PH adds to stockpile, seeks new $300-M WB loan

The Philippines will buy COVID-19 boosters and additional shots for children partly through a forthcoming $300-million loan up for the World Bank’s (WB) approval in December, adding to the country’s ballooning debt pile.

As the year-to-date increase in borrowings outpaced economic growth, the debt-to-gross domestic product (GDP) ratio further rose to a 16-year high of 63.1 percent as of end-September, above the 60-percent threshold deemed a manageable debt level among emerging markets like the Philippines. The latest Bureau of the Treasury data on Tuesday showed that debt-to-GDP, which reflects a country’s ability to repay debt, was at its highest level since the 65.7 percent posted in 2005.

The national government’s outstanding debt jumped 27.2 percent year-on-year to a record-high P11.92 trillion as of September, outpacing the average of 4.9-percent real GDP growth during the first nine months of 2021.

Treasury data showed that the share of domestic debt to GDP rose to 44.4 percent in September from 43 percent in June, while foreign debt-to-GDP inched up to 18.7 percent from 17.5 percent.

Economists had warned that ballooning debt may result in a downgrade of the country’s investment-grade credit ratings.

Separate documents showed that the second additional financing for the Philippines’ COVID-19 emergency response project will be tackled by the Washington-based multilateral lender’s board on Dec. 17.

Investment financing

Once approved by the World Bank, its total investment financing for this project currently being implemented by the Department of Health (DOH) will total $900 million, including the original $100 million extended last year and the additional $500 million in March.

This second additional financing will “support the government of the Philippines in scaling up the national vaccination program, including pediatric vaccination and boosters,” the World Bank said.

Citing data on infections as of October, the World Bank noted that the Philippines had the second-highest COVID-19 burden in Asean (Association of Southeast Asian Nations), after Indonesia. The Philippines also ranked second in the region, after Malaysia, in cases per million population.

“Test positivity rates have hovered above 10 percent for the past six months; they peaked at 27.9 percent in September and dropped to 11.5 percent in October. The high positivity rates spotlight the country’s limited testing and the continued spread of COVID-19,” the World Bank said, although it also pointed to a declining number of cases in October.

The World Bank said that while the free nationwide mass vaccination program was “deploying rapidly,” there had been disparity in rollout across the country’s regions, citing for instance the below 10-percent coverage in the Bangsamoro Autonomous Region in Muslim Mindanao to date.

System readiness

“Scaling up of the COVID-19 vaccination will put the current system readiness to the test. Vaccine and cold chain logistics and infrastructure will likely be limiting factors, in addition to human resource readiness, particularly in areas with supply-side constraints,” the World Bank said. Including the upcoming $300-million World Bank loan, the government plans to borrow a total of $900 million to procure booster shots from multilateral banks, including the Manila-based Asian Development Bank and the Beijing-based Asian Infrastructure Investment Bank.

—Ben O. de Vera INQ