained the government’s capacity to effectively address these challenges. 9. Faster growth was driven by pro-investment reforms implemented in a context of high returns to investment facilitated by public investment in foundational infrastructure. Key macro and structural reforms enhanced stability and lowered investment costs, while public investment, increasing from 2.5 to 5 percent of GDP, contributed with some of the needed public goods. Given the significant gaps in investment relative to global standards but also within regions, these reforms led to high returns to investment, thus creating the right conditions for more domestic and foreign investment attraction. 2 Spatial convergence facilitated fast growth, though disparities persist. 10. Growth of the Philippine economy remains largely driven by private consumption and by the services sector. Private consumption accounts for three-fourths of GDP, supported by a young, urbanizing population, remittances from overseas Filipinos, and a dynamic labor market. It contributed an average of 4.2 percentage points to post-pandemic GDP growth, similar to pre-pandemic levels. On the supply side, the services sector is the leading production sector, comprising 61.8 percent of post-pandemic GDP. This places the Philippines among the world’s most servicified middle-income countries. 11. Inflation, which rose steadily following the pandemic, has returned to the Central Bank’s target. Consumer prices increased by 2.4 percent in 2020 to 6.0 percent in 2023, initially due to global supply chain disruptions, followed by commodity price shocks and domestic supply constraints. To curb inflation, which breached the 2-4 percent target, the Bangko Sentral ng Pilipinas (BSP) raised the key policy rate by 450 basis points between 2022 and 2023. Inflation has been declining since mid-2023, falling to 3.2 percent in 2024. Inflation declined further to 1.8 percent in March 2025, and is expected to stay within the target range due to favorable base effects and lower global energy prices. In August 2024, BSP cut its policy rate by 100 basis points to 5.5 percent in April 2025, reflecting the more stable inflation outlook. Risks remain related to high food prices, particularly rice, impacting living standards of the poor the most. 12. The pandemic-induced surge in public debt led to a focus on fiscal consolidation. The 2020 recession and continued economic deceleration in 2021 lowered revenue collection, while the government maintained expansionary fiscal policies to support recovery. National government debt increased from 39.6 percent of GDP in 2019 to 60.5 percent by the end of 2021, and is estimated to have increased marginally to 60.7 percent by 2024. To lower the public debt and enhance macroeconomic stability, the government has been implementing a medium-term fiscal consolidation framework aiming to reduce the fiscal deficit closer to pre-pandemic levels. The public debt trajectory is consistent with fiscal sustainability and is expected to remain so under baseline and stress test scenarios. More than two-thirds of public debt (68.1 percent) is in domestic securities, while close to one third (31.9) is external. 13. The recent global trade policy shifts and increased trade policy uncertainty are likely to have a negative effect on Philippines’ GDP growth. The forecast for GDP growth in 2025 is 5.3 percent. Slower forecast growth is driven by the direct impacts of the higher tariffs and trade policy uncertainty on demand for exports, the effects of increased global policy uncertainty on investment demand, and the indirect effects on export and investment demand through lower global growth. These negative effects are dampened as the Philippines is mostly integrated in services rather than merchandise value chains (that have been most affected by trade policy barriers), and as public investment and private investment in non-tradables is expected to remain robust. The average GDP growth forecast for 2025-2027 is expected at 5.4 percent. Risks are mostly tilted downside and include potential retaliation by main global players that may affect global growth further, probably hitting domestic growth. Increased uncertainty could trigger instability in financial markets and capital flight. On the upside, the Philippines may benefit from improved margins of preference for key export products, and from lower global commodity prices (tied to lower global growth), and absent any external pressures, the prospect of continued monetary policy rate normalization. 3 Table 1: Key Macroeconomic Indicators (2021-2031) 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Actual Projected Growth and inflation Gross domestic product (percent change) 5.7 7.6 5.5 5.7 5.3 5.4 5.5 5.7 5.8 5.8 5.9 Inflation (period average) 3.9 5.8 6.0 3.2 3.1 3.0 3.0 3.2 3.1 3.1 3.0 Public sector National government balance -8.6 -7.3 -6.2 -5.7 -5.4 -4.9 -4.4 -4.1 -3.9 -3.7 -3.6 Total revenue (government definition) 15.5 16.1 15.7 16.7 16.2 16.2 16.3 16.7 16.8 16.9 16.9 Total spending (government definition) 24.1 23.4 21.9 22.4 21.6 21.1 20.7 20.8 20.7 20.6 20.5 National government debt 60.4 60.9 60.1 60.7 60.2 59.7 59.6 59.1 58.9 58.6 58.1 Balance of payments Total exports (goods and services) 22.3 24.4 23.7 23.2 23.5 23.7 23.9 24.1 24.4 24.6 24.5 Total imports (goods and services) 32.1 37.8 34.6 34.9 34.0 34.2 34.4 34.6 34.8 35.1 35.0 Remittances 8.9 8.9 8.5 8.5 8.6 8.6 8.7 8.7 8.8 8.8 8.8 Current account balance -1.5 -4.5 -2.8 -3.8 -4.2 -3.7 -3.4 -3.2 -3.0 -2.8 -2.7 Foreign direct investment 3.0 2.3 2.0 2.0 1.8 1.7 1.7 1.8 1.9 2.0 2.0 Portfolio investment -2.6 0.3 -0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 International reserves and foreign exchange Gross official reserves (months of imports) 9.7 7.2 7.6 7.3 US dollar (average) 49.3 54.5 55.6 57.3 Source: Government of the Philippines for historical and World Bank for projections. Note: 1) Numbers may not add up due to rounding errors or statistical discrepancies. 2) MFMOD calculations for 2025-2030. For 2031 linear projections are used. 3) Refer to the annex for the detailed macroeconomic indicators. 1/Revenues defined as “all cash inflows of the national government treasury which are collected to support government expenditures but do not increase liabilities. Expenditures defined as “obligations that the government incurs that must be paid during or after the year when they were incurred.” 2/ Including borrowing for the Bond Sinking Fund. 3/ Total exports pertain to exports of goods and services, and credits on primary and secondary income. 4/ Total imports cover imports of goods and services, and debits on primary and secondary income. 5/ Remittances refer to personal remittances that cover cash sent through banks and informal channels as well as remittances in kind. 6/ Portfolio investment inflows are reported as positive numbers although BSP reports them as negative in BOP tables. 7/ Defined as the total of goods and services imports and primary income that can be financed by reserves. 4) Total exports and imports are from BSP BOP. 4 C. Poverty, Shared Prosperity, and Livability 14. Poverty reduction was interrupted by the COVID-19 pandemic but has since regained momentum. While declining for three decades, poverty rose from 16.7 percent in 2018 to 18.1 percent in 2021 due to the pandemic’s impact on employment and incomes. Access to health and education was also affected by the COVID-19 pandemic, particularly in vulnerable areas. By 2023 (latest available data), poverty fell to 15.5 percent, indicating a recovery in household incomes. Fast growing food prices during 2023-24 brought the inflation rate for the poorest 30 percent of the population to substantially higher levels than that for the average household (by 2024, it was 3 percentage points above that average). However, the labor market recovery suggests that household incomes are rising, further supporting poverty reduction as inflation eases. Unemployment decreased from 4.4 percent in 2023 to 3.8 percent in 2024, while underemployment declined from 12.3 percent to 11.9 percent over the same period. 15. The Philippines has been gradually narrowing its income gap with high-income countries. In 2023, the GNI per capita was at 30 percent of that of the high income threshold, up from 15 percent in 2000. Despite this progress, it is anticipated that about half of the population will remain below the US$8.3 per day poverty line (in 2021 PPP terms) used for UMICs as the country transitions to UMIC status. 16. Income inequality fell during the COVID-19 recovery but remains high compared to other East Asian countries. In 2023, the Gini index decreased to 39.3, the first time it has fallen below 40 since its calculation began. From 2009 to 2023, income growth was higher for poorer households than for those better off. For the poorest 40 percent, income growth averaged 7.3 percent compared to the overall income growth of 3.4 percent. Despite accelerated poverty reduction and sustained income growth for the bottom 40 percent, significant disparities persist: the top 1 percent captured 20 percent of national income, while the bottom 50 percent only 13 percent. 17. Spatial convergence supported the growth of the past decades, but high regional disparities remain. The fast economic growth observed since 2010 was on the back of spatial convergence. Almost all of it was accounted for by the growth of middle- and low-productivity regions, while high-productivity regions have stagnated since 2010. However, high regional disparities persist. In 2023, about 42 percent of the poor resided in areas that had an average poverty rate of 35 percent. In contrast, the National Capital Region (NCR), home to 13 percent of the population, had a poverty rate of only 1.8 percent. Labor productivity in the Eastern Visayas is half that of Central Luzon and one-fifth of NCR. These spatial inequalities are linked to disparities in health and education outcomes, in access to basic services and infrastructure, as well as to the local investment climate. Climate events tend to accentuate disparities. Provinces affected by extreme weather experienced increased poverty from 2021 to 2023. 18. BARMM, historically the poorest region, has experienced significant poverty reduction and economic growth. Poverty rates in BARMM, which exceeded 60 percent for decades, dropped by almost 28 percentage points between 2018 and 2023, even as national poverty increased. In 2023, the poverty rate in BARMM was 32.4 percent, still doubling the national rate but closing the gap. Despite improvements, BARMM’s GDP per capita in 2023 was US$1,163, far below the national average and on the verge of the low-income economy threshold as defined by the World Bank. Vulnerability to poverty – both monetary and multi-dimensional – remains high, reflecting limited economic opportunities and long-term challenges due to limited access to key services needed for human capital and productivity growth. Sustaining poverty reduction will require narrowing gaps in health and education, emphasizing the need for strengthened institutional capacity in local governance to deliver essential services effectively. 19. The Philippines' high exposure to natural hazards and climate events risks significantly threatens livability, economic growth and poverty reduction. The Philippines is the country in the world 5 most exposed to natural hazards and at risk of natural disaster. Extreme weather and seismic events – including typhoons, floods, earthquakes, and volcanic eruptions – regularly disrupt the country and extract a heavy toll on lives and livelihoods. On average, over 20 tropical storms form near the Philippines each year, with approximately eight hitting the country’s landmass. From 2012 to 2023, disasters killed around 11,000 persons, affected 130 million people, and resulted in economic losses amounting to approximately US$9 billion. Over the long term, annual losses from typhoons and earthquakes are estimated at over US$3.3 billion. Climate events and slow-onset trends – such as drought, higher temperatures, and rising sea levels – are expected to exacerbate these impacts, potentially resulting in losses up to 13.6 percent of GDP by 2040 in the absence of adaptation and mitigation efforts. 20. Disasters and climate events disproportionately impact the poor, with around one million Filipinos falling into poverty due to disasters each year . Around 60 percent of the country’s total land area and at least 74 percent of Filipinos are vulnerable to multiple hazards including typhoons, earthquakes, tsunamis, and volcanic eruptions. In the Philippines, poverty is directly correlated with exposure to natural hazards; regions that are often hit by disasters have high incidences of poverty. The poorest quintile experiences asset and income losses 1.5 times higher than the average due to disasters. Those with livelihoods dependent on agriculture and fisheries are particularly at risk. Uncontrolled urbanization adds to disaster vulnerability, which has been compounded by the acute shortage of affordable housing. Financing for adaptation, such as crop insurance, imperfectly covers only one-third of farmers. Smaller firms lack the resources and know-how to adapt to climate shocks with associated losses in terms of value added and wages paid. D. Key Development Challenges 21. Sustaining the Philippines’ development trajectory hinges on generating more and better jobs through inclusive and resilient economic growth. This overarching goal, however, is constrained by several persistent challenges—including low human capital outcomes, limited competitiveness, weak public sector capacity, and high vulnerability to climate and natural hazards. Addressing these barriers is essential to unlocking the country’s full potential and ensuring that growth translates into widespread opportunity and improved well-being. 22. Despite income growth and progress in social services in recent years, the Philippines still struggles with inequality, social exclusion, and vulnerability . While the prosperity gap declined by one- third, this progress lagged behind regional peers, which saw a 70 percent reduction. Inequality remains high, with more than half of workers from vulnerable groups—including those from low-income or underdeveloped regions—employed in agriculture or as unpaid family workers. These groups remain vulnerable to shocks like rising food prices, disasters, and health crises. In addition, the Philippines’ progress in education, health, and nutrition has been slower compared to global trends, except for gains in water supply and sanitation coverage, where it outpaced global improvements. 23. The post-Global Financial Crisis (GFC) period saw the Philippines double in economic size, create 11.7 million jobs, and achieve relatively fast income convergence. Aggregate and per capita real GDP growth rates were at 5.2 and 3.5 percent, respectively. This growth, interrupted only by the pandemic, was comparable to Indonesia and slightly below Viet Nam, ranking among the top quartile for MICs. Investment rates peaked at 27.2 percent in 2018 and remained high at 23.4 percent in 2023 on the back of growing public and private investment. Growth benefitted poorer households, partly due to better- paying jobs and social protection. Wage employment increased from 31 to 39 percent of the working-age population. 24. Faster growth came with more and better jobs, although challenges remain calling for structural reforms. Employment rates rose, unemployment and underemployment rates declined, and job quality 6 improved as employment shifted from agricultural self-employment to higher-productivity wage jobs, mostly in the services sector. However, most jobs have been created in non-tradable sectors, typically less dynamic than tradables, and in mid- rather than high-productivity firms. Indeed, frontier firms shrank, rather than expanding over the past decade. Also, more than 20 percent of employment remains in agriculture, where median per capita income is only 23 percent above the poverty line. This stresses the need for a more dynamic private sector, particularly in tradable services sectors, to accelerate structural transformation and better job creation. This has become more pressing with technological disruptions, such as gen-AI, that may reduce the growth-employment link, particularly in some of the sectors (e.g. IT- BPO) that acted as drivers of growth in the past. 25. Narrowing the income gap with high-income economies and approaching the national ambition of a “middle-class economy where nobody is poor” will require sustained high growth. Although GDP growth rates have been historically high, they lag behind those of nations that have transitioned to upper middle or high income status, which maintained above 7 percent growth for decades. In the Philippines, the recent growth rates are also below the national targets of 6.5-8 percent as set in the PDP for 2023- 2028. The welfare implications of the difference between growing at historical rates and achieving the upper bound of the government's target (8 percent) are significant. By 2050, this gap could determine whether the Philippine economy mirrors Brazil or Poland in terms of today's per capita income. 26. Job creation is crucial to achieving the Philippine’s national ambition. Unemployment rates have remained low and stable. However, the country’s relatively high fertility rate will continue to expand the labor supply. Labor force participation remains below potential, in aggregate, and particularly for women, where the Philippines lags Viet Nam by 10 and 17 percentage points. With higher educational attainment for females than males, this gap results in talent misallocation. In addition, technological disruptions such as GenAI pose an important challenge for one sixth of jobs in the Philippines, particularly those in IT-BPO, one of the country’s most dynamic sectors of the past decade. It also poses an opportunity, if the sector upgrades from voice services and administrative support tasks. 