Loans for COVID-19 response continue to rise

MANILA, Philippines — The head of the Duterte administration’s economic team on Wednesday said they expected President Rodrigo Duterte to decide in the next couple of days if he would ask Congress to convene a special session to pass pending stimulus bills that lacked time to approve before legislators went on break this month.

In the meantime, Finance Secretary Carlos Dominguez III told an online forum that the Department of Finance (DOF) was raising more money through domestic and foreign borrowings to finance COVID-19 response as the Philippines enjoys low and concessional interest rates due to its investment-grade credit ratings.

Dominguez said they wanted to make sure that any special congressional session to be convened would be “productive.”

“We want to have a stimulus package. However, we want to have one that’s affordable—something that we’re not spending all our money at this particular time,” Dominguez said.

The economic team earlier lamented that the stimulus bills worth trillions of pesos, which were pending in Congress, would be “unfundable.”

Dominguez said the economic team was sticking to a fiscal deficit of up to 9 percent of gross domestic product (GDP) this year as a budget gap beyond this ceiling would be “very dangerous.”

Even without the stimulus spending yet, the Cabinet-level Development Budget Coordination Committee already projected the budget deficit to hit P1.61 trillion, or 8.4 percent of GDP, as expenditures on COVID-19 response continue to increase while tax collection remained weak amid a recession.

Dominguez said that as of June 9, the DOF raised P1.2 trillion in net domestic borrowings through the sale of government securities on top of the P300-billion financing support from the Bangko Sentral ng Pilipinas through its repurchase agreement with the Bureau of the Treasury, with the bulk of the money funding measures addressing the health and socioeconomic crises caused by the COVID-19 pandemic.

From foreign lenders, Dominguez said the Philippines already borrowed a total of $4.83 billion as of June 17: $2.6 billion from the Asian Development Bank, $1.2 billion from the World Bank, $750 million from the Asian Infrastructure Investment Bank and $275.7 million from Agence Francaise de Development.

Of these external borrowings, $2.26 billion were already disbursed or injected into the budget, Dominguez said. —Ben O. de Vera