Foreign loans, grants for COVID-19 response hit $18.4B

Foreign borrowings and grants obtained by the Philippines to fight the COVID-19 pandemic reached $18.4 billion (about P903 billion) in June, with the bulk of which injected into the budget, the Department of Finance (DOF) said.

In a report, the DOF said $16.26 billion of these externally sourced funds had been set aside for budgetary support.

As of June 25, $15.6 billion of these external loans plus proceeds of offshore bond issuances were already disbursed to the government, the DOF said.

These budgetary support financing included concessional loans extended by multilateral lenders like the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and the World Bank.

The government had also secured bilateral loans from the aid agencies of France, Japan and South Korea.

The Philippines, likewise, raised money commercially through the US dollar- and euro-denominated global bonds which it sold last year and this year.

Also, it had obtained project loan financing from the three multilateral banks, which directly went to specific projects implemented by agencies in the front lines of the pandemic response. The eight project loans, which amounted to $2.12 billion, include the $1.2 billion from the ADB, the AIIB and the World Bank which will be used to directly pay for the vaccines to be procured by the national government.

On top of the loans, the Manila-based ADB and the Japanese government had extended grants totaling $26.74 million for COVID-19 response.

Disbursement

Disbursement of some of these multilateral loans had been “satisfactory” so far, according to the lenders’ recent implementation reports.

In the case of the $600 million extended by the World Bank for the Philippines’ COVID-19 emergency response project this year and last year, 36 percent or $218.54 million was already spent to equip public hospitals with personal protective equipment and ventilators; ramp up testing at laboratories and train nearly 15,000 health-care workers in infection prevention and control.

Also, $300 million or half of the $600-million World Bank loan for the beneficiary FIRST (fast, innovative and responsive service transformation) social protection project has been disbursed as aid to Pantawid Pamilyang Pilipino Program beneficiaries. The AIIB, however, reported that the Philippines did not meet its target to prolong COVID-19 infections’ doubling rate to 30 days by end-2020 under the Beijing-based lender’s $750-million cofinancing for the COVID-19 active response and expenditure support (CARES) program.

The ADB, which shelled out $1.5 billion for the $2.25-billion CARES program, said in February implementation areas showing “good progress” included testing capacity, social assistance for 23 million households, distribution of wage subsidy and support to micro, small and medium enterprises (MSMEs).

But the ADB sought improvements in the following: implementation of the social amelioration program, contract tracing and isolation facilities, employment and job creation, adequacy of social assistance and MSME lending.

—Ben O. de Vera INQ