27. Job creation in higher productivity activities and of better occupational types also matter for economic convergence. The modernization of agriculture relies on industry and services creating quality jobs to absorb excess labor. Agriculture accounts for 22 percent of jobs, but for less than 9 percent of value added. As a result, the median agriculture income is only 2.1 times the national poverty line, compared to about 4 and 3.6 times in industry and services. 28. To sustain high and inclusive growth, the Philippines must intensify its structural reform agenda for a competitive private sector that creates good jobs. Accelerating potential output growth requires prioritizing reforms that enhance competition and innovation across sectors. In agriculture, targeted incentives should promote diversification, competition, and clustering to achieve scale, alongside investments in value chains and improved financial access for technology adoption and for resilience. Similarly, boosting competition in manufacturing and services is essential, as these sectors drive higher- productivity jobs and absorb excess labor from agriculture. This requires streamlining business regulations to facilitate increased entry of new firms. Recent reforms have removed legal barriers to foreign direct investment (FDI) in key sectors, but further regulatory streamlining is needed to eliminate de facto barriers. Registering a foreign firm in the Philippines takes 106 days – 30 percent longer than for domestic firms and 91 days longer than in Singapore. Regional trade agreements will also increase competitive pressures on large domestic firms while providing a platform to enhance SME productivity and scale. However, to fully realize these benefits, SMEs must be better integrated into global value chains (GVCs) – an area where the Philippines is missing opportunities. Additionally, stronger incentives for skilling and reskilling, along with reforms to deepen capital markets, will drive technology adoption and innovation. 29. Significant challenges in critical infrastructure increase the cost of doing business, limit access 7 to markets, and reduce regional integration, thus constraining economic potential. In the energy sector, high electricity costs and tight power supplies affect businesses and households alike. As the country pushes forward on its ambitious renewable energy (RE) agenda, transmission bottlenecks loom large. In transport, the Philippines suffers from high logistics costs, congested urban roads, lagging public transport, poor connectivity to rural and highland communities, and inefficient inter-island connectivity. In water supply and sanitation, access to and quality of services is uneven, especially among poor and rural households. Infrastructure gaps, amplified by vulnerability to climate change and natural hazards, not only limit productivity and innovation but also widen the urban-rural divide, underscoring the need for reforms and investments to enhance capacity, affordability, and accessibility in these critical sectors. 30. The Philippines faces both challenges and opportunities in greening economic growth . Despite its low carbon intensity, greenhouse gas (GHG) emissions increased from 97 Mt CO2e in 1990 to 237 Mt CO2e in 2021, with projections reaching 276 by 2024. The energy sector must expand to meet rising demand driven by growth in manufacturing, e-mobility, and digitalization, while shifting towards renewable energy and maintaining supply security. Currently, power generation and transport together account for 90 percent of fossil fuel consumption and 80 percent of GHG emissions in the Philippines. Coal-fired power plants contributed to 58 percent of power generation in 2023, up from 34 percent in 2010. Decarbonizing the power and transport sectors through large-scale deployment of cost-competitive renewable energy is essential for the transition to a prosperous low-carbon economy. Solar and onshore wind power generation is already competitive against coal-fired power. This transition will require continued support from the government and may challenge the current reliance on local private sector financing, especially with higher-risk technologies like offshore wind and innovative approaches such as battery energy storage of renewables. Another high potential sector is the building and commercial real estate sector, one of the most energy-intensive, accounting for 54 percent of total power consumption. 31. Human capital development has not kept pace with strong economic growth in the Philippines. A child born in 2020 will only reach 52 percent of their potential productivity by age 18 due to gaps in education and healthcare. Compared to its regional peer countries – Indonesia, Malaysia, Thailand, and Viet Nam – the Philippines has the lowest human capital index (HCI). Nearly one-third of children under five are stunted, largely due to inadequate maternal nutrition and poor infant health, with stunting levels 12 percentage points higher than expected given the country's GNI per capita. 32. The Philippines has made progress in education, health, and water supply and sanitation, though challenges remain. Life expectancy rose from 68.8 to 72.3 years between 2010 and 2023. However, limited access to healthcare especially in rural areas has contributed to the deceleration of the reduction in maternal mortality rates in recent years. A Filipino aged 30 in 2019 has a 25 percent chance of dying from one of the four major NCDs before the age of 70. In 2023, 95.5 percent of Filipinos had access to safe drinking water, an improvement from 85 percent in 2010. Yet, an estimated 5 million Filipinos still lacked improved water and sanitation in 2023. The gross enrollment rate in primary education reached over 100 percent at its peak, but was lower at 93 percent in 2023, after rebounding from 91 percent in 2021 in the aftermath of the COVID pandemic. Only 77 percent of Filipino children complete secondary school in 2023 (up from 75 percent in 2010). Education quality remains a concern, with learning poverty at 90 percent—above expectations given the country's income. Health and education outcomes are particularly worse in BARMM where child stunting is nearly 10 percentage points higher than the national average, while the secondary education enrollment rate is 40 percentage points lower. 33. Digitalization is key for inclusive growth, yet the Philippines lags in access to digital infrastructure, and quality and depth of digitalization in economy and government. Just 28 percent of households had access to fixed broadband in 2023, a much smaller share than in Viet Nam (79 percent), 8 Thailand (55 percent), and Malaysia (54 percent). With active mobile broadband subscribers at just 74 percent of the population, the Philippines accounts for more than half of the population unconnected to mobile broadband in ASEAN. Not only access but affordability and speed of both fixed and mobile broadband lag behind regional peers, and the digital divide is rapidly expanding. In the bottom wealth quintile, households with access to fixed broadband have remained below 5 percent, while in the top quintile, this increased from 43 percent in 2019 to 60 percent in 2022. Growth of the digital economy and digitalization of government services have been slow, with the country’s ranking consistently and increasingly underperforming relative to its peers across indices measuring digital maturity and readiness affecting the government, economy and society’s capacity to leverage digital transformation. 34. Improving public administration efficiency, particularly at the local level is crucial for development. Addressing the critical development challenges will require highly efficient and effective national agencies and local government units (LGUs) to deliver quality public services. National government agencies suffer from poor integration and limited innovation, while LGUs face unequal resources and weak accountability, hindering their ability to implement reforms and deliver services effectively. LGUs hold key responsibilities across health, education, disaster risk management, and economic development, but weak capacity limits their ability to address spatial disparities and ensure sustainable local growth. National agencies can also benefit from increased capacity for their remaining centralized functions, including standards setting, quality assessments, and remaining service delivery mandates that cross subnational jurisdictions. Stronger coordination between the national and subnational levels is needed to improve planning and service delivery. II. WBG COUNTRY PARTNERSHIP FRAMEWORK A. Selectivity Selectivity Filters 35. The scope of the CPF program sharpened with a focus on relevance, strategic alignment, the WBG’s added-value. These filters ensured: (i) support for the country’s development goals; (ii) alignment with the WBG mission; and (iii) alignment with the WBG core competence and value proposition. Lessons learned from the previous CPF and extensive consultations also inform the program design. 36. The CPF is aligned with the Philippine Development Plan (PDP) 2023-2028 that aims to guide the economy to high and inclusive growth. The PDP focuses on: (i) investing in human and social development with social safety nets; (ii) transforming agriculture, manufacturing, and services through market expansion and value addition; (iii) fostering trade, innovation, competition, and regulatory quality; and (iv) ensuring good governance, sound macroeconomic fundamentals, infrastructure development, security, resilience, and climate action. The plan emphasizes digitalization, a dynamic innovation ecosystem, improved connectivity, private sector partnerships, and local-national government collaboration. The CPF is also fully aligned with the long-term aspirations of AmBisyon Natin 2040 for a comfortable and secure life for all Filipinos. Moreover, the selection of outcome areas not only is aligned with the government priority programs and investment, but also considers significant policy momentum and government actions beyond the PDP, increasing the likelihood of achieving results. 37. Comprehensive diagnostics guided the selection of the outcome areas that are aligned with the new WBG Evolution Roadmap and Corporate Scorecard Indicators. Behind each outcome area lies a body of recent and ongoing analysis to diagnose the challenges and develop evidence-based solutions. Main diagnostics include: 2024 Systematic Country Diagnostic Update (summary included in Annex 2), the 2023 Country Climate and Development Report (CCDR), the 2024 Philippines Human Capital Review, the forthcoming Growth and Jobs Report (GJR) and Poverty and Equity Assessment (PEA), and other sector 9 specific analyses. These diagnostics helped to identify the key barriers to job-rich and inclusive growth in the Philippines. Diagnostics also inform policy dialogue with the government, support the design of operations, and contribute to the work of development partners active in the Philippines. 38. The narrowing of outcome areas reflects ongoing successful engagements that are expected to be scaled up during the CPF period to amplify impact. In developing countries, needs are extensive and priorities are far-reaching. Outcome selection prioritized areas where the World Bank comparative advantage is visible and strong analytical underpinnings are matched by sustained demand for IBRD financing support (see Annex 4 for the indicative IBRD financing pipeline). It considered the strategies of key development partners in the Philippines. For example, JICA, AIIB, and ADB lead in sectors where they hold a comparative advantage, such as large-scale urban infrastructure including railways and metro systems. Engagement strategies are complementary where there is sectoral overlap—for instance, in skills development, ADB focuses on infrastructure, while the World Bank supports policy and service delivery reforms; similarly, WFP’s school feeding programs align with the Bank’s teacher training initiatives. Lessons Learned 39. The new CPF incorporates key lessons learned from the implementation of the FY19-24 CPF, as outlined in the Completion Learning Review (CLR):1 a. Addressing development challenges relevant for a new UMIC: Key challenges include human capital strengthening, expanding public health preparedness, and skills development. Given the tightening fiscal situation, a more prominent role for the private sector in financing development is required, particularly through PPPs, supported by collaboration between the World Bank, IFC, and the WBG guarantee platform (WBG-GP) housed in MIGA. New projects should consider implementation capacity (particularly in LGUs), ownership, and the political environment to ensure success. b. Building capacity for delivering development results: The rapid expansion of World Bank engagement has highlighted capacity constraints on the client side that have, in turn, affected the speed of project preparation and implementation. Achieving the CPF outcomes within the expected timeframe will require substantial public sector strengthening. Capacity building efforts must span the full spectrum—from evidence-based policymaking and reform implementation at the central level to effective service delivery at the local level. Operationally, the World Bank should scale up the effort in training implementation agencies in procurement, financial management, and ESF, particularly targeting agencies on the ground such as the regional government offices and local government units. c. Strengthening the One WBG approach through joint programs and program design: The Philippines’ tightening fiscal position calls for a more prominent private sector role in financing development. In the short term, this would mean pursuing opportunities for private financing through PPPs in key sectors (e.g., renewable energies), minimizing the fiscal implications of potential contingent liabilities, supporting regulatory reforms to create an enabling environment, and providing more capacity- building support to LGUs in service delivery. Improved coordination and sequencing of World Bank, IFC, and WBG-GP/MIGA interventions can help promote private sector development. To advance the One WBG approach, the CPF should reinforce the rationale for collaboration, articulate a strong results chain for joint efforts, and improve operational compatibility by relying on the WBG scorecard. Stakeholder Consultations 40. Extensive consultations with a broad range of stakeholders confirmed the development challenges where the WBG can make the greatest contribution. Consultations were held during July to 1The previous CPF, covering the period of FY19-24 (Report No. 143605-PH), was discussed by the Board of Executive Directors on December 17, 2019. 10 September 2024 with national and local government counterparts, universities, civil society organizations, development partners, and the private sector. Stakeholders affirmed the WBG as a trusted development partner and expressed broad support for the development challenges targeted by the CPF. Government representatives emphasized leveraging private sector investments, while local governments requested more support for agriculture, water, and coastal resource management. CSOs endorsed improving education, reducing stunting, and enhancing climate resilience. Development partners highlighted infrastructure gaps and barriers to competitiveness. All groups consistently raised the need for strengthening public sector capacity, especially for LGUs. (Annex 3 provides a consultation summary). B. Proposed WBG Country Partnership Framework 41. The CPF aims to improve the quality of life for all Filipinos by strengthening their capabilities and providing better opportunities, while minimizing volatility caused by shocks. Applying the selectivity filters, the WBG is sharpening its program and supporting the Philippines in achieving three critical outcomes (Figure 1). Improved access to quality health and education will close the human capital gap and strengthen the capabilities of Filipinos. More private sector job opportunities will raise productivity and incomes, sustaining and accelerating inclusive growth. The disruptive disaster and climate risks that the Philippines faces will be mitigated with stronger socioeconomic resilience. With a sharper focus, the WBG aims to achieve large-scale results across each of the engagement areas. Across each of the outcome areas, there will be a strong focus on improving the efficiency of the public sector to improve implementation, accelerate progress, and sustain impact. Figure 1: CPF Outcome Areas and Indicators 1. Improved access to quality 2. More private 3. Stronger socio- health and education sector jobs economic resilience 1.1 19 million people receiving 2.1 4 million new or better 3.1 12.5 million beneficiaries of quality health, nutrition, and jobs social safety net programs population services 2.2 19 million people using 3.2 13 million people with 1.2 15 million students broadband internet enhanced resilience to climate supported with better risks education 2.3 US$2 billion in total private capital enabled or mobilized Cross-cutting: Efficient public sector 4.1 20 million people using digitally enabled services WBG Scorecard (Note: All target numbers reflect incremental changes) 42. The CPF contributes to the implementation of the WBG vision and mission identified in the Evolution Roadmap. The Philippines program focuses on contributing to eight of the fifteen WBG outcome areas: (i) protection for the poorest; (ii) no learning poverty; (iii) healthier lives; (iv) green and blue planet with resilient populations; (v) digital connectivity; (vi) more and better jobs; and (vii) more private investment (Table 2). The program also tackles several of the global challenges identified in the Roadmap including climate change adaptation, energy access, and enabling digitalization. 