Lenders see uneven progress in gov’t loan spending

The Philippines’ spending of loan proceeds to buy vaccines and modernize customs administration have been progressing well, but implementation of the massive flood control project in Metro Manila—also funded by debt—remained lacking, multilateral banks said.

In a report last week, the Asian Infrastructure Investment Bank (AIIB) said the government as of September disbursed $199.4 million or 66.5 percent of its $300-million contribution to the second health system enhancement to address and limit COVID-19 (Heal 2) project.

The AIIB’s co-financing with the Manila-based Asian Development Bank (ADB) for the $700-million Heal 2 was the China-led lender’s first-ever vaccine financing under its COVID-19 crisis recovery facility. The banks directly paid vaccine suppliers for the doses ordered by the Department of Health.

“The project is progressing with the government of the Philippines’ efforts to secure vaccines through bilateral negotiations with vaccine suppliers. The first batch of vaccines procured under this project arrived in June 2021 with regular vaccine deliveries since then,” the AIIB said.

While the financing targets to buy and deliver at least five million COVID-19 doses in September 2021, the AIIB noted that actual procurement overshot with 85.5 million doses, adding that 37.2 million doses had been already delivered.

“It is expected that nearly 110 million doses of vaccine will be procured in 2021,” it said.

The AIIB loan would also help put in place a vaccine information management system in 2023, which the Department of Information and Communications Technology had a soft launch for last April.

The Washington-based World Bank, meanwhile, also last week said the Bureau of Customs (BOC) “made good progress in advancing toward implementation” of the $88.28-million customs modernization project.

“Moving forward, the [interagency, BOC-led] project teams will focus on the completion of the bid documents for the procurement of the customs processing system, the administrative back-office enterprise resource planning system and remote image analysis center feasibility study,” the World Bank said.

So far, $630,000 or 0.7 percent of the World Bank financing approved last year was already disbursed. The project loan will close in 2025, during which the time to import and export were expected to be slashed to 80 and 30 hours, respectively. At present, importation processes at the BOC took 120 hours, while exportation was 42-hours long.

However, the AIIB in another report flagged the still sluggish disbursement of its $207.6-million loan for the Metro Manila flood management project.

“Project implementation has been progressing slower than originally agreed timelines. The COVID-19 pandemic has significantly impacted the project progress, particularly procurement process since March 16, 2020,” the AIIB said.

The AIIB nonetheless said that construction of Balut pumping station had been completed and it “functioned well” when Typhoon “Ulysses” battered the country in November 2020.

In the current fourth quarter of 2021, contracts for Labasan and Paco pump stations were expected to be awarded, and “procurement will be followed shortly for remaining pumping stations,” the AIIB said.

Following the latest disbursement of $4.2 million last July, a total of just $10.9 million or merely 5.3 percent of the AIIB’s commitment had been disbursed since the loan was approved in 2017.

The AIIB, the World Bank, and the Philippine government have been co-financing the $500-million project currently jointly implemented by the Department of Public Works and Highways and the Metropolitan Manila Development Authority.

This project would protect 1.7 million residents near 56 “potentially critical” drainage systems across 11,110 hectares of flood-prone areas in Metro Manila. Upon project completion in 2024, these areas should be free of water within 24 hours after a major rainfall.