War chest vs pandemic rises to $8.96B

The Philippines’ financial war chest versus COVID-19 composed of external borrowings for budgetary support and grants for specific projects rose to $8.96 billion as of mid-September, the latest Department of Finance data showed.

Foreign loans and offshore commercial borrowings amounted to $8.33 billion as of Sept. 14, of which $6.86 billion were already disbursed to the Bureau of the Treasury.

The loans came from multilateral lenders such as the Asian Development Bank (ADB), Asian Infrastructure Investment Bank and World Bank as well as from bilateral development partners such as the Agence Française de Développement (AFD) and the Japan International Cooperation Agency.

The government is also spending the money raised from the $2.35 billion in dollar-denominated global bonds issued in May.

The ADB and the World Bank also provided project loans for specific COVID-19 response initiatives totaling $595 million.

The Manila-based ADB and the Japanese government likewise extended grant assistance worth $26.36 million.

Last Tuesday, the Philippines and Japan signed another 50-billion yen loan (about P23.3 billion), which the government can spend as budgetary support not only when natural calamities strike but also during disease outbreaks and lockdowns to contain their spread.

Finance Secretary Carlos G. Dominguez III said the postdisaster standby loan (phase two) from Japan would make budgetary support available for quick disbursement in the event of national emergency such as the COVID-19 pandemic.

“The declaration of a state of calamity, public health emergency or the imposition of enhanced community quarantine (ECQ) will activate the package,” Dominguez said.

Finance Undersecretary Mark Dennis Joven said the loan agreement allowed tapping the facility when an ECQ—the most stringent level of lockdown—is imposed to contain an outbreak in urban areas amid the ongoing COVID-19 pandemic or any future public health emergency.

Joven said whenever there is a trigger for loan utilization, the Philippines could quickly disburse multiples of one billion yen five times, or an average of 10 billion yen per tranche during the next three years, extendable by four times.

Dominguez said the loan package “can be activated anytime because we are in an emergency.”