11 Table 2: CPF Alignment with WBG Corporate Outcome Areas CPF Outcome Areas Cross-cutting WBG Scorecard Outcome Areas Improved access to quality More private Stronger socio- Efficient public health and education sector jobs economic resilience sector 12.5 million 1. Protection for the beneficiaries of social poorest safety net programs* 15 million students supported 2. No learning poverty with better education* 19 million people receiving 3. Healthier lives quality health, nutrition, and population services* 5. Green and blue 13 million people with planet with resilient enhanced resilience populations to climate risks* 20 million people 10. Digital 19 million people using using digitally connectivity broadband internet* enabled services* 13. More and better 4 million new jobs or better jobs* US$2 billion in total private 15. More private capital enabled or investment mobilized* * WBG Scorecard (Note: All target numbers reflect incremental changes) C. Outcome Areas and Engagement Approaches CPF Outcome 1: Improved Access to Quality Health and Education 43. Despite progress in human capital development, the Philippines continues to struggle with low health and education outcomes. The human capital gap in the Philippines is holding back the potential of the country. The COVID-19 pandemic exposed weaknesses in healthcare, particularly with high out-of- pocket expenses. Only 50 percent of the rural population has access to health units within 30 minutes, which often lack adequate equipment, medicines, and personnel. The Universal Healthcare Care (UHC) Act has the potential to improve outcomes, but only with its full implementation. The Philippine Health Insurance Corporation (PhilHealth) has been expanding the country’s social health insurance program but implementation has faced challenges due to limited capacity and persisting health system issues. Education quality is a challenge, despite increases in basic education school enrolment. In the 2022 Programme of International Student Assessment, Filipino students scored significantly below the global average in reading, mathematics, and science. Systemic weaknesses—including limited access to early childhood education, sub-optimal teaching practices, inadequate infrastructure, and disparities in access—worsened due to the COVID-19 pandemic. 44. As the Government of the Philippines prioritizes human capital in its development strategy, the reform momentum for the health and education system grows. The UHC Act aims to provide all Filipinos with access to quality and affordable health care. The Kalusugan at Nutrisyon ng Mag-Nanay Act was passed in 2018 providing the legal basis for a multisector program targeting the first 1,000 days of life. There is strong reform momentum to improve education quality. The 2030 Basic Education Development Plan (BEDP) is being updated to reflect a stronger focus on quality improvements, which is complemented 12 by the Department of Education’s 5-Point Reform Agenda. The 2nd Congressional Commission on Education (EDCOM2) was established in 2022 to assess key education issues and prepare policies to address them by 2025. The government has leveraged the Bank’s support for the implementation of a large-scale national reform agenda, both through financing and technical advice. Major health, nutrition, and education projects have significant room for scale-up. Figure 2: Engagement Approach for Improved Access to Quality Health and Education WBG Results WBG Interventions • Strengthen capacity and incentives to deliver high-quality health and nutrition 19 million people services (particularly local). receiving quality • Foster community engagement and outreach to boost the utilization of quality health health, nutrition, and and nutrition services. population services • Adopt a multisectoral approach to accelerate improvements in nutrition outcome. • Support private investment in affordable and accessible health care (IFC). • Improve teacher effectiveness and competencies. • Support learning of students at high risk of dropping out and in need of recovery or 15 million students acceleration. supported with • Strengthen school-based management and regional and local capacity in service better education delivery. • Support sector reforms and learning improvement with advisory/analytical support. Cross-cutting: Efficient Public Sector: Developing a national digitalization strategy for education; establishing an online teaching and learning hub; building regional and local government capacity in service delivery, and; strengthening accountability systems to improve health and education services quality. 45. The WBG focuses on improving access to quality health and nutrition services to improve health outcomes. The World Bank will support the government in strengthening the delivery of public health services through interventions that increase the number of qualified primary care workers, expand health infrastructure, and improve the performance of decentralized local health systems. Digital health solutions will be deployed including telemedicine, electronic medical records, and a supply chain management information system. Efforts to address child stunting will continue by supporting the utilization of key services and practices that improve the nutritional status of infants, children, pregnant and lactating women. Learning from the COVID-19 experience, the World Bank will enhance the country’s health emergency prevention, preparedness, and response to health emergencies, with a focus on disease surveillance systems, public health laboratory networks, and emergency response capacities. The IFC will continue pursuing opportunities in private healthcare using a combination of mainstream and upstream advisory and investment products to improve accessibility and affordability. Upstream advisory also focuses on strengthening ASEAN’s vaccine supply chain by supporting private firms in developing bankable manufacturing projects, with the Philippines as a priority market. The WBG fosters community engagement and outreach to boost the utilization of quality health and nutrition services, promotes digital platforms to improve operational efficiency, and builds the capacity of LGUs responsible for health service delivery. 46. The WBG helps improve education and training outcomes by focusing on enhanced professional development of teachers, improved curriculum, and improved service delivery. To address learning gaps and strengthen workforce preparation, the WBG supports initiatives to increase learning outcomes at the primary and secondary levels. Interventions aim to improve teacher qualifications and effectiveness, accelerate learning, enhance learning assessments, and strengthen education and training service delivery by leveraging digital technologies, such as developing a national digitalization strategy for education and establishing an online teaching and learning hub, and improving the education sector’s governance. Regional and local-level capacity-building programs and accountability measures are prioritized to 13 strengthen education service delivery. Financing is complemented by analytical and advisory services to support sector reforms and learning improvements, including ongoing support to EDCOM2 and the Department of Education. IFC complements these efforts through investments in private education providers at the tertiary level. The WBG engagement strategy is informed by successful experiences from countries including Brazil, India, Chile, and Kenya, and the World Bank education policy academy. 47. The human capital agenda relies on close linkages with other CPF outcome areas and exploring new engagement opportunities. WBG support for improving the social safety net system (Outcome Area 3) – including the Pantawid Pamilyang Pilipino Program (4Ps) and the Supplementary Feeding Program (SFP) – plays a critical role in improving the access of marginalized families to health, nutrition, and education services. New initiatives to improve water and sanitation services will also be critical in improving health and nutrition outcomes. The WBG will explore new opportunities to improve workforce preparation by expanding access to quality training programs that are relevant to changing labor market demands. The World Bank and IFC will jointly explore opportunities to improve post-secondary skills training and upskilling or reskilling workforces in industries affected by technological developments. CPF Outcome 2: More Private Sector Jobs 48. Median incomes in the Philippines remain low despite recent rapid and pro-poor growth, underscoring the importance of accelerating productivity-based growth and better job creation. Structural transformation, with the shift of labor to nonfarm and wage employment, has been a key driver of income growth, alongside poverty and inequality reductions. However, informal and low-earning employment remains widespread, resulting in relatively low incomes. In 2023, the median total household per capita income adjusted by spatial deflator was only 90 percent higher than the national poverty line. Agriculture, employing about 30 percent of household heads and 22 percent of the working-age population, exhibited the lowest incomes. Median income in BARMM substantially improved in 2021 amid the restoration of peace but remains over 30 percent lower than the national average. 49. Jobs provide dignity and purpose, unlocking potential in communities, empowering women, engaging youth and creating business opportunities. Supporting families can lift entire communities out of poverty and foster economic stability. The WBG prioritizes job creation, taking a three-part approach : (i) establishing preconditions for jobs by investing in infrastructure, health, and education as well as advancing reforms for better tax systems to boost domestic resource mobilization; (ii) as the Knowledge Bank, generating and applying analytics to create a predictable regulatory environment through strengthened governance, transparency, anti-corruption, and business-enabling policies; and (iii) supporting businesses with financing, equity, guarantees, and political risk insurance to attract investors. Mobilizing private capital is crucial to catalyze entrepreneurship, competition, and demand for labor. 50. The government supports private sector development, recognizing firms as the engine of growth in the Philippines and committing to the reduction of red tape to boost investment. Slow job creation and low dynamism of frontier firms, and underinvestment in innovation impede productivity and quality job growth. To unleash the economy’s full potential, reforms have to be accelerated to streamline regulations, minimize market distortions, and open key sectors to greater investment. The government is committed to supporting private sector development through a series of policy reforms that include business regulatory streamlining, with focus on firm entry and FDI, and on enabling sectors such as transportation, telecommunication, or renewable energy. The government is also focused on supporting rural and urban SMEs to connect to markets and gain productivity and scale through capability upgrading and access to finance, while enhancing digital infrastructure, promoting competition, and reducing trade and investment costs through regional integration agreements. 51. Job-rich growth in the Philippines hinges on combining productivity growth with increases in 14 scale across firms and farms. Unlocking this potential requires coupling reforms to promote competition (to boost productivity), with those to increase within-country and international integration (to boost productivity and to gain scale), and targeted interventions to ensure firms and farms can take advantage of increased opportunities. The World Bank focuses on enhancing productivity by encouraging advanced technologies adoption across sectors, creating strong market linkages for urban and rural SMEs, and promoting sustainable production practices, particularly in agriculture. By connecting SMEs (firms and farms)—especially with women, youth entrepreneurs, and entrepreneurs in lagging areas such as BARMM—to markets and encouraging the adoption of modern technologies, these initiatives aim to raise incomes and boost economic resilience. IFC complements these efforts by supporting productivity- enhancing sectors such as with investments in fintech innovations and digital financial services, which streamline operations and open new economic opportunities. FDI can facilitate the adoption of new technologies and WBG-GP housed in MIGA will aim to mobilize investment (including FDI) in various sectors through its risk-mitigation solutions. Figure 3: Engagement Approach for More Private Sector Jobs WBG Results WBG Interventions • Streamline business regulations to reduce entry costs, increase competition and productivity. 4 million • Narrow infrastructure gaps in energy, transport, water supply, and digital connectivity new or • Promote technology adoption through capabilities upgrading and long-term finance. better jobs • Support SMEs in agriculture, manufacturing and services to connect to local and regional value chains, to improve productivity and scale, for more and better jobs. 19 million people • Promote competition and investment for better access and lower cost of broadband services using broadband • Invest in digital infrastructure in remote and disadvantaged areas. internet • PPP advisory and investments in digital infrastructure development (IFC). • Reduce distortions in capital markets (increased openness to foreign investment in key enabling US$2 billion sectors). in total private capital • Deepen capital market and enhance financial sector resilience (WB and IFC). enabled or mobilized • Invest to enhance financial market and firms in venture capital space (IFC). Cross-cutting: Efficient Public Sector. Support for increasing domestic revenue mobilization; improved government-to-business/consumer services; build LGU capacity through partnership with the Department of the Interior and Local Government (DILG); support institutional and regulatory reforms to scale-up private investments in clean energy, connectivity, and infrastructure asset resilience. 52. Despite significant increases in infrastructure investment in recent years, substantial gaps in energy, logistics, and digital connectivity continue to hinder economic growth, inclusion, and competitiveness. Electricity costs remains among the highest in the region. Aside from unsubsidized electricity prices, key factors contributing to elevated costs include the lack of competition in generation, the lengthy approval process of energy projects, and dependence on imported fuels. Energy transition towards large scale deployment of RE will require large buildout of transmission systems which have been slow to develop due to right of way issues and reliance on a single private entity. Access to affordable, reliable, and sustainable energy in rural and remote areas remains a significant challenge due to high investment costs and insufficient funding from the private and public sectors. The country also struggles with low broadband penetration, high costs, and low investment in digital connectivity, exacerbating the digital divide and limiting economic opportunities in underserved regions. The transport and the water sectors are hindered by fragmented institutions, weak capacity and lack of integrated planning. 53. To improve digital infrastructure, the World Bank Group is supporting the government in promoting competition and investments to lower broadband costs and expand access, particularly in disadvantaged areas. Priority is given to improving fixed broadband, given its importance in productivity- 15 enhancing digital adoption. The World Bank provides technical assistance, capacity building, and financing to support the policy reforms that remove barriers to market entry, competition and investments, lowering internet costs, expanding access in rural areas and narrowing the digital divide. This is complemented by financing for targeted public investments in digital infrastructure, ensuring that citizens and businesses in commercially unviable areas can benefit from digital opportunities. IFC provides complementary advisory services and fosters private sector participation in digital infrastructure development, including data centers and telecommunication towers. MIGA, through the WBG-GP, is exploring options to support the development of data centers in the country. This digital advancement is crucial for achieving key outcomes such as boosting productivity in firms and farms, promoting inclusive finance, strengthening health systems, improving education and social safety net, and enhancing resilience to climate risks. 54. WBG initiatives are seeking opportunities to scale up efforts to improve energy reliability and affordability to sustain growth and support private sector development. To be successful in energy transition, the Philippines needs to overcome the triple challenge of meeting fast growing energy demand, transforming its fossil-fuel-based energy infrastructure, and keeping energy affordable. Massive public and private investments will be needed to implement the Philippines Energy Plan, which aims for a 35 percent renewable energy share in power generation by 2030 and 50 percent by 2040. World Bank initiatives will support an energy transition away from fossil fuel generation and import options towards RE – including solar and microgrids for rural electrification – that can help the country lower electricity generation costs while increasing energy security and lowering emissions. This includes support for reforms to enhance the legal, institutional and regulatory environment required for achieving significant scale up of private investments in RE. It also includes support for reforms to strengthen the resilience of critical infrastructure to continue to operate during and after a disaster to reduce the economic impacts of disasters and ensure business continuity. The World Bank, IFC and MIGA are developing a joint program for offshore wind, mobilizing public and private sector resources for renewable energy projects. IFC will also look at supporting renewable energy developers – foreign and local - with innovative financing and advisory services, including developers looking at hybrid projects with battery storage which is considered important given the status of the grid. WBG-GP/MIGA has been in discussions with potential investors to support microgrid solutions in rural, remote areas of the country. 