Dominguez: Landbank, DBP loans to fund free coronavirus vaccines for poor
The government would use loans from two state-run banks to purchase vaccines for SARS Cov2, the coronavirus that causes COVID-19, and distribute them for free to the poor, according to the head of President Rodrigo Duterte’s economic team.
At a meeting with Duterte aired on TV on Friday (July 31) morning, Dominguez said the Department of Health (DOH) had estimated a minimum of 20 million poorest Filipinos would have to be vaccinated for free.
If two shots were needed, 40 million doses of vaccines must be purchased for about $10 per dose, requiring a budget of $400 million or about P20 billion, Dominguez said.
Dominguez later explained that the plan was for state-run Philippine International Trading Corp. (PITC) to purchase the COVID-19 vaccines that would be approved by the DOH’s Food and Drug Administration (FDA). The PITC would obtain loans from the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP).
“PITC will sell the vaccines to the DOH. The DOH will pay PITC over time from their future allocations from the national budget,” Dominguez said.
Referring to Landbank and DBP, Dominguez said that “the current balance sheets of both” were sufficient for the needed funds.
“Please recall that since 2016, by hardly collecting any dividends from Landbank and DBP, the national government, in effect, strengthened their capital bases,” Dominguez said.
“This, in turn, was made possible by the tax and administrative reforms that increased government revenues,” Dominguez added.
The national government had been waiving cash dividends from the two state-run banks for their use in building up capital. As government-owned corporations, Landbank and DBP were mandated to remit dividends to the Treasury.
According to Dominguez, the government has been using “increased revenues not only to boost the economy through Build, Build, Build (BBB) but also to increase” all its financial institutions’ capacity to support the country “in times of emergency.” BBB is the Duterte administration’s ambitious infrastructure program.
People who could afford the vaccines and aren’t qualified to get these for free could also run to Landbank and DBP for loans if they are “qualified borrowers” who wanted to supply the vaccines “on a commercial basis.”
Cecilia C. Borromeo, Landbank president and chief executive, said the bank could extend credit facility to the PITC for purchase of the vaccines “similar to what Landbank did when the national government launched the generic medicine program years ago.”
She said the amount of the credit facility would be “based on the requirement of PITC.” “Sharing between Landbank and DBP will logically be based on the size of the balance sheets” of the two banks and “the preference of the Department of Finance.” Landbank is bigger than the DBP.
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