PH eyes P 1.14T in borrowings, grants

Foreign financing from grants and loans extended by multilateral lenders and bilateral development partners as well as offshore debt issues will further rise to $23.71 billion (about P1.14 trillion) this year, partly to finance the national COVID-19 vaccination program.

In a statement on Saturday, Finance Undersecretary Mark Dennis Joven said the biggest chunk of external financing in the 2021 pipeline worth $10.54 billion would be sourced from bilateral partners, which traditionally included China, France, Japan and South Korea, among others.

From multilateral institutions such as the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and the World Bank, the Philippines plans to borrow and secure grants totaling $7.67 billion this year, Joven said.

World Bank documents seen by the Inquirer showed more than $3 billion in near-term lending pipeline for the Philippines across 14 projects, which included a $500-million loan expected to be approved by its Washington-based board on March 11.

The ADB, meanwhile, is planning to lend the Philippines a total of $3.57 billion across seven programs and projects plus $800 million worth for five projects still on standby in 2021.

In 2020, the Manila-based ADB extended to its host-country a record-high $4.2 billion across 11 loans, of which the bulk were spent on COVID-19 response.

Also, Joven said $5.5 billion would be raised from offshore debt markets in 2021, which National Treasurer Rosalia de Leon last month said would possibly include US dollar, euro, renminbi-denominated panda and yen-denominated samurai bonds.

Unlike last year when foreign borrowings and grants mostly financed budgetary support, project financing will get a bigger $15.65 billion or two-thirds of the total this year, while the remaining $8.06 billion will be set aside for budget items, Joven said.

Oozing domestic liquidity

Finance Secretary Carlos Dominguez III earlier said $1.3 billion would be borrowed from the World Bank, the ADB and the AIIB to buy COVID-19 vaccines and roll out mass vaccination.

Since borrowings from multilateral lenders are exempt from the Philippines’ procurement law, proceeds can be used for advance payments to vaccine manufacturers, which reportedly wanted the government to cough up as much as half the cost of vaccines for supply deals.

In the case of the World Bank’s upcoming additional financing for the Philippines’ COVID-19 emergency response project, documents showed $155.5 million worth would be spent on COVID-19 vaccine deployment.

While ramping up foreign borrowings this year, the Philippines will still source the majority from local sources amid oozing domestic liquidity.

The government has programmed to borrow a total gross amount of P3.03 trillion in 2021, of which P2.58 trillion will be sourced locally on top of P442.36 billion in external borrowings.

These additional borrowings will further jack up the debt-to-gross domestic product ratio—a measure of a country’s capacity to pay its creditors—to 57 percent by year’s end from the 14-year high of 54.5 percent in 2020.

Last year, the Philippines secured $17.06 billion in foreign financing—$7.73 billion from multilateral banks, $2.86 billion in bilateral official development assistance and $6.47 billion from the sale of US dollar-denominated and euro bonds, Joven said. INQ