55. The WBG is also addressing transport and water supply bottlenecks, which are areas that show potential for scaling up. The World Bank is supporting the decarbonization, climate resilience, and safety of transport infrastructure and services. This complements the government’s efforts to address spatial connectivity in a more efficient manner. IFC contributes to transportation infrastructure by advising on PPP projects and financing private sector players directly. Various guarantee solutions from the WBG Guarantee Platform housed at MIGA will be explored to attract private investment for transport infrastructure. By combining public investments and private sector mobilization, the World Bank, IFC, and MIGA work to modernize transport systems, reduce congestion, and improve connectivity across land, air, and maritime networks to boost the Philippines’ connectivity and economic resilience. Additionally, the WBG is exploring opportunities to improve and expand the delivery of safe and affordable water supply and sanitation services. Interventions will seek to expand coverage and efficiency, especially in underserved regions. By collaborating with local governments, the WBG seeks to improve infrastructure and foster resilience against climate change impacts. These efforts are complemented by governance reforms to enhance service delivery and adopt technologies to monitor and manage resources effectively. 56. The WBG will continue playing a pivotal role in deepening the capital market, strengthening financial sector resilience, and fostering innovation for productivity and job creation. By investing in underfunded venture capital (VC) space and supporting innovative firms IFC not only provides critical 16 capital but also drives entrepreneurship, job creation, and technological advancement. The WBG plays a pivotal role in deepening the capital market in the country, with the World Bank helping improve the regulatory framework, WBG-GP/MIGA by mitigating public sector and political risks, and IFC pioneering sustainability-themed capital markets by building capacity and providing hands-on support to help clients issue green, blue, and social bonds. This expands access to green and resilience financing, thereby helping to align the private sector with global sustainability trends. Towards the same goal, IFC is also advancing innovative and flexible financing solutions, such as embedded finance, securitizations, hybrid capital, and greening the supply chain financing, as well as supporting non-banking financial institutions (NBFIs) such as insurance companies (offering non-life insurance, typhoon, and drought insurance). By fostering diverse financial instruments, IFC boosts market liquidity, empowering businesses to secure capital for growth and greater competitiveness. IFC also partners with local financial institutions to enhance their risk management in line with international standards, creating a robust foundation for sustained private sector dynamism. CPF Outcome 3: Stronger Socioeconomic Resilience 57. The Philippines is one of the most disaster-prone countries in the world because of its unique geography. Disasters, climate shocks, and public health emergencies are among the key factors that adversely affect human capital accumulation. Between 2020-2022, disasters damaged almost 28 percent of educational facilities, disrupting the education of 7.8 million students. In the same period, disasters damaged around 1,000 health facilities. Climate change is not only amplifying the frequency and intensity of adverse natural events but also worsening slow onset hazards like drought, salination of soil and groundwater, and sea level rise. Sixty-one percent of Filipinos are at high risk of suffering from climate- related hazards due to the combination of high prevalence of exposure to multiple hazards across the country and low access to key coping mechanisms - notably low coverage of social protection systems and limited financial inclusion. The poorest are the most likely to live in riskier places with inadequate infrastructure, and rely on climate-vulnerable occupations such as farming and fishing, or in informal SMEs that struggle to invest in adaptation. The social protection system, while crucial, has weakened due to outdated targeting and slow adoption of digital technologies. 58. The Government of the Philippines has been implementing policy reforms to transition from a reactive to a proactive approach to disaster risks for more than a decade and is now a global leader . This builds on a sustained and successful partnership between the Philippines and the World Bank to support comprehensive and transformative reforms and investments to strengthen the financial, physical and social resilience of the government and Filipino communities, including the creation of digital platforms to generate risk-informed and data-driven sectoral and sub-national plans and asset management, using the GeoRiskPH platform. The National Disaster Risk Reduction and Management (NDRRM) plan for 2020-2030 aims to strengthen the government’s capacity in disaster prevention and mitigation, disaster preparedness, disaster response, and disaster rehabilitation and recovery. This involves developing a multi-faceted approach to improve the resilience of both people, communities, and key sectors vulnerable not only to disasters but also growing climate risks. In 2019, the government passed legislation that permanently institutionalized the Pantawid Pamilyang Pilipino Program (4Ps), a conditional cash transfer program. The Department of Social Welfare and Development (DSWD) is committed to its continued efforts to enhance digital payment systems, improve beneficiary targeting, and ensure cash transfers are appropriate amidst volatile macroeconomic conditions (such as inflation). 59. To protect the most vulnerable from economic and social shocks, the WBG is continuing its support to develop a strong, modern, and comprehensive social safety net system. Disasters and climate shocks often disproportionately affect women, poor, and minority communities, including indigenous peoples. Strengthening and expanding the social safety net is crucial for improving resilience and ensuring 17 inclusion. A systematic approach to disaster risk management should include real-time beneficiary data updates, targeted assistance for disaster-affected households, and timely delivery of financial tools such as insurance and emergency cash transfers, ensuring that vulnerable populations receive support quickly and accurately during crises. The World Bank will continue to provide financial and technical support to the Philippines’ 4Ps program, helping expand its reach and strengthen its targeting, delivery systems, and impact monitoring, including digitizing and streamlining business processes, workflows, and payment systems, and deploying digital communication tools for enhanced 4Ps beneficiary engagement. It is estimated that every dollar invested in adaptive social protection can yield up to three dollars in reduced disaster response costs and economic losses. For the Philippines, with average annual disaster-related economic losses of US$3.5 billion, this could mean savings of over US$1 billion each year. Figure 4: Engagement Approach for Stronger Socioeconomic Resilience WBG Results WBG Interventions 12.5 million • Support safety net reforms and program design to improve targeting, coverage, and beneficiaries graduation. of social safety • Expand adaptive social protection with new financial tools (including insurance and net programs emergency cash transfers). • Build emergency preparedness and response capacities in local communities and schools. 13 million people • Strengthen the resilience of schools and health facilities. with enhanced • Improve disaster risk information systems for risk-informed decision making, land use resilience to planning, and urban design. climate risks • Invest in climate resilient insurance products, construction, and risk mitigation solutions (IFC and MIGA). Cross-cutting: Efficient Public Sector. Digitizing and streamlining 4Ps business processes, workflows, and payment systems; supporting digital platforms to generate risk-informed and data-driven sectoral and sub-national plans and asset management; improving LGU capacity to integrate disaster risk in spatial and budget planning. 60. The WBG is strengthening government and community adaptive capabilities for managing disaster and climate change risks, and enhancing public infrastructure resilience. The World Bank will focus on building disaster risk management capacity and information systems for improved emergency preparedness, rapid response, reconstruction, and climate-informed land use planning. World Bank interventions will also strengthen the resilience of school and health facility infrastructure to withstand high-impact natural hazards such as typhoons, floods, and earthquakes. Leveraging the existing and strong community driven development platforms, the World Bank will support communities to engage in risk and vulnerability assessments. Findings will be translated into risk-informed local plans to deliver resilient local infrastructure, such as flood and landslide controls, drought prevention, disaster response systems, and retrofitting structures. The World Bank will also strengthen the local government capacity to invest in and maintain this infrastructure. On the private sector side, IFC is further rolling out the Building Resilience Index (BRI), a tool to assess and improve project resilience for construction developers, banks, insurers, and governments. MIGA will explore risk-mitigation solutions to support disaster-resilient investments. A One WBG joint program will be initiated to expand resilient, affordable, and green housing. 61. The WBG will also build resilience in key sectors that are exposed to climate risks. Agriculture remains a critical yet vulnerable sector in the Philippines, heavily impacted by climate risks. Aligned with National Adaptation Plan to improve resilience, raise productivity, and reduce environmental impacts the WBG promotes secure land tenure, crop diversification, post-harvest modernization, and climate-smart agricultural practices (these include crop rotation, integrated pest management, soil health improvements, and the adoption of ecologically suitable high-yield technologies). The World Bank and IFC deliver complementary solutions to enhance access to drought and crop insurance for smallholder farmers. IFC is also supporting the housing sector to expand the availability of more affordable, greener, 18 and more resilient housing. 62. The Philippines will continue to implement the country’s national disaster risk financing strategy. Given the Philippines’ high disaster risk, the CPF continues to support the country’s disaster risk financing strategy. The WBG will continue the support to strengthen the financial sector resilience in the Philippines, while providing contingent financing, such as the Catastrophe Deferred Drawdown Option (Cat DDO) and IPF Contingent Emergency Response Projects (CERPs). The CPF will support the potential use of the new Crisis Preparedness and Response Toolkit, which allows scaling up the disaster risk financing. This toolkit includes the “Rapid Response Option” (RRO) for which the Philippines was the first WBG client country to set in place, as well as increased country limits for the CatDDO. D. Integrated Priorities 63. Supporting a more efficient public sector is a cross-cutting priority and critical to achieving results across all CPF outcome areas. World Bank analyses and stakeholder consultations consistently highlight the need to enhance public institutions to improve development outcomes. This priority is already reflected in ongoing and planned engagements. For example, the Bank will continue to support domestic revenue mobilization, including assistance to the Philippines’ Comprehensive Tax Reform Program (CTRP), which aims to advance fiscal consolidation through improved revenue generation and spending efficiency. In addition to sustained support for core public administration functions—such as public financial management, procurement, and human resource management—the Bank will scale up financing to drive digital transformations in the public sector. This will involve streamlining and automating systems and processes, harmonizing e-government initiatives, and strengthening connectivity and cybersecurity. At the local government level, the Bank will build on its experience with LGU engagement in agriculture operations to broaden support for delivering key public services, including health and nutrition, education, water supply, sanitation, and community resilience, particularly in lagging and under-served areas. These priorities are also reflected in the pipeline of operations, where LGU participation is a central feature. 64. The WBG will continue addressing key gender equality challenges in the Philippines, particularly by removing barriers to women’s economic participation and expanding their access to opportunities . The country ranks 25th globally and 2nd in East Asia and the Pacific in the 2024 Global Gender Gap Report, with strong female representation in firm ownership and management. However, female labor force participation remains low at 54.1 percent—compared to 75.5 percent for men—despite high educational attainment among women and declining fertility rates. This gap limits the country’s growth potential. The FY26–31 Country Gender Action Plan (CGAP, forthcoming) identifies four priorities: (i) promoting women’s economic participation by improving access to childcare, finance, digital tools, and skills; (ii) addressing reproductive health challenges, including teen pregnancy; (iii) tackling deep-rooted gender inequalities in BARMM; and (iv) strengthening women’s roles in the public sector through greater representation, gender-responsive procurement, and improved gender budgeting. 65. Across the program, there will also be a continued focus on addressing inequalities across regions and communities that have been negatively impacted by conflict, violence, and social exclusion. This approach will include a continued focus on improving service delivery in BARMM and other conflict- affected areas where the operating environment remains fragile. It also expands the inclusion agenda by focusing on disadvantaged communities such as indigenous peoples (IPs), many of whom live in geographically isolated areas. Convening and leveraging partnerships is a key strategy, including through platforms such as the Bangsamoro Normalization Multi-Donor Trust Fund (BNTF) that facilitates close collaboration with development partners active in the region. The application of Environment and Social Framework (ESF) will be enhanced in areas facing fragility to support the success of interventions, 19 particularly in the BARMM but also potentially some IP groups. 66. Climate actions are integrated across the CPF objectives, focusing on adaptation and resilience. WBG supports climate-resilient infrastructure, local climate action, adaptive social protection, energy efficiency initiatives, industry, transport and property decarbonization, greener financial market, while also promoting a transition towards renewable energy to reduce costs and increase energy security. All WBG financing operations will align with the Paris Agreement's goals. III. CPF IMPLEMENTATION A. Scope 67. The CPF will cover a 6-year period, allowing more time for project implementation and achieving meaningful results that support national development priorities. The CPF covers the period from July 2025 to June 2031 (FY26-31). This will allow the WBG to provide continued support for the government’s implementation of the current PDP. Presidential elections are scheduled for May 2028, and a new PDP is expected within the first year of the new administration. Discussions with the client government at this juncture will inform a decision whether to further extend the CPF or to prepare a new CPF, depending on the incoming administration’s development priorities. A Performance Learning Review (PLR) will be prepared if the CPF is extended or if, at any point during the duration of the CPF, need arises for adjustments of the outcome areas due to evolving priorities and major portfolio changes. 68. The WBG will provide an indicative US$22-23 billion in financing to implement the FY26-31 CPF. This resource envelope includes an indicative IBRD envelope of US$18 billion (see Annex 4 for FY26 and FY27 indicative lending) and an estimated US$4-5 billion in long-term IFC financing over the CPF period. Actual IBRD lending volumes, however, will depend on country demand, overall macroeconomic performance, global economic/financial developments which affect IBRD’s financial capacity, and demand by other Bank borrowers. Actual IFC financing volume will gradually ramp up over the CPF period but will depend on local demand and the potential for upstream engagements to convert into investments. WBG- GP housed in MIGA is exploring opportunities to support domestic and cross-border investment through its different products, including LCMF, trade finance and non-honoring guarantees. The deployment of guarantees, however, will depend on investor demand and pace of project development. 