Foreign loans, GOCC dividends added to mix of funds for coronavirus vaccines, cash aid

MANILA, Philippines—The Philippines is getting by its COVID-19 response through a mix of financing from multilateral lenders and dividends from state corporations which allowed the government to buy vaccines and give away cash dole outs to the most vulnerable households.

In a statement on Monday (Feb. 1), one of the sources of funds, Asian Development Bank (ADB), said $25 million from $125 million from its health system enhancement to address and limit (Heal) COVID-19 project loan had gone to the Philippines in August 2020 and would cover the Philippine government’s advance payment to vaccine suppliers.

As earlier reported, this portion of the ADB loan was already released by the Department of Budget and Management (DBM) to the Department of Health (DOH) in the amount of P1.27 billion last Dec. 28, 2020.

On top of the Heal COVID-19 project loan, ADB had also committed to lend the Philippines $325 million more under its $9-billion regional financing dubbed Asia-Pacific Vaccine Access Facility (Apvax).

ADB said all of its vaccine financing for the Philippines would adhere to Apvax’s eligibility requirements.

“The government has developed a COVID-19 vaccine road map to immunize 60-75 percent of Filipinos with safe, cost-effective vaccines in an equitable manner,” said ADB.

The Philippines, it said, was negotiating vaccine supplies with several developers. ADB said it was providing “technical advisory assistance” to the Philippine government for the national vaccine road map through a “development partner coordination working group created by the Department of Finance.”

“The government’s vaccine supply contracts with ADB financing, including direct payments by the ADB to vaccine manufacturers, will follow the ADB’s procurement rules and guidelines, and the ADB’s anticorruption and integrity policy,” the lender said.

“The financing will also follow global best practices on safeguards measures, including waste management of medical supplies,” it added.

“The Philippines launched a comprehensive economic stimulus and healthcare support program following the surge in COVID-19 cases in April 2020,” said Masagatsu Asakawa, ADB president.

“It has significantly improved its capacity in testing, tracing, isolating, and treating COVID-19 cases in the last 10 months,” Masagatsu said.

“Vaccination is the next critical step to protect lives and promote livelihood opportunities,” the ADB chief added.

“We stand ready to support the government in these unprecedented times and help the economy navigate back to its pre-pandemic growth path,” he said.

The World Bank, also in December 2020, restructured an earlier $100 million loan for vaccine procurement and distribution and prepared another $400-million facility that was expected to be approved by the Washington-based lender on March 24, 2021.

In all, the DBM already released P2.76 billion to the DOH to procure COVID-19 vaccines.

The DOF had said up to $800 million, or P39 billion, in loans were being negotiated with multilateral institutions like ADB, the World Bank and the Beijing-based Asian Infrastructure Investment Bank (AIIB) for the Philippine government’s vaccination plan.

These upcoming loans would fill the gap in the P70-billion unprogrammed appropriations that had been set aside in the P4.5-trillion 2021 national budget for mass vaccination.

A total of P82.5 billion will cover vaccine deployment in 2021, including P2.5 billion in the DOH’s 2021 budget, plus P10 billion in the continuing appropriations of the 2020 budget under the Bayanihan to Recover as One Act or Bayanihan 2 Law, whose validity was extended until June 2021.

In a statement on Monday, the DOF said P119.1 billion, or 75 percent, of the record P156.9 billion in dividends remitted by government-owned or -controlled corporations (GOCCs) in 2020 were spent on cash dole outs for poor families under the social amelioration program (SAP) at the height of the pandemic lockdown.

Finance Undersecretary Antonette C. Tionko said the remittances from 57 GOCCs in 2020 contributed to the national government’s unprogrammed revenues, which were in turn tapped as a source of SAP funds.

“These GOCC dividends were primarily utilized for the SAP, which provided emergency assistance to low-income families to help tide them over during the strict lockdowns imposed earlier last year to curb the spread of COVID-19,” Tionko said.

Under Republic Act (RA) No. 7656 or the GOCC Dividend Law, state-run firms were mandated to declare and remit at least half of their annual incomes to the national government as dividends.

The earlier Bayanihan to Heal as One Act, or Bayanihan 1, which took effect from March to June 2020 had required GOCCs to remit national government advances, unspent subsidies, and payments of guarantee fees to the national treasury amid a scramble to squeeze money for pandemic response.

TSB