In single day, PH acquires $900M in loans to buy vaccines

MANILA, Philippines—It took only one day for the Philippines to get the nod of two multilateral lenders for a total of $900 million (about P43.6 billion) in loans for the mass rollout of its vaccination program which was expected to bring back jobs and economic growth a year after Southeast Asia’s longest and most stringent community quarantine pushed the economy to its worst post-World War II recession.

The Asian Development Bank’s (ADB) board on Thursday (March 11) approved the $400-million loan for its host-country’s second health system enhancement to address and limit COVID-19 (HEAL 2) project—the Manila-based lender’s first financing under its Asia-Pacific vaccine access facility (APVAX) established in December 2020.

In the afternoon of March 11 in the United States—early morning of March 12 (Friday) in the Philippines—the Washington-based World Bank board also approved a $500-million additional financing for COVID-19 emergency response project.

Both new loans announced on Friday will finance mainly the national government’s purchase and nationwide distribution of coronavirus vaccines, which will be carried out by the Department of Health (DOH).

Finance Undersecretary Mark Dennis Joven said signing for the loan agreements and their effectivity will be within this month, which meant that the Philippine government can immediately dip into this pool of money as long as there are vaccines to pay for.

ADB and World Bank were hopeful that mass vaccination would ease not only the health crisis but also the economic pain inflicted by the COVID-19 pandemic.

“Procuring and administering vaccines provides the country an added layer of defense against COVID-19 on top of public health measures or interventions like social distancing, wearing of masks, and washing hands.” said Ndiame Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand.

“Inclusive deployment of vaccines in line with the World Health Organization (WHO) fair allocation framework is critical for preventing grave illness and deaths from COVID-19, opening the economy in earnest, ensuring a resilient recovery, and restoring jobs and incomes,” Diop said in a statement.

The ADB’s country director for the Philippines, Kelly Bird, told a press conference that vaccination will not only help mitigate long-term scarring in the labor market, but also allow quicker reopening of the economy. The government reported this week that four million Filipinos were jobless in January amid prolonged quarantine.

World Bank said its loan “will also support the Philippines to continue to implement public health measures until a majority of the population has been vaccinated or is deemed safe based on global evidence.”

“The use of web platforms to gather citizen feedback on the vaccination program as well as beneficiary feedback surveys to boost engagement with citizens will help ensure effective implementation,” World Bank said.

The ADB’s $700-million Heal 2 project, which it is co-financing with China-led Asian Infrastructure Investment Bank (AIIB), would facilitate the purchase of 110 million vaccine doses for at least 50 million Filipinos or almost half of the population.

The entire funding would be spent on vaccine supplies and freight. The government plans to vaccinate 70 million adults to achieve herd immunity, while minors were not recommended for inoculation yet.

The AIIB’s $300-million contribution to the Heal 2 project loan was also expected to be approved within the month.

Sakiko Tanaka, principal social sector specialist for Southeast Asia at the ADB, told reporters that vaccines to be financed by APVAX will be paid directly by the bank to suppliers, which means loan proceeds will never pass through government coffers.

Using the ADB’s procurement rules, the DOH was expected to seal supply deals with vaccine manufacturers or bilateral sources, and request the bank to pay these suppliers, Tanaka explained.

Before paying the vaccine makers, ADB will first review if the doses were eligible for APVAX financing, she said.

In December, ADB said proposed vaccine financing among its member-countries could only qualify under APVAX if they met one of three criteria:

• Vaccines must be procured through the COVID-19 Vaccines Global Access (COVAX) facility of World Health Organization (WHO)
• Vaccines have to be prequalified by the WHO
• Vaccines must have been approved by regulatory agencies like the Food and Drug Administration in the Philippines’ case.

Also, Eduardo Banzon, ADB principal health specialist for Southeast Asia, said the bank will assess not only the efficacy of vaccines but also the manufacturing processes they had gone through since some suppliers may get sources from third-party manufacturers.

According to ADB discussions with Philippine authorities, the loan will finance the cost-share for vaccines from the COVAX facility, Tanaka said. She said the Philippines preferred vaccines that can be stored at temperatures of 2 to 8 degree Celsius, like AstraZeneca or Novovax, which required only conventional storage facilities.

Banzon said the Philippines had enough warehouses for these conventional temperature vaccines.

According to Banzon, the combined ADB, World Bank and AIIB loans for vaccines totaling $1.2 million, plus the local financing amounting to P12.5 billion, would be enough to buy vaccines needed for herd immunity. He said the government target was to vaccinate 50 million people in 2021.

But as far as closing the deals with vaccine makers were concerned, Banzon said the ADB was hopeful the government could secure the doses in the second quarter of 2021.

ADB noted in earlier documents that rich countries had cornered the bulk of global vaccine supply while poorer nations scrambled to secure their doses from the limited COVAX facility.

TSB