The Incentive Program of the Provincial Road Management Facility (PRMF) drives critical areas of reform.

About 50% of funds available to provincial governments under PRMF are associated with the incentive program. With more funds at their disposal for road infrastructure works and other development priorities, the provincial governments are better placed to improve service delivery. Incentive funds are awarded when the provincial governments meet targets showing how well they have developed multiyear budgets linked to provincial plans; established effective internal controls and internal audit; developed and carried out a multiyear human resource management and development plan to support service delivery; contracted out road service delivery using their own resources; and generated local revenue.

Guiding Principles
Effective incentive targets catalyze reform by activating, accelerating, or amplifying it, or by inducing the provinces to adhere to reform; reinforce one another and lead to institutional reform; support the use of national systems and regulations; inspire the provinces to put forth equal effort; and are directly linked to program outcomes and key areas of reform

How the Incentive Program Works

There are two pools of funds in the incentive program. The distribution of untied funds to provincial governments depends on increasing trends in local revenue generation; that of tied funds, on the achievement of targets under the four other reform criteria. Untied funds can be used for any project eligible under the 20% mandatory appropriation for development projects from the internal revenue allotment. Tied funds must be spent on gravel road rehabilitation or maintenance. Equally important considerations in the distribution of incentive funds are the extent to which the provincial governments, individually, have met the agreed targets for the current fiscal year, and their success in meeting the targets in comparison with the achievement of the other participating provinces. Untied incentive funds are awarded following a comparison of relative increases in locally generated tax and fee revenue, based on a three-year rolling average, across all provinces. Tied incentive funds are directed to the key reform areas behind sustainable road maintenance. The province earns 25 points for each incentive target achieved, and zero or no points for targets only partially achieved or not achieved at all. Each province can therefore have a rating of 0, 25, 50, 75, or 100 for tied incentives.

Setting Incentive Targets

Every year the Facility Managing Contractor (FMC) negotiates targets for each of the tied reform criteria (the first four of the five criteria mentioned above) with the provincial government. The targets conform to certain guiding principles and fit the needs of the province. They must be challenging but not impossible, must push long-term institutional reforms forward, and must require similar effort from the provinces. The FMC collects baseline information to assess the degree of difficulty of the targets and to make sure that the provinces exert similar effort across all criteria. Once the targets have been agreed on with the provincial government, the Australian Agency for International Development (AusAID), and the Department of the Interior and Local Government (DILG), the FMC decides how achievement is to be verified, basing its decision on commonly understood terms. Targets must be met by the end of March each year, in time for annual funding allocations by AusAID.

About PRMF
PRMF is a five- year (20092014), Php4.3 billion (A$100-million) development initiative of the Governments of the Philippines and Australia. Through PRMF, the Australian Government helps provincial governments to put in place the governance systems that will enable them to maintain their roads over time, while rehabilitating and maintaining a core road network in up to 10 provinces in Mindanao and the Visayas. PRMF aims to boost the local economy by improving road transport so that more people will have better access to rehabilitated and maintained road networks, economic activity and public infrastructure and services that will improve their livelihoods. Better roads will also improve access to jobs, health services and essential social and educational facilities in rural and regional areas. FOR MORE INFORMATION See www.prmf.org.ph or contact
OIBONE C. ENOBIO Communications Officer Philippines Provincial Road Management Facility (PRMF) Supported by Australian Aid Coffey International Development 19th Floor, Salcedo Towers, 169 H.V dela Costa St., Salcedo Village, Makati City, Philippines T (+63) (2) 753 1241 ext 108 F (+63) (2) 753 2150 M (+63) (917) 590 6941 Email: PRMF@ prmf.org.ph