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Philippine President Rodrigo Duterte, wearing a military uniform, gestures as he attends the 67th founding anniversary of the First Scout Ranger regiment in San Miguel town, Bulacan province, north of Manila, Philippines November 24, 2017. REUTERS/Romeo Ranoco

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MANILA (Reuters) - The Philippines said on Tuesday it has withdrawn an application for a second grant from a U.S. aid agency, the Millennium Challenge Corp (MCC), after getting an initial five-year $434 million grant in 2010 aimed at reducing poverty.

Such grants require counterpart funding from the Philippines for MCC-financed projects, but presidential spokesman Harry Roque said the government wanted to channel resources into rebuilding Marawi, a southern city devastated in fighting between the military and Islamist insurgents this year.

"It was deemed that for the time being, we will withdraw our application for the second cycle and we will focus instead on the rebuilding of Marawi," Roque said.

"We have to re-allocate our resources and priority to the rebuilding of Marawi."

The issue of aid has been contentious in the Philippines of late, with President Rodrigo Duterte objecting to donors attaching conditions to their help, and especially to any expressions of concern about human rights.

Nearly 4,000 people have been killed by police since June last year. Police reject allegations they are executing drug users and dealers and say killings were all in self-defence.

Several thousand other people have been killed in mysterious circumstances, with the police usually attributing those deaths to gang violence.

In August, the MCC upheld the eligibility of the Philippines to secure a fresh grant, after initially deferring a vote on its re-selection for help amid concern about the staggering death toll in Duterte's ferocious war on drugs.

The Southeast Asian country' graft-fighting efforts are also on the spotlight after it fell short of the "control of corruption" target on the MCC's scorecard.

But Roque was quick to point out that the decision to withdraw the application for another MCC grant had nothing to do with such issues.

He said the government would "probably" apply for another MCC grant in future.

This year, his government rejected about 250 million euros ($295 million) in European Union grants.

Officials of the MCC, which describes itself on its website as an independent U.S. foreign aid agency created by the U.S. Congress in 2004, were not available for comment.

(Reporting by Enrico dela Cruz)

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Reuters