By Manny Mogato
MAY 31, 2020 – The Philippines has already borrowed a total of $4.55 billion (227.5 billion pesos) from two multilateral financial institutions and commercial markets to respond to the coronavirus pandemic, the finance department said on Sunday.
In a press statement, Finance assistant secretary Antonio Lambino II said the loans helped support the government’s budget to boost to defeat the virus which originated from China late last year and provide relief to the most affected sectors.
Of the amount of $4.55 billion, $1.7 billion came from the Manila-based Asian Development Bank (ADB), $500 million more was from the World Bank, and another $2.35 billion was raised from the dual-tranche issuance of the Philippines’ global bonds, which fetched coupon rates of 2.45 percent for the 10-year and 2.95 percent for the 25-year, the lowest ever for a Philippine dollar bond in both tenors.
The World Bank has also accelerated its disbursement of the $200-million additional financing for the ongoing Social Welfare Development and Reform Project II to the Philippines, bringing the total amount for budgetary support financing sourced by the government from foreign loans for the COVID-19 response to $4.75 billion.
In terms of project loan financing, the Philippines signed a $100-million loan with the World Bank last April 28 for the government’s COVID-19 Emergency Response Project (ERP) that aims to strengthen the country’s capacity to prevent, detect and respond to the threat posed by the COVID-19 pandemic and boost its national systems for public health preparedness.
The DOF also raised an additional $8 million in grant financing from the ADB to support two projects implemented by the Department of Health (DOH) and other government agencies dealing with the COVID-19 emergency.
These financing packages for budgetary support, project loan and grants amount to a grand total of $4.858 billion secured as of May 14 by the DOF for the government’s COVID-19 response efforts.
The DOF’s update on these financing packages formed part of President Duterte’s seventh weekly report to the Congress on the use of the additional powers granted to him under Republic Act (RA) No. 11469 or the Bayanihan To Heal As One Act.
The update on these financing packages has been posted on the DOF website.
For the budgetary support to help the government deal with the COVID-19 crisis, the ADB opened up to $1.5 billion in credit for the Philippines’ COVID-19 Active Response and Expenditure Support (CARES) program last April 27, and another $200 million for the additional financing under the Social Protection Support Project (SPSP) last May 5.
The World Bank provided budgetary support to the government with the signing of the $500-million loan for the Third Disaster Risk Management Development Policy Loan (TDRMDPL) last April 10, which became effective on April 27.
Last April 27, the government successfully raised $1.35 billion from its issuance of US-dollar denominated 25-year global bonds, and another $1 billion from its 10-year bonds.
In terms of grants, the ADB has provided $3 million for the government’s purchase of medical supplies for health workers, and $5 million for the government to leverage private-sector donations for a food distribution program that has benefited 55,000 poor households in Metro Manila and neighboring areas.
Earlier, Finance Secretary Carlos Dominguez III said Duterte’s “saving-for-a-rainy-day” approach to economic management has gained for the country the trust and confidence of the world’s most respected credit rating agencies and development partners,” such as the ADB, World Bank and Asian Infrastructure Investment Bank (AIIB)—“allowing us to borrow money at lower interest rates and longer repayment periods.”
Dominguez said the strong demand for the government’s latest global bond issue also “demonstrates the resiliency of global investor interest in the Philippine economy despite an environment gripped with pandemic fear.”
As a