T
he Philippines lags behind its neighbor countries in its progress toward poverty reduction and
faces challenges in achieving the Millennium Development Goal (MDG) targets on poverty,
education, and health. A sluggish economic growth over the decades, led mainly by the
service sector, did not create enough job opportunities to lift Filipino workers and their families out
of poverty. The country thus needs a new development model to benefit the poor. While poverty
can be best reduced by economic growth, poverty reduction efforts should be supplemented by
an adequate social protection system to relieve the poorest of the poor. The Philippines’ social
protection system has been fragmented, uncoordinated, and poorly targeted. The conditional
cash transfer (CCT) program, which was initiated in 2007, is currently becoming a centerpiece
of the social protection system in the country. This note reviews the economic rationales for
transferring a cash grant to poor families contingent on their certain behavior, the major challenges
in designing a CCT program, the targeting methodologies, and the impact evaluation designs. It
also looks into how the Philippines’ CCT program was designed to resolve major difficulties in
its design, targeting, and evaluation. Although the program is well prepared having been based
on international experiences, it requires an effective implementation and careful monitoring and
evaluation to achieve the expected goals. A CCT program with a rigorous impact evaluation offers
an excellent opportunity, for both policy makers and development practitioners, to learn what
works and what does not work as they search for effective poverty interventions.