69. The World Bank has an active and growing financing portfolio, with a mix of instruments and supported by Advisory Services and Analytics (ASAs). The IBRD portfolio has grown from US$377.6 million in annual new commitments during FY18 to US$2.85 billion in FY25. Maximizing development impact, the average financing size per lending operation also increased during this period from US$189 million to US$458 million. The indicative IBRD lending envelope from FY26 to FY31 is estimated at US$3 billion per year, or US$18 billion over the duration of the CPF. The portfolio will utilize a strategic mix of instruments to support policy reforms and the implementation of priority development projects. Successful investment projects will be scaled up through additional financing or follow-on operations. New instruments - such as Program for Results (PforR) and Multiphase Programmatic Approach (MPA) programs (e.g. under the EAP region water and agriculture sector MPA) - will be introduced to expand the range of tools available to better support the Philippines. Trust funds will continue to play a catalytic role, with an expected recipient-executed grant volume of US$150-200 million, alongside US$20-30 million of Bank-executed trust funds. 70. IFC has a strong and growing program in the Philippines. This growth reflects a strong program delivery, which over the period totaled US$1.9 billion in new commitments. The program increasingly focuses on sustainability financing, including green, blue, and social bonds, as well as the banking sector, healthcare, sustainable/resilient real estate and transportation. Going forward, IFC will continue building 20 its program around eight priority areas with climate and digitalization as cross-cutting themes.2 IFC aims to ramp up its new commitments from around US$400-600 million per year in earlier years of the CPF to around US$1 billion in second half, or US$4-5 billion in total long-term financing for the CPF period, including mobilization. IFC also has a dynamic advisory program focused on financial inclusion, climate finance, digitalization, capital market development, PPPs, green and resilient buildings and cities, affordable and resilient housing, and reforms to promote private sector investment. A significant portion of IFC's advisory portfolio, standing at US$29.6 million as of December 2024, comprises upstream engagements with good potential for conversion into investments. 71. WBG-GP/MIGA currently has no active guarantees in the Philippines due to perceived low political risk, but it remains engaged with potential investors to mobilize foreign capital . WBG- GP/MIGA will collaborate with the World Bank and IFC to support renewable energy projects, for which there is considerable foreign investor interest. It is exploring support for micro-grid projects in remote areas, data center development, and transport infrastructure. Under the WBG Guarantee Platform, launched in FY25, various innovative guarantee products and solutions will be explored to address project and development challenges in different sectors, including LCMF, potential IBRD guarantees for PPP payments in the transport sector and MIGA’s full suite of guarantees such as non-commercial risk, trade finance, and non-honoring guarantees. B. Operationalizing the CPF One WBG Approach 72. The CPF aims to leverage the collective capabilities of the World Bank, IFC, and WBG-GP/MIGA to support development across sectors, particularly through PPPs. The World Bank and IFC have a track record of working together to apply public and private-sector solutions to support sectoral transformations (see Box 1). Sectors where joint work is underway include telecommunications, capital market development broadband, open finance, transportation, green buildings, affordable housing, and waste management. During this CPF, the focus will shift to developing joint upstream strategies on sectors where coordinated and complementary programs are needed, and seek opportunities in which the WBG- Box 1: Developing a Stronger Portfolio in the Philippines through the One WBG Approach The Bank and IFC have demonstrated how a joint approach can lead to greater impact. A joint engagement program in the telecommunications sector delivered technical assistance and financing that helped to significantly streamline tower building permit processes, increasing the number of towers from 23,000 in 2020 to 31,000 in 2022, and leading to the registration of 23 firms as Independent Tower Companies (ITC). This joint approach will continue through the implementation of existing initiatives. The joint “30 by 30 Zero” program scales up climate financing and supports capital markets development by supporting regulatory reforms and capacity building. Similarly, the WBG Joint Capital Market Program (J-CAP) continues building stronger, deeper and more efficient capital market in the country. A new WBG offshore wind (OSW) joint program will help accelerate the development of OSW energy, which is instrumental to reaching Philippines’ renewable energy expansion goals. This transformational initiative builds on strong WBG coordination, with each agency’s support based on their comparative advantage. The World Bank is supporting policy and regulatory reforms to create investment climate at the sector level through development policy financing and technical assistance. IFC is complementing such assistance through advisory services to government agencies, focusing on the first competitive selection (auction) of projects to be developed by the private sector. In parallel, IFC Upstream and operations will work with OSW developers to line up investments and help supply chain development. MIGA will support infrastructure development and potentially a de-risking facility. 2The eight priority areas are: (i) quality and affordable health and education, (ii) financial inclusion, (iii) deepening capital market, (iv) digital infrastructure, (v) energy transition, (vi) transport and logistics, (vii) water and waste, and (viii) property. 21 GP housed in MIGA can play a greater role. During the initial phase of the new CPF, the One WBG approach will focus on two joint programs: (i) offshore wind (OSW) energy; and (ii) joint capital markets. Knowledge and Learning Agenda 73. The WBG program will maintain a strong analytical agenda to inform policy decisions, shape operations, and track progress. This will be delivered through a mix of instruments, including standalone advisory services and analytics (ASAs), programmatic ASAs across key sectors, and just-in-time support. The knowledge agenda will align with government reform priorities and enhance the impact of WBG operations in the Philippines. Core country diagnostics will be regularly delivered and updated to identify key challenges, benchmark progress, and generate policy recommendations. These will be complemented by targeted sector-specific analyses to support both ongoing and emerging engagements. The World Bank aims to remain the government’s partner of first call for just-in-time research and policy advice. In parallel, the WBG will strengthen efforts to build client capacity for data collection and analysis to support evidence-based decision-making. 74. The country program will continue to bring global knowledge and best practices to the Philippines to strengthen intervention design and implementation. Expertise from WBG global practice groups—People, Prosperity, Planet, Infrastructure, and Digital—will offer cutting-edge knowledge, global insights, and capacity-building support through both direct support and the WBG Academy. A Knowledge Advisory Team (KAT) will help integrate global learning in the country program. For example, nutrition interventions in the Philippines draw on best practicises from World Bank programs in Indonesia, Lao PDR, Rwanda, and Peru. A new renewable energy engagement benefits from the Offshore Wind Development Program, an ESMAP-IFC initiative that shares global knowledge to support the inclusion of offshore wind in energy sector strategies. The disaster risk management engagement is informed by participation in global WBG knowledge sharing platforms such as the Understanding Risk community, an initiative of the Global Facility for Disaster Reduction and Recovery (GFDRR). Partnerships 75. The WBG will continue to work in close partnership with other development partners to provide coordinated financing for the Philippines’ development agenda. The WBG has a track record of impactful partnerships with development partners in the Philippines. For example, the World Bank and IFC worked with ADB to support the preparation of the Accelerating Coal Transition Investment Plan (ACT-IP) that received US$500 million in concessional funding from the Climate Investment Funds (CIF) to retire coal- fired power plants and develop renewable energy. Partnerships also help in aligning strategies and increasing investments, such as IFC’s partnership with the European Union (EU) to mobilize private capital for climate challenges. Under the new Full Mutual Reliance Framework (FMRF) the World Bank and ADB will deepen collaboration, potentially starting with projects for social protection and skills development. In addition, the World Bank convenes and hosts quarterly meetings with development partners for information sharing and coordination, focusing on sectors in which multiple partners are active (Table 3). 76. Knowledge partnerships help the World Bank produce cutting edge knowledge and to effectively engage in dialogue with the government and broader development community . The World Bank has a strong comparative advantage in analytics and global knowledge that informs both government policymaking and development partners’ investment strategies. Through trust funds, development partners help finance World Bank knowledge generation and sharing. The Australia - World Bank Growth and Prosperity in the Philippines (AGaP) Trust Fund finances analytic and advisory services to broadly support the government’s reform agenda. The Bangsamoro Normalization Trust Fund (BNTF) – supported by Australia, Canada, and the United Kingdom – also plays an important role in generating and sharing knowledge in BARMM. Partnerships with the Knowledge for Development Community (KDC) 22 and the CSO Advisory Group promote knowledge sharing within the Philippines across a wide range of stakeholders. These partnerships align with the new One WBG Partnership Charter. Table 3: Development Partner Engagement in CPF Sectors CPF Sectors ADB AIIB DFAT JICA Other Remarks Health and UNICEF is the implementing partner for the WB nutrition X X UNICEF Nutrition project. Complementary ADB-WB skills strategies. WFP is Education X X WFP implementing partner for school feeding in BARMM. EU co-financed the agriculture operation; FAO supported Private Sector X X X EU, FAO agriculture related technical work. Renewable Energy X X UK Aligned policy reform support. Transport X X AFD AFD co-financed Cebu-BRT. Digital X X X X Water X X X AIIB co-financed the Manila flood control project. Social Protection X X FAO, WFP Coordinated ADB-WB strategies supporting 4Ps. ADB, AFD and JICA coordinate on risk financing, policy Disaster Resilience X X X AFD matrices, and target sharing. AFD supports GeoRisk. JICA shares CAT DDO 4 targets. Scalability 77. The WBG’s engagement will focus on scaling up and replicating successful operations and collaborations by building on implementation experience and leveraging broad partnerships. A significant share of new IBRD commitments during the CPF period is expected to support these scale-ups, including follow-up lending operations and additional financing in areas such as agriculture, community- driven development, social safety nets, health and nutrition and private sector development. Simultaneously, new lending initiatives will pave the way for future scale-ups. For instance, the Health System Resilience Project is designed to expand LGU coverage in future phases, while the Accelerated Water Supply and Sanitation Project in Selected Areas includes activities to support feasibility studies for priority LGUs, laying the groundwork for subsequent investments. Strengthening partnerships and expanding co-financing arrangements will be essential for amplifying impacts. Key collaborations include joint efforts with IFC and ADB on energy transition and partnerships with ADB in the water sector, encompassing water supply and sanitation, flood control, and water resource management. Annual Business Planning 78. An annual WBG business planning process will provide flexibility to respond to new opportunities and adjust interventions and instrument mix as needed. Through this process, the three WBG institutions will review the status of the program and identify new opportunities for support and collaboration, in line with the CPF outcome areas or in response to shocks. This may include redirecting the program as priorities shift away from areas of low absorptive capacity, low demand, or where WBG financing is no longer needed. The process will follow a two-part approach. First, an annual portfolio review will be undertaken (June) to address implementation bottlenecks and draw lessons from the ongoing program. Second, bi-annual pipeline reviews (March and September) will take place to take stock of progress toward results, reassess risks, and adjust the program and pipeline to respond to emerging opportunities. Implementation Support and Capacity Building 79. While fiduciary oversight capacity in the Philippines has significantly improved, continued effort is needed to strengthen country systems in financial management and procurement. Following the 2016 23 Public Expenditure and Financial Accountability (PEFA) assessment, the government has pursued reforms, including the development of the Budget and Treasury Management System (BTMS) for integrated financial monitoring. A PEFA update was conducted in 2024 and the results will be released in 2025. The World Bank closely monitors financial management issues, follows up on project-related matters, and provides ongoing training to avoid delays in budget allocation, transactions, and disbursements. On procurement, the Methodology for Assessing Procurement Systems (MAPS) findings helped prioritize future reforms, with the World Bank supporting project-level procurement to address delays, capacity limitations, and contract management issues. Strengthening local PFM and procurement capacity, especially in BARMM, is critical to ensuring effective use of public resources at the local level. Spatial Targeting 80. The WBG will continue to address spatial disparities by prioritizing areas with high poverty and vulnerability. To support this effort, a WBG footprint map will be developed to monitor activities across the country. This map will be overlaid with a heatmap of key development outcomes, serving as a tool to identify future investment priorities. Insights from ongoing engagements in underserved regions and communities will inform future initiatives. Projects such as the Multisectoral Nutrition Project, Teacher Effectiveness and Competencies Enhancement Project, and Disaster Risk Financing programs have already demonstrated effective geographic and LGU-level targeting, focusing on the most affected municipalities and regions. Under this CPF, these inequality-reducing interventions will be scaled up to encompass lagging regions and enhance the capacity of local governments to implement programs effectively. Monitoring, Evaluation, and Accountability 81. The WBG will use select Scorecard indicators to track progress under the CPF, ensuring alignment with global standards and operational priorities. Indicators will be available through the World Bank’s Scorecard monitoring platform, including gender breakdowns. Additional beneficiary disaggregations – for indigenous peoples and other vulnerable groups – will be added where feasible. Geographic disaggregations, including the monitoring of regions like BARMM, will provide a more nuanced understanding of development impacts. Building on the household surveys and existing analytical tools, the WBG will help the government further strengthen data collection systems, analysis, monitoring, and evaluation to better assess, adapt, and deliver on development priorities. 82. The CPF will emphasize embedding citizen engagement and social accountability mechanisms across financing operations, highlighting beneficiary satisfaction and effective grievance redress systems. The WBG is committed to fostering active citizen engagement in all its investment projects, using participatory approaches to empower project beneficiaries and ensure their voices are heard in decision- making processes. Beneficiaries will be able to assess the quality and performance of services provided, while also providing valuable feedback to guide improvements in service delivery. Tools such as community scorecards, beneficiary satisfaction surveys, and inclusive consultation processes will ensure diverse representation, particularly of vulnerable and marginalized groups. Through these practices, the CPF aims to create more responsive and inclusive development initiatives that reflect the needs and aspirations of all stakeholders. IV. RISK MANAGEMENT 83. The overall level of residual risk to achieving the proposed program outcomes is assessed as Moderate. Using the WBG Systematic Operations Risk-Rating Tool (SORT), risks to achieving the CPF outcomes are determined to be the same since they were last assessed for the 2023 PLR. 84. Political and governance risk is assessed to be Substantial, considering the 2028 Presidential 24 election that may result in changes in policy direction. Presidential elections in 2028 coincide with the CPF midpoint. In the event that a new administration initiates major changes in policy direction and development priorities, the CPF may need adjustment. The external environment is characterized by geopolitical uncertainties that may increase protectionism and impact cross-border trade and investments. Policies remain stable currently but may shift alongside changes in the administration, with potential implications on relations with multilateral institutions such as the WBG. Risks of policy discontinuity will be mitigated by close engagement at the technical level and proactive initiatives such as policy notes and dialogue on key public policy issues that emerge during the government transition. 