WB OKs $600-M loan for poorest in PH as country grapples with new record-high debt

MANILA, Philippines—Government debt further rose to a new high of P9.62 trillion in August, while the World Bank has approved a $600-million loan to finance cash aid to the poorest during the COVID-19 pandemic.

In a report on Wednesday (Sept 30), the Bureau of the Treasury said the national government debt rose by 4.9 percent from July’s P9.16 trillion mainly coming from local sources, especially the record P516.3 billion in five-year retail treasury bonds (RTB) issued last August.

Domestic debt increased to P6.71 trillion, while the value of foreign debt slightly declined to P2.902 trillion due to a stronger peso, which appreciated to 48.483:$1 in August from 49.114 against the US dollar last July, the Treasury noted.

Separately, the World Bank’s Washington-based board last Sept. 28 approved fresh financing for the Philippines’ Beneficiary FIRST Social Protection Project.

The acronym “FIRST” stood for “fast, innovative, and responsive service transformation” of about four million poor families receiving conditional cash transfers under the 4Ps program of the Department of Social Welfare and Development (DSWD), the World Bank said in a statement also on Wednesday.

At the height of the longest and most stringent COVID-19 lockdown in the region, the government gave away dole outs to vulnerable households.

Documents showed that the World Bank loan will cover about 6.9 percent of the total project cost amounting to $8.69 billion.

“We are pleased to support the government’s efforts to sustain social protection for the poor and most vulnerable families,” the World Bank said.

“These efforts are critical to ensure that their children can remain in school and stay healthy as the country takes measures to control this pandemic,” said Ndjamie Diop, WB country director for Brunei, Malaysia, Philippines and Thailand, in a statement.

“In these difficult times, cash transfers to the poor and vulnerable indirectly support local economies and boost prospects for recovery,” Diop said.

The loan will support the digital disbursement of money to 4Ps beneficiaries. “Key outputs include a new unified beneficiary data base for DSWD programs and integration with the new national ID system (PhilSys) to allow beneficiaries to be verified and enrolled in a timely and reliable manner,” said Yoonyoung Cho, WB project task team leader and senior economist.

The Bangko Sentral ng Pilipinas (BSP) will help the DSWD “modernize payment delivery systems and promote financial literacy among beneficiaries, accelerating financial inclusion in the process,” WB said.

“Global experience shows that countries that have effective government-to-persons payments systems and a coherent approach to social protection beneficiary data management have been very effective in quickly and effectively cushioning the impacts of COVID-19 pandemic,” Diop said.

Finance Undersecretary Mark Dennis Y.C. Joven told the Inquirer on Wednesday that the loan agreement for the Beneficiary FIRST Social Protection Project will be signed “soon.”

“The operative fact here is the signing of the agreement by the Philippine government and World Bank representatives, which comes after board approval,” Joven said.

Once signed and disbursed, this newest World Bank loan will push the foreign financing obtained by the Philippines to fight COVID-19 beyond the $10-billion mark.

As of Sept. 28, the total amount of foreign borrowings and grants secured by the Department of Finance (DOF) for COVID-19 response stood at $9.91 billion.

Edited by TSB