MANILA, PHILLIPINES - The World Bank Wednesday said it had increased development aid to the Philippines by almost a third, with an eye on easing the burden of high food costs on the country's poor.

The Bank will lend 320 million dollars for fiscal year 2009, an increase of 31 percent from the previous year.

It said 200 million dollars of that will support the national budget in stabilising over the short- and medium-term the price of rice, the staple food, a year after export prices surged to near 30-year highs.

"Fiscal year 2009 was particularly challenging as the Philippines and the rest of the world were hit by shocks coming from the global food crisis and the global financial meltdown," World Bank country director Bert Hofman said.

Increased aid would "help address the country's development needs as it battles the impact of the evolving global recession."

Latest government data show that 32.9 percent of the country's 90 million population earns 312 pesos (85 US cents) a day. The National Statistical Coordination Board estimates at least 53 percent of that would have to be spent on food.

The Bank earlier forecast the economy would contract this year for the first time since the Asian crisis in 1998. Growth slowed to 0.4 percent in the three months to March as plunging exports and remittances by Filipinos working abroad hit consumer spending.

The aid package also includes 70 million dollars to improve irrigation services and 40 million dollars to help provide electricity to the southern region of Mindanao.

Repayment terms were not disclosed.

For the three years to fiscal 2012, the bank said it is committing between 700 million and one billion dollars per year on top of grants and a large programme of advisory activities.

The World Bank's fiscal year starts July 1.