85. Macroeconomic risks are assessed to be Moderate, although subject to high uncertainty. The recent global trade policy shifts and increased global trade policy uncertainty are likely to have a negative effect on Philippines’ GDP growth through three channels: direct effects on demand for exports, uncertainty effects on demand for investment, and indirect effects on export and investment demand through lower global GDP growth. There are downside and upside risks to the forecast. On the downside, an escalation of global trade and investment fragmentation will affect global growth further, probably hitting domestic growth. Increased uncertainty could trigger instability in financial markets and capital flight. On the upside, the Philippines could benefit from improved margins of preference for key export products, and from lower global commodity prices. To mitigate these risks, the WBG will support the government in diversifying trade and investment risks, and in accelerating domestic reforms to reduce trade and investment costs. 86. Uneven levels of capacity across national and local government agencies can pose a substantial risk to achieving CPF outcomes. As the WBG’s engagement expands, multiple sources of implementation capacity risks emerge. First, some agencies do not have significant experience in implementing development projects and will require intensified implementation support and sufficient time to gain knowledge and experience. Second, some agencies often implement multiple large projects simultaneously, stretching staff capacity. To mitigate these risks, the WBG will need to diversify engagement modalities (e.g., TA vs. projects), prioritize operations taking into account capacity constraints, and aligning resources for critical capacity building activities. While LGUs play a critical role in delivering development programs, their implementation capacity varies significantly across the country, leading to budget allocation uncertainties and delayed project preparation and implementation. Short political cycles further hinder the development of sustained institutional capacity. To mitigate these risks, the World Bank will closely engage with LGU counterparts, particularly in lagging regions, and focus on governance projects and capacity-building initiatives to strengthen local implementation capabilities. Table 4: Systematic Operations Risk Rating Risk Categories Risk Rating 1. Political and Governance Substantial 2. Macroeconomic Moderate 3. Sector Strategies and Policies Moderate 4. Technical Design of Project or Program Moderate 5. Institutional Capacity for Implementation and Sustainability Substantial 6. Fiduciary Moderate 7. Environmental and Social Moderate 8. Stakeholders Moderate 9. Other Moderate OVERALL Moderate 25 Annex 1. CPF Results Framework CPF Outcome 1: Improved Access to Quality Health and Education WBG Results Indicator: Millions of people receiving quality health, nutrition, and population services Baseline (2024): 0 Target (2031): 19 WBG Results Indicator: Millions of students supported with better education Baseline (2024): 0 Target (2031): 15.3 Intervention Logic: Health outcomes trail regional peers for maternal mortality, immunization coverage, prevalence of non-communicable diseases, and childhood stunting. Out-of-pocket spending remains high while public health spending remains relatively low and fragmented. Childhood stunting rates remain high; 26.7 percent of Filipino children under five were stunted (2021), among the highest in EAP and globally. Learning poverty remains high, 91 percent of 10-year-olds unable to comprehend a simple text, while Filipino students scored below the global average in reading, mathematics, and science in the 2022 PISA assessment. Significant disparities persist across regions, with education and health outcomes worse in lagging areas, especially in BARMM. Engagement strategies and selected indicators to track progress towards this outcome include: 1.1: Millions of people receiving quality health, nutrition, and population services. The WBG will focus on strengthening the delivery of public and private health services to improve health and nutrition outcomes. The World Bank supports health and nutrition initiatives through investment financing, technical assistance, capacity building, and knowledge exchange. The World Bank also partners with the government to build institutional capacity, support Universal Health Care, and promote digital transformation. On the private sector side, IFC is providing investment and advisory to make healthcare more accessible and affordable. In coordination with the Bank, IFC’s upstream advisory is engaging in the development and strengthening of the vaccine supply chain in ASEAN by helping private firms develop bankable vaccine manufacturing projects. 1.2: Millions of students supported with better education. The World Bank supports initiatives to improve teacher effectiveness, enhance learning outcomes, and strengthen education service delivery, particularly in disadvantaged areas. Interventions will also strengthen school-based management and local capacity in education service delivery. IFC complements these efforts through investments in private education at the tertiary level. Analytical and advisory services will support sector reforms and learning capacity, including ongoing support to the Second Congressional Commission on Education. Lessons Learned and New Knowledge: After a decade of no lending in the health sector, COVID-19 led to a strong and rapid re-engagement, primarily through the Philippines COVID-19 Emergency Response Project (PCERP) and two additional financing operations, which together supported the government’s vaccine program and helped build surge capacity in emergency response. The WB published a report on nutrition which highlighted the scale of the childhood stunting crisis and the urgency of addressing it through a c omprehensive multisectoral approach. Due to the Bank’s responsive action to the needs of the government at the height of the pandemic, there is now a strong relationship in the areas of health and nutrition. Analytical inputs for EDCOM2 provided greater insight into the critical challenges observed in the sector. Managing a close and collaborative relationship with counterparts and policymakers can enhance the impact of WB advice. There are other development partners supporting education in the country, and the WB will maintain dialogue and cooperate with them (e.g., with UNICEF to jointly implement a grant aimed at enhancing DepEd’s institutional capacity in 2024 -2026) to ensure alignment and avoid replication of efforts. 26 Ongoing WBG Support Planned WBG Support The World Bank supports health and nutrition initiatives through investment financing, While the engagement on nutrition will continue, the portfolio will technical assistance, capacity building, and knowledge exchange. Ongoing private focus more on health outcomes by strengthening the health sector engagements led by IFC include assistance to develop a greenfield cancer care system. There will be a strong focus on reaching disadvantaged center and the cross-border expansion of a leading healthcare third-party areas and population groups. administrator (TPA) for medical claims in Southeast Asia. Current World Bank education projects aim to improve teaching quality in disadvantaged areas. IFC will The Project for Learning Upgrade Support focuses on enhancing lead in support for private education and skills training providers. This includes student learning outcomes, including those out of school. A post- supporting the transformation of higher education institutions to make quality secondary skills project is also being conceptualized to improve education more accessible and help students develop skills for the labor market. skills access and quality, with advisory support provided to the 2nd Congressional Commission on Education (EDCOM2) since 2024. IBRD Financing Philippine Multisectoral Nutrition Project (PMNP, P175493) IBRD Financing Pipeline Teacher Effectiveness and Competencies Enhancement Project (TEACEP, P164765) Health System Resilience Project (HSRP, P503763) No Bangsamoro Child Left Behind (JSDF Grant P176749) Scale Up Multi-sectoral Nutrition Program (FY27) Project for Learning Upgrade Support and Decentralization (PLUS-D, WB ASA P503991) Strengthening Local Health Systems for Universal Health Care (P175650) Skills Development Project (FY26) Train More and Better: Improving Access and Quality of Skills in the Philippines (TECEP, P500664) Philippines Education PASA (P506958) WB ASA Pipeline Philippines Poverty and Equity Assessment (P500812) Health and Nutrition PASA Mindanao Peace and Development (P506593) IFC Pipeline and Leads IFC Active Investment Portfolio MAS Asia Medical Education Seed (606426, multi-country) Ayala Corp Social Bond (44252) Potential investment opportunities in healthcare services. MiCare Healthtech Holdings (48749) Potential sector-level advisory project focused on medical TCG Holdings (35471) equipment and vaccine provision Potential employability advisory in digital education IFC Advisory Portfolio MAS Asia Medical Education Seed (606426, multi-country); possible Philippine General Hospital Cancer Facility PPP (602320) investment support to private sector players in the education D4TEP (607998, multi-country project on digital transformation of higher education) sector. Cross-cutting: Efficient Public Sector. Developing a national digitalization strategy for education, establishing an online teaching and learning hub, building regional and local government capacity in service delivery, and strengthening accountability systems to improve health and education services quality. 27 CPF Outcome 2: More Private Sector Jobs WBG Results Indicator: Millions of new or better jobs Baseline (2024): 0 Target (2031): 4 WBG Results Indicator: Millions of people using broadband internet Baseline (2024): 0 Target (2031): 19.3 WBG Results Indicator: US$ billion in total private capital enabled or mobilized Baseline: 0 Target (2031): 2 Intervention Logic: Median incomes in the Philippines remain low despite recent rapid and inclusive growth. Although a structural transformation has shifted labor to nonfarm and wage employment, informal and low-productivity employment remains widespread, resulting in relatively low incomes. In 2021, the median total household per capita real income was only 70 percent higher than the national poverty line. The slow business dynamism of frontier firms impedes productivity growth and high-wage job creation. As they get older, Philippine firms struggle to grow bigger, even if investing in innovation boosts their productivity, and technology helps service firms. Combining competition reforms for increased productivity, with openness reforms for increased scale is crucial for growth to be job rich. Boosting productivity through regulatory streamlining, connecting domestic firms to globally value chains and encouraging technology adoption is crucial for sustainable job creation and growth in the Philippines. Reforms and interventions are needed to increase incentives for firm creation, technology adoption and innovation and connections to global markets. Limited financial development is constraining growth. The Philippines faces significant challenges in critical infrastructure, which not only increase the cost of doing business but also limit access to markets, reduce regional integration, and constrain overall economic potential. The Philippines lags regional neighbors in digital connectivity and fixed broadband costs remain high, creating a digital divide that is significant and rapidly widening. Engagement strategies and selected indicators to track progress towards this outcome include: 2.1: Millions of new or better jobs. To contribute to the creation of new and better jobs, the WBG will focus on increasing the productivity of firms and farms, through more competition (regulatory streamlining), technology adoption, and connection to (global) markets, to create opportunities and absorb excess labor from agriculture. In turn, agriculture and related agribusiness value chains will be one of the key sectors targeted due to low productivity, accounting for 22 percent of employment but only 9.4 percent of GDP in 2023. The World Bank will enhance agricultural productivity by introducing advanced technologies, promoting agriculture diversification and sustainable farming practices, and creating strong market linkages. MIGA will aim to mobilize FDI in various sectors through its risk-mitigation solutions to facilitate the adoption of new technologies. 2.2: Millions of people using broadband internet. The World Bank supports foundational reforms to promote competition and investment by the private sector to deliver commercially viable digital infrastructure. This complements ongoing public investments addressing connectivity gaps in remote and disadvantaged areas. IFC will focus on developing digital infrastructure (including towers, data centers, broadband) through PPP advisory and potential investments. MIGA is exploring options to support the development of data centers in the country. 2.3: Billions (US$) in total private capital enabled or mobilized. WBG interventions will help deepen the capital market in the country. IFC will keep strengthening capital markets, financial resilience, and innovation by investing in venture capital and supporting startups, driving entrepreneurship and jobs. The World Bank will help improve the regulatory framework and WBG-GP/MIGA will mitigate public sector and political risks. With the World Bank and MIGA, IFC will continue leading in sustainability bonds and green financing, aligning businesses with global trends. IFC will also continue supporting innovative 28 financing like embedded finance and decarbonization/greening the supply chain solutions, boosting market liquidity and competitiveness. IFC will also continue collaborating with local banks to improve risk management, supporting a dynamic private sector. Lessons Learned and New Knowledge: Several completed and ongoing diagnostics and technical assistance such as the Growth and Jobs report, the Poverty and Equity Assessment, programmatic ASA in productivity and innovation, and the financial sector engagement have provided key knowledge underpinnings for this engagement. Direct engagement in the agriculture, fishery, and other sectors enables the WBG to gain significant sector-specific knowledge and operational experience. Several completed and ongoing diagnostics and technical assistance such as the Growth and Jobs report, programmatic ASA in productivity and innovation, and the financial sector engagement have provided key knowledge underpinnings for this engagement. Direct engagement in the agriculture, fishery, and other sectors enables the WBG to gain significant sector-specific knowledge and operational experience. Ongoing WBG Support Planned WBG Support IBRD Financing: The focus on improving agricultural productivity and incomes will Sustainable Recovery DPL 2 (P180336) increase during this CPF period, supporting the government’s four- Philippine Rural Development Additional Financing 2 (P169025) year plan “Para Sa Masaganang Bagong Pilipinas 2024-2027” (MBP, Philippine Rural Development Project Scale-Up (P180379) translated as “For a Prosperous New Philippines”). Operations will Philippine Fisheries and Coastal Resiliency Project (FishCORE P174137) support specific actions to develop the agri-fishery sectors as BNTF Bangsamoro Camps Transformation Project (P180320) profitable industries for farmers, fisherfolk and all stakeholders Mindanao Inclusive Agriculture Development Project (MIADP, P173866) involved in the value chain. Additionally, new operations are Philippines Second Digital Transformation DPL (P181127) planned to foster innovation and SME growth through improved Philippines Digital Infrastructure Project (P176317) access to finance. Cebu Bus Rapid Transit (P119343) Mindanao Transport Connectivity Improvement Project (P177017) Renewable energy is a promising area and preparatory work is underway to prepare a WBG joint initiative to support offshore IBRD ASA: wind energy development. Philippines Growth and Jobs report (P501984) Poverty and Equity Assessment (P179622) IBRD Financing Pipeline: Financial sector PASA (P507213) Growth DPL (FY26 and FY27) Philippines Productivity and Innovation PASA (P506010) Philippines Sustainable Agricultural Transformation Program Protect and Invest in the Filipino Workforce (P509141) (P507504, FY26) Support to Local PPP Program (P501033) MSME Access to Finance and Resilience (FY27) Resilient Port and Maritime Connectivity for the Philippines (P500537) SME Upgrading (FY27+) Philippines Urban Mobility Improvement (P180179) Irrigation (FY27+) Philippines Digital Development PASA (P502027) First Energy Transition and Climate Resilience DPL (P181389) Philippines Water Sector Engagement (P500726) Accelerated Water and Sanitation Project in Selected Areas (FY26) BNTF Roads to Development (R2D) IFC Active Investment Portfolio: 29 Asia Link (45749) IBRD ASA Pipeline: Bank of Philippine Islands (47671) Public Finance Review (P507582, FY26) BDO Unibank (40419, 46151) Philippines Decentralization and Public Service Modernization PASA Sierra Madre I (38633) (P508897, FY26) Navegar Fund I and II (32663, 42102) Philippines Energy Transition Support PASA EdgePoint (46882) E-Mobility Technical Assistance City Savings Bank (46172) Energy Transition Technical Assistance Program (RETF) Rizal Commercial Banking Corp (30235) Decarbonized Ferry Pilot Study Union Bank of the Philippines (44900) MAA General Assurance Philippines Inc (47578, 49476) IFC Pipeline and Leads: Voyager Innovations (40681, 44085, 46760) Potential investment in agribusinesses and supply chain Growsari (46169) development; potential upstream and mainstream advisory to Wavemaker (50338, 50380) develop agri-finance; potential investment and advisory to deepen First Circle (43071) financial markets and improve access to finance for underserved Salmon Group (49084, 50377) segments. Esquire Finance (44138) Energy Development Corp. (26529, 29404, 39842) EDSA Busway/BRT (609501) Communication and Renewable Energy Infrastructure (CREI) Phils. Inc. (46171) Cebu BRT PPP Component (609492) Cebu Pacific (44179) Manila LRT Line 5 Potential upstream and mainstream advisory engagements in IFC Advisory/Upstream Portfolio renewable energy, E-Mobility and transport Joint Capital Markets Program Philippines (608069) Philippine Movables Finance Market Development (607537) Philippine’s 30by30 zero program (606287) - Regulatory and Capital Markets Development Philippines Plastic Recycling (607829) Philippines Affordable Housing (608100) BANKO Risk Management, Digital Microfinance and Gender Advisory (605745) Esquire Financing Risk Management and Gender Advisory (606175) Philippines Open Finance (607048) UBX Open Finance Lending (608760) Unionbank Digital Bank Build (606342) Digital Enabled Sustainable MSME Finance (609266) Philippine Movables Finance Market Development (607537) Mortgage-backed Securitization and Green Housing in Philippines (608981) IFC PPP Advisory in transport, healthcare (607694, 607696, 602320, 607868, 607897, 608812, 608841, 609055) First Balfour (607408)Air Navigation Services (607868) 30 Manila LRT2 PPP Project (607897) Philippine Iloilo Airport PPP (608841) Philippine Bohol Airport (607694) Philippine Laguindingan Airport (607696) Davao International Airport (609055) Air navigation services (607868) New Cebu International Container Port (608812) Dumaguete Airport (xx) Siargao Airport (xx) Cross-cutting: Efficient Public Sector. Improve evidence-based policymaking, public spending effectiveness and public administration efficiency through increased regulatory capacity, improved government-to-business and government-to-consumer services. Local government capacity building through partnership with the Department of the Interior and Local Government (DILG) for the agriculture sector. Institutional and regulatory reforms to scale-up of private investments in clean energy, connectivity and infrastructure asset resilience. Strengthen the capacity of sector institutions for energy transition. 