This working paper draws upon responses from a selection of interviews conducted in mid-2006 with in-country stakeholders and a review of the relevant analytical and evaluative material. The aim was to use a client perspective drawn from in-country consultations-to shed light on the experiences of the Bank with its Middle-Income Country (MIC) partners. It provides valuable insights into selected issues faced by many MIC clients, and has been used as a background to the IEG evaluation. The Philippines is an interesting case study in that it is a middle income country (MIC), but at a GNI per capita of only $1,170, it is in the lower MIC category, and close to the bottom threshold of the group ($826). It possesses many characteristics which are symptomatic of the problems faced by lower-income countries. Notwithstanding a recent period of relative calm, its polity is often reported as unstable. The report points out that counterparts identified two problems that led to low levels of borrowing. First, clients were of the view that the Bank had been providing mostly investment loans for individual projects, and yet the government wanted programmatic loans for sectors because their priorities sometimes changed with the circumstances, and they wanted to implement sector-wide reforms for a bigger impact on the economy. Second, clients felt that the Bank's lending cycle was not well synchronized and intertwined with the Philippine budget process. Another reason raised by several counterparts for reduced borrowing was the excessive imposition of conditionality that caused the use of funds to be more restrictive. The report concludes that this past year, the Bank changed its focus and began providing more flexible sector-wide investment loans to the Philippines.
