DOF: COVID-19 vaccine loans only P58.5 billion

MANILA, Philippines — The Department of Finance (DOF) on Sunday reiterated that multilateral loans in the pipeline to buy COVID-19 vaccines only amounted to $1.2 billion or about P58.5 billion to date, contrary to a senator’s erroneous figures in a social media post last week.

In a letter sent by the DOF to Sen. Panfilo Lacson and other senators, Finance Secretary Carlos Dominguez III said the loans included the Washington-based World Bank’s $500-million additional financing for the Philippines’ COVID-19 emergency response project, plus $400 million from the Manila-based Asian Development Bank (ADB) for the second health system enhancement to address and limit COVID-19 (Heal 2). Both projects will be implemented by the Department of Health (DOH).

The World Bank and ADB boards approved these loans both on March 11. The Philippine government and the lenders were expected to sign the agreements to execute the loans and make them effective also within this month — this meant the money would be made available as long as there were vaccine supply agreements that needed to be paid.

In the case of the ADB, it will directly pay the vaccine suppliers such that the money would never pass through the Philippine government.

The Beijing-based Asian Infrastructure Investment Bank’s (AIIB) $300-million contribution to the Heal 2 project, which it was co-financing with the ADB, was expected to be approved this month.

These three fresh loans for vaccines formed part of the P82.5-billion funding to roll-out mass inoculation nationwide this year.

Under the P4.5-trillion 2021 national budget, P2.5 billion had been set aside for the DOH’s vaccination program. The bulk of P70 billion would come from external borrowings or excess revenues as they were lodged under unprogrammed appropriations.

Loans filled the financing gap as it had been harder to eke out tax and non-revenues amid a recession. The latest Bureau of the Treasury data showed that total revenue collection fell 11.5 percent year-on-year in January this year; for the entire 2020, revenues fell 8.9 percent.

The remaining P10 billion came from the Bayanihan to Recover as One or Bayanihan 2 Law, which the DBM released to the DOH in February and was charged against unutilized automatic appropriations.

As for the figure which Lacson tweeted last week, in which he claimed P126.75 billion in loans have been secured for the sole purpose of vaccines, Dominguez said “some of the amounts in the report are not for COVID-19 vaccine procurement.” Lacson’s tweet also included in the total computation the Bayanihan 2 allotment, which did not come from a loan.

Dominguez said, “$1.7 billion of the total of $2.4 billion loans listed in the circulated report were intended for the purchase of COVID-19 medical and laboratory equipment, reagents, personal protective equipment (PPEs), ambulances and other essentials for medical frontliners, while the other loan packages mentioned were for general budgetary support to cover state spending on pandemic response measures.”

The latest DOF data showed that the foreign loans and grants obtained by the Philippines to bankroll the war chest against COVID-19 stood at $14.29 billion (about P696 billion) as of mid-March. This DOF figure excluded the unsigned ADB and World Bank loans as well as unapproved AIIB financing for vaccines.

Late last year, the DOF renegotiated two prior loans obtained from the ADB and the World Bank to settle advance payments to vaccine suppliers.

The Philippines’ procurement law, which did not allow advance payments beyond a maximum of 15 percent of government-financed projects except in emergency situations, “does not apply in the case of multilateral-funded projects, which are governed by the procurement guidelines of multilateral development banks,” Finance Undersecretary Mark Dennis Joven had explained to the Inquirer.

Upon getting the two lenders’ approval, the DBM released to the DOH in December last year P2.76 billion or $55 million from two loans — allowing the government to settle $50 million in advance payments for six vaccine supply agreements in January.

In December 2020, Dominguez and the World Bank signed the amendment to the $100-million Philippines COVID-19 emergency response project extended in April last year, which was supposed to cover only procurement of additional medical equipment to strengthen the health care system amid the fight against COVID-19.

The amended loan terms allowed the Philippines to realign up to $30 million into vaccine procurement, which the DBM released to the DOH in the amount of P1.49 billion before 2020 ended.

The DBM also released to the DOH in December last year P1.27 billion to buy vaccines from the ADB’s $125-million health system enhancement to address and limit (Heal) COVID-19 project approved last August, which was originally intended to be spent on buying PPEs.

It was the $25 million that the ADB referred to when it announced in February its initial financial support to the Philippines’ vaccination program.

Former socioeconomic planning secretary Ernesto Pernia, who resigned from President Duterte’s Cabinet in April last year following disagreements on how to reopen the economy amid the pandemic, told the Inquirer last week that these loans should have been obtained earlier on. “It’s kind of late, it should have been done earlier — anticipatory planning — so that vaccines could have been ordered much earlier, as what other countries in Asia have done,” Pernia said.

/MUF