31 CPF Outcome 3: Stronger Socioeconomic Resilience WBG Results Indicator: Millions of beneficiaries of social safety net programs Baseline (2024): 0 Target (2031): 12.5 WBG Results Indicator: Millions of people with enhanced resilience to climate risks Baseline (2024): 0 Target (2031): 13 Intervention Logic: The Philippines is vulnerable to many forms of natural and climate hazards such as typhoons, floods, volcanic eruptions, and earthquakes, the frequency and intensity of which is exacerbated by climate change. Without intervention, disasters and climate change will impose substantial economic and human costs, disproportionately affecting the poorest households. The WBG will build resilience by strengthening the social safety net, strengthening emergency preparedness and response capacity, and improving food security. Engagement strategies and selected indicators to track progress towards this outcome include: 3.1: Millions of beneficiaries of social safety net programs. Social assistance plays a critical role in disaster response by providing immediate financial assistance, food, and support to affected households in the Philippines. The World Bank will build on its past work in this sector, especially the Pantawid Pamilyang Pilipino Program (4Ps), and promote reforms to increase program effectiveness, expand coverage, and strengthen graduation support. To boost disaster risk management, efforts will focus on improving beneficiary targeting through a dynamic social registry and expanding adaptive social protection with tools like insurance and emergency cash transfers. 3.2: Millions of people with enhanced resilience to climate risks. The World Bank continues to support the national and local governments in the Philippines to improve emergency preparedness and response capacities, focusing on schools, health facilities, land-use planning, and urban design. The World Bank will also introduce measures to anticipate low-frequency high-impact events such as floods and earthquakes. The new Crisis Preparedness and Response Toolkit will allow for scaling up disaster risk financing. IFC supports climate resilience via insurance products and drought insurance for smallholder farmers. The WBG is enhancing the resilience of buildings, both public and private, to climate hazards through the Building Resilience Index, IFC’s resilient building design and construction program, launched by the Philippines. MIGA explores risk-mitigation solutions to support disaster-resilient investments. Lessons Learned and New Knowledge: The World Bank’s sustained DRM support has helped the country to continue to strengthen its DRM system, building on the country’s accomplishments, experiences, and lessons from previous disasters. Support has evolved from a program that supports policy reforms at the national level to reforms at the sector and local levels. Development policy financing through the Cat DDOs is complemented by investment financing (e.g., PSRRRP, ISRS, etc.) and further by the Crisis Preparedness and Response Toolkit that allows the country to better respond to crises and prepare for future shocks. The PlanSmart Ready to Rebuild Program enhances the capacity of national and local governments, through a risk-informed and digital planning platform to better prepare for and recover faster from disasters and climate risks even before it happens. It serves as an effective platform of engagement across levels of government, enhancing collaboration and capacity-building for local governments and relevant national government agencies. Ongoing WBG Support Planned WBG Support The WBG will scale up successful social protection and community IBRD Financing: development projects to continuously strengthen socioeconomic and Beneficiaries First Social Protection Project (BFIRST, P174066) community resilience. Additionally, there will be increased investment Philippines Second Sustainable Recovery DPL (P180336) in sustainable and climate-smart agriculture, disaster and Metro Manila Flood Management Project (P153814) 32 Philippine Seismic Risk and Resilience Project (P171419) environmental risk reduction programs to enhance the Philippines' Infrastructure for Safe and Resilient Schools Project (ISRS P180936) resilience to climate change and environmental degradation. Disaster Risk Management and Climate DPL with CAT-DDO (P180585) Support to Parcelization of Lands for Individual Titling (SPLIT) Project (P172399) IBRD Financing Pipeline: Social Protection for Early Intervention, Economic Inclusion, and WB ASA: Digital Innovation (SPEED, P509079, FY26) Strengthening Support for the Philippine Pantawid Program and Social Protection Philippine Community Resilience Project (PAGKILOS, P506594, FY26) Systems (P181138) Philippines Sustainable Agricultural Transformation Program Strengthening Local Government Finance and Development to Build Urban Resilience (P507504, FY26) Resilient Philippines (financed by the Pandemic Fund in the Philippines (P502877) as AF to PRDP SU and HSRP) Transformation of the Agri-Food System in the Philippines (P500759) Philippines Solid Waste Management and Plastic Improvement Aligning Climate Change and Development in the Philippines (P179219) Project (FY27) TA for Preventing Pandemic Risks in East Asia and Pacific (P178997) Reducing air and water pollution (FY27+) Enhancing Irrigation Climate Resilience in the Philippines (P507009) Supporting Plastics Circularity and Blue Economy in the Philippines, Thailand and WB ASA Pipeline: Malaysia (P176923) Building Efficiency Technical Assistance Philippines Poverty and Inclusion (P507535) IFC Pipeline and Leads IFC Active Investment Portfolio Opportunities in green and resilient commercial and residential real Ayala Land (49225) estate MAA General Assurance Philippines Inc (47578, 49476) Philippines Enabling Green for decarbonization of select industrial sectors (607409) IFC Advisory Portfolio Developing Green Affordable Housing Debt Fund 30 by 30 Zero Philippines [606287, incl. sub-projects: Climate Smart Agriculture SteelAsia Decarbonization (609578) Project (CARD SME Bank); Drought Insurance Project (CARD Pioneer); CARD-Pioneer EAP Cities I (605019, EAP multi-country umbrella) Drought Insurance; Security Bank Climate Advisory; CARD Climate Smart Agriculture; Bank of the Philippine Islands Climate Risk Advisory] MIGA will explore risk-mitigation solutions to support cross-border BRI Philippines and Pacific Islands (608080) investment projects that build resilience. Green Buildings Philippines (607219) Philippines Plastic Recycling (607829) Plastic Footprint Reduction with Universal Robina Corporation (608152) Mortgage-backed Securitization and Green Housing in Philippines (608981) Cross-cutting: Efficient Public Sector. Digitizing and streamlining 4Ps business processes, workflows, and payment systems; supporting digital platforms to generate risk-informed and data-driven sectoral and sub-national plans and asset management; improving LGU capacity to integrate disaster risk in spatial and budget planning. 33 Annex 2. Systematic Country Diagnostic Update Summary 1. The Systematic Country Diagnostic (SCD) Update reviews current challenges and opportunities for poverty reduction and shared prosperity in the Philippines. This Update considers socio-economic changes, revises constraints, and identifies new opportunities since the 2019 SCD. It serves as a key input for the World Bank Group's Country Partnership Framework (CPF) for the Philippines from 2025-2029. Country Context and Economic Outlook 2. The Philippines has made significant progress in economic growth and poverty reduction, but the COVID-19 pandemic caused a severe economic downturn in 2020. Average annual GDP growth was 6.6 percent from 2015 to 2019. This growth led to a reduction in the national poverty rate from 23.5 percent in 2015 to 16.7 percent in 2018. Services and industry were key contributors to GDP growth during this period, while agriculture lagged. However, the pandemic caused a GDP contraction of 9.5 percent in 2020. Poverty increased to 18.1 percent in 2021, and the pandemic exposed structural weaknesses in health, education, and social assistance systems. Despite a robust rebound in 2021-2022, growth tapered off to below 5.6 percent in 2023. 3. While the post-pandemic recovery is underway, the pandemic had a persistent impact on incomes and poverty. The post-pandemic recovery in the Philippines has demonstrated resilience, driven by services, industry, and household consumption. Tourism and MSMEs have rebounded significantly, though the number of large enterprises and job quality remain below pre-pandemic levels. While poverty reduction has resumed, it remains higher than before the pandemic, and the long-term impacts on human capital development, including food security and learning losses, are concerning. The growth model is still dominated by low-end services, which continue to constitute the largest share of GDP growth and employment. 4. The Philippines aims to achieve UMIC status within a few years, yet accelerating efforts to improve its socio-economic development indicators is imperative. Socio-economic indicators surpass LMIC averages but fall short of UMIC standards. GNI per capita is half of UMIC's average, despite higher growth rates. The poverty rate was 17.8 percent in 2021 at $3.65/day (2017 PPP) but rose to 55.3 percent using the UMIC threshold of $6.85/day. Education and health indicators also lag behind UMIC levels. Low educational outcomes and nutritional deficiencies hinder human capital, exacerbated by the pandemic. The income Gini coefficient dropped to 40.7 percent in 2021, comparable to Malaysia and lower than Thailand, but it remains high relative to LMIC and UMIC medians. While peacebuilding efforts reduced poverty in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) in 2021, further effort is required for sustained stability. 5. The Philippines is highly vulnerable to disasters and climate risks, with over 60 percent of its land and population at risk from hazards like cyclones, floods, and earthquakes. Without intervention, disasters and climate change will impose substantial economic and human costs, disproportionately affecting the poorest households. Climate change exacerbates these threats, with around 83 percent of the population exposed to, vulnerable to, or at high risk from extreme and slow onset climate events, jeopardizing food security and public safety. Economic losses could be substantial, potentially reducing GDP by up to 13.6 percent by 2040, affecting all sectors, especially capital-intensive industries and agriculture. 34 Proposed Development Priorities for the Philippines 6. While the development challenges identified in the 2019 SCD remain valid, this update adds a new focus on resilience, decarbonization, and new cross-cutting areas. Despite progress, many constraints identified in the 2019 SCD still hinder the Philippines' development goals and could worsen due to global economic and climate changes. This Update maintains the previous SCD's conceptual framework, describes the evolution of structural conditions, and proposes a revised set of development priorities for the next five years. It introduces digital transformation and efficient local service delivery as new cross-cutting areas and is aligned with the World Bank Group's updated mission and the Philippines Development Plan 2023-28. 7. The SCD update proposes nine development priorities in three thematic areas and two cross- cutting areas. This is an analysis of the key development challenges and opportunities. The priorities have been selected from a long list of development opportunities based on their expected impact on the World Bank Group’s triple goals to reduce extreme poverty and boost shared prosperity on a livable planet, complementarities with other opportunities, alignment with government priorities, and time for reforms to achieve results. Thematic Area 1: Deepen inclusive growth and enable job creation 8. Despite recent high and pro-poor growth, income levels on average remain low, as indicated by the relatively high prosperity gap indicator. More efforts are needed to improve access for women, youth, and underprivileged regions to more and better employment opportunities, leading to higher incomes. This requires accelerating inclusive growth and better-quality job creation through infrastructure investments, enhancements to the business environment, and maintaining macroeconomic stability. Thematic Area 1 Priorities 1) Enable investment and innovation 2) Enhance infrastructure and financial sector development 3) Increase agricultural productivity and promote resilience and sustainability in the agri-food sector 9. The main areas for improvement include easing regulations on key services like transport, telecoms, and professional services to encourage competition and promote investment in skills and technology adoption. Crucial investments in digital and managerial skills should be supported by industry- led training. Firms need aid in adapting to external shocks through technology and systems. Reducing trade and investment costs via trade agreements and customs modernization will boost knowledge spillovers and investment linkages. Innovations in flood management, energy efficiency, and clean production standards will enhance competitiveness. 10. To address the infrastructure gap there are significant opportunities to attract private investment. This requires upgrading the regulatory framework for infrastructure projects, utilizing the recently approved PPP Code, and promoting local-level PPPs in sectors such as affordable housing, solid waste management, and energy efficiency. Additionally, the private sector investment in the energy, transport, and water sectors can be attracted by focusing on enhancing regulatory reforms, improving water project financial viability, and supporting modernization efforts, such as implementing further the 35 renewable energy sector liberalization, Public Utility Vehicle Modernization, and the Electric Vehicle Industrial Development Act. These efforts aim to boost connectivity, food security, sustainability, and overall economic growth. 11. There are several reform areas to deepen financial development. It is important to expedite legal reforms to reduce risks in the financial sector, such as amendments to bank secrecy laws and effective implementation of anti-money laundering legislation. The authorities should develop digital infrastructure and payments, expand MSME finance access, and deepen capital markets by passing the Passive Income and Financial Intermediary Taxation Act (PIFITA). Unlocking finance for innovation through increased funding and improved regulations, along with the new sustainable finance taxonomy, will also be crucial. 12. To improve incomes and inclusion in sectors and areas with high poverty, it is important to increase agriculture productivity and a resilient and sustainable agri-food sector. Boost resilience, sustainability, competitiveness, and emissions reduction in the agriculture and fisheries sectors. This involves aligning public expenditure with these goals, shifting to area-based planning, and focusing on underfunded public goods. The central government should influence LGU spending priorities and support private sector agribusiness development. Promoting improved agronomy practices, such as climate- resilient seed varieties, soil health improvement, balanced fertilizer use, and digital agriculture technologies, will lower GHG emissions and improve rice production. Investments in irrigation modernization and post-production operations will also enhance competitiveness. Adopting sustainable technologies will enable farmers to achieve better prices in domestic and international markets. Thematic Area 2: Boost human capital to harness the demographic dividend 13. The Philippines needs to strengthen its human capital and skill base to foster innovation and productivity growth essential for creating more and better jobs and preparing for the future of work. Thematic Area 2 Priorities 4) Strengthen foundational learning and enhance conditions for improving education quality at all stages 5) Ensure comprehensive health and nutrition investment by improving access to quality, affordable primary health care and expanding high-impact multisectoral interventions 14. Strengthen foundational learning and enhance conditions for improving education quality at all stages. Policies could focus on: (1) investing smartly and early by expanding access to Early Childhood Care and Development (ECCD) programs for all children; (2) accelerating learning recovery in basic education; (3) promoting equitable access to higher education; and (4) improving the quality and relevance of Technical and Vocational Education and Training (TVET) and higher education to better meet the skills needs of the labor market. 15. Ensure comprehensive health and nutrition investment by improving access to quality, affordable primary health care and expanding high-impact multisectoral interventions. This entails increasing the public health budget and allocating it more to primary healthcare (PHC), building PHC facilities and setting quality standards, and comprehensive health financing reforms. For nutrition, it entails strengthening coordination and oversight of multisectoral programs, strengthening the delivery of 36 quality high-impact nutrition interventions with a focus on local level implementation, and enhancing convergence of services at the community and individual level. Thematic Area 3: Build a greener, more resilient, and low-carbon economy 16. The frequency and intensity of disasters and slow-onset events are increasing, and the country needs an added boost on resilience (people, ecosystems, and infrastructure). There are also opportunities for advancing mitigation efforts that offer co-benefits like energy transition, urban mobility, better air and water quality, climate resilient agriculture and low carbon cities. Thematic Area 3 Priorities 6) Ensure water security 7) Support front-line climate action and better managed ecosystems 17. To improve water security, it is crucial to enhance both natural and built systems such as forest- enabled watersheds and urban water supply and sanitation. This involves operationalizing integrated river basin management plans, managing water losses in distribution systems in urban centers, supporting the sustainable operations of water and sanitation service providers, and considering a mix of solutions like decentralized sewerage systems and fecal sludge management. Integrated water management systems aligning with climate change actions are essential for water-secure cities. 18. Support front-line climate action and better managed ecosystems. This entails strengthening local government units (LGUs) and empowering local and indigenous communities in climate action by enhancing service delivery, climate resilience, and inclusive planning. Improvements in forest management, biodiversity, and natural ecosystems through nature-based solutions and afforestation can significantly aid climate mitigation and adaptation. Prioritizing biodiversity, enhancing habitat restoration, and integrating natural capital accounting can lead to more effective management and sustainable economic benefits. Cross-Cutting Priorities 19. Two cross-cutting areas are priorities by themselves as they underpin the achievement of the other development opportunities. 20. Despite three decades since the enactment of the 1991 Local Government Code, service delivery has not reached its full potential. However, targeted and ambitious reforms of Local Government Units (LGUs) could be pivotal in overcoming growth challenges, building human capital, and addressing spatial inequality. As the first point of contact between citizens and government services, local authorities face unique challenges that can either hinder or enhance the distribution of resources. LGUs are well- positioned to help reduce infrastructure disparities, take decisive action on climate change, and facilitate investments that create jobs. 21. Digitalization is a cornerstone for inclusive growth, jobs, human capital and resilience. The Philippines however experiences problems with the quality and depth of digitalization and with a growing digital divide. Broadband infrastructure is poor and inadequate, constraining people and firms’ digital potentials. Government digitalization is slow and siloed. Deepening of digital financial services is behind, and the dynamism of the digital ecosystem is lower than in comparable economies. 37 Cross-Cutting Priorities 8) Make local government service delivery more efficient 9) Support front-line climate action and better managed ecosystems 22. Given the increasingly important role that the LGU are playing in the delivery of key services, making it more efficient will have an impact on all three Thematic Areas. For example, addressing regional resource disparities and regional inequality through fiscal transfers reform can help broaden access to education services, improving transparency and accountability will improve the quality of services and positively impact human capital and skills. 23. Facilitate an inclusive and safe digital transformation for all. There are four elements in this priority: 1) addressing domestic broadband infrastructure gaps and becoming a regional connectivity hub; 2) supporting the government’s digital transformation will have an impact especially on the business climate and contribute to growth and job creation; 3) enhancing financial inclusion will have an impact mainly on social services including social protection delivery (human capital); and 4) supporting the growth of digitally enabled businesses. 38 Annex 3. Stakeholder Consultations Summary 1. Extensive consultations were conducted during preparations for the Philippines WBG Country Partnership Framework (CPF). Ten consultation meetings took place from August through September 2024 in Metro Manila, Mindanao, Visayas, and Luzon, collecting inputs from over 300 participants of various stakeholder groups. These included representatives from national, regional, and local government units (LGUs), civil society organizations (CSOs), the private sector, academia, development partners (DPs), and youth groups. The consultation process was publicized and documented on a dedicated consultation website that extended a public invitation to submit written comments. 2. Consultation meetings discussed the relevance of the proposed CPF with national and regional priorities and how the WBG could best support the Philippines’ development agenda. Most meetings began with a presentation summarizing key development challenges in the Philippines and the proposed outcome areas. Regional consultations highlighted local development challenges using subnational data and analysis. Stakeholder inputs were collected through a combination of plenary and small group discussions facilitated by Bank staff. Summaries of the feedback received from each meeting were posted online and supported the preparation and finalization of the CPF. 3. Overall, there was broad support for the strategic direction of the new CPF. Stakeholders broadly agreed with the proposed CPF outcomes and cross-cutting solutions. Government economic oversight agencies found broad alignment between the Philippines’ development goals and the CPF. Leveraging private sector investment is crucial, and instruments like Public-Private Partnerships (PPPs) should be used where possible. Local governments welcomed greater WBG support, particularly in agriculture, clean energy, water and sanitation, fisheries and marine coastal resource management. Across all meetings, participants expressed strong endorsement for expanding existing support to agriculture and food security, raising education quality, addressing stunting, digital connectivity, and strengthening the public sector. In addition to financing, stakeholders valued the role of the WBG in generating knowledge, supporting partnerships, and strengthening interagency coordination. 4. Job-Rich Growth. Stakeholders across meetings highlighted the need for employment generation (including green jobs) through business regulatory reforms, support for start-ups and MSMEs, agricultural modernization, access to finance, and reducing logistic costs. The private sector agreed that there is a need to improve the investment climate through enhanced policy effectiveness and reduced regulatory inefficiencies, addressing high costs and inefficiencies in the energy and water sectors, supporting startups, and enhancing digital infrastructure and access. Development partnership identified key support areas including infrastructure development to boost trade and economic competitiveness, enhancing agricultural productivity, and streamlining business registration. BARMM stakeholders stressed that priorities for the agriculture sector include sustainable agrarian reform, modernization, and human resource development. Inclusive finance, especially Islamic finance, is vital for MSMEs, farmers, and fishers. 5. Improving Human Capital. There was broad support for a strong engagement on human capital and addressing stunting. Participants flagged the need for work on water and sanitation, education and workforce upskilling, and social protection programs for informal workers. Development partners stressed that strengthening human capital is vital, specifically through a holistic approach to public health, healthcare funds monitoring, and food security. Education efforts should enhance collaboration between relevant national government agencies, address learning losses, improve school infrastructure, and 39 strengthen skillsets for both students and teachers. Skills development is necessary to allow the youth access to employment opportunities in wage work, especially in BARMM. Private sector participants expressed that their capacity should be leveraged in the reskilling and upskilling of workers. 6. Strengthening Resilience. The importance of disaster response and management and building climate resilience was raised in many consultations. Some argued for an integrated approach to resilience that encompasses climate change, public health emergencies, national security, inclusion, conflict, and peacebuilding. Vulnerability assessments and project convergence in vulnerable areas are essential. In some regions, participants thought that social and environmental safeguards are needed protect Indigenous Peoples' rights. There was a strong emphasis on improving access to basic services in poor and remote areas, with a strong focus on BARMM. 7. Climate Change, Renewable Energy and Environment. Stakeholders supported a focus on climate finance, renewable and clean energy, watershed rehabilitation, and environmental protection. CSOs focusing on environment and climate change stated that long-term planning, coordination, and appropriate infrastructure are needed to build climate resilience. Adaptation measures should consider slow-onset events that have serious impacts on communities. Moreover, local governments require capacity building on just transition, with particular attention to the equitable phaseout of fossil fuels and the protection of workers' rights amid anticipated down-sizing. Some advocated for microplastic regulations, environmental impact assessment, and the need for more data analysis. The private sector highlighted issues related to high costs and inefficiencies in the energy and water sectors. 8. Cross-Cutting Solution: Strengthening the Public Sector. National and local government participants highlighted the need to continue strengthening institutions, improving regulatory inefficiencies, investing in the capacity-building of local government units to improve delivery of services, and supporting the government’s full devolution implementation in the face of resource limitations. Many placed a strong emphasis on strengthening local government capacity, especially in lagging areas, with a focus on improving service delivery in areas such as healthcare, social services, infrastructure, sustainable tourism, disaster response, water supply and sanitation, waste management, and revenue generation. Capacity building for BARMM ministries and local governments was considered to be especially crucial. 9. Cross-Cutting Solution: Accelerating Digital Transformation. There was agreement across many consultations to maintain a focus on improving digital connectivity, digital banking, and digital infrastructure and access. There was an emphasis on promoting digital literacy and upskilling workers for IT is essential. Some raised cybersecurity as a priority given the potential for user risks. 10. Government economic oversight agencies recommended strengthening planning and coordination with the WGB during the implementation of the new CPF. These agencies indicated a need for detailed planning, clear resource allocation, and robust monitoring and evaluation mechanisms. Specificity in the financing strategy and resource sharing is essential. Strengthening country systems in procurement, environmental and social safeguards, and monitoring and evaluation is necessary and should be complemented by technical assistance and capacity building. 40 List of Consultation Meetings and Participants Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) August 1, 2024, Cotabato City Participants: Officials from the BARMM government including Ministries Baguio City Multi-Stakeholder Meeting August 13, 2024, Baguio City Host: Saint Louis University Participants: CSOs, academia, university students, LGUs, regional offices of national agencies, private sector including the regional offices of CHED, NEDA, DENR, and DA, LGUs of Baguio, Tabuk, Kabugao and others, Cordillera Network of Development NGOs and POs Davao City Multi-Stakeholder Meeting August 15, 2024, Davao City Host: Mindanao Development Authority Participants: CSOs, academia, LGUs, regional offices of national agencies, private sector such as regional offices of ATI, DHSUD, DPWH, Davao City Chamber of Commerce, and Davao Youth Leaders’ Congress Los Baños Multi-Stakeholder Meeting August 20, 2024, Los Baños, Laguna Host: University of the Philippines Los Baños Participants: CSOs, academia, youth, LGUs, regional offices of national agencies, private sector such as local governments of los Banos and Calamba, International Rice Research Institute Cebu City Multi-Stakeholder Meeting August 27, 2024, Cebu City Host: University of San Carlos Participants: CSOs, academia, youth, LGUs, regional offices of national agencies, private sector including Central Visayas Network of NGOs, University of Visayas, Cebu Chamber of Commerce and Industry Local Government Consultation August 30, 2024, Makati City Host: Union of Local Authorities of the Philippines (ULAP) Participants: Governor of Quirino, Representative of DILG, Representatives of Municipalities of Bayugan, Aklan, and others Private Sector Consultation (Joint World Bank-IFC Event) September 5, 2024, Makati City Participants: Companies in industries of manufacturing, IT Business Process Outsourcing, electronics manufacturing, startups, and business associations such as Makati Business Club, American Chambers of Commerce, and Bankers Association of the Philippines Development Partners Consultation September 5, 2024, Makati City Participants: ADB, JICA, USAID, KOICA, UNFPA, UNRC, Canadian Embassy, Australian Embassy, British Embassy, FAO, UNDP Environmental and Climate Change CSO Consultation September 20, 2024, Quezon City Participants: World Wildlife Fund Philippines, Wetlands International Philippines, Philippine Business for Social Progress, Philippine Movement for Climate Justice, Institute for Climate and Sustainable Cities, NGOs for Fisheries Reform Central Government Economic Oversight Agencies September 23, 2024, Mandaluyong City Host: National Economic and Development Authority (NEDA) Participants: NEDA, DOF, DBM, OSAPEIA, BSP 41 Annex 4: Indicative IBRD Financing FY26 and FY27 FY 2026 Project Commitment Project Name FY GP LEN Inst ID (US$M) P506594 Philippines Community Resilience Project 2026 Social IPF 700.00 (PAGKILOS) Development P503991 Project for Learning Upgrade Support and 2026 Education IPF 600.00 Decentralization (PLUS-D) P504257 Accelerated Water and Sanitation Project in 2026 Water IPF 250.00 Selected Areas (AWSPSA) P510184 Philippines Second Energy Transition and 2026 Energy & DPF 800.00 Climate Resilience DPL Extractives P508080 Skills Employment Project 2026 Education IPF 300.00 P509079 Social Protection for Early Intervention, 2026 Social Protection IPF 500.00 Economic Inclusion and Digital Innovation (BENFIRST 2 or New Social Protection Project) P507528 Growth and Jobs DPL series 1 2026 Macroeconomics, DPF 800.00 Trade and Investment FY 2027 Project LEN Inst Commitment Project Name FY GP ID Type (US$M) TBC Philippines Health System Resilience Project 2027 Health, Nutrition IPF 300.00 Phase 2 & Population P508686 Philippines Government Modernization 2027 Governance IPF 400.00 (ROTUNDA) Project P509345 Philippine Waste and Plastic Pollution 2027 Environment, IPF 300.00 Reduction and Management Project (Clean Natural Resources PH MPA) & the Blue Economy TBC Growth DPL series 2 2027 Macroeconomics, DPF 800.00 Trade and Investment P507493 MSME Access to Finance for Productivity and 2027 Finance, IPF 400.00 Resilience to Climate Shocks Project (PRIME) Competitiveness and Innovation TBC Philippines Multisectoral Nutrition Project 2027 Health, Nutrition IPF 500.00 Additional Financing or New Project & Population P507827 SME COMPETE (SME Productivity, Value 2027 Finance, IPF 400.00 Chain, and Markets) Competitiveness and Innovation TBC New DPL 2027 TBC DPF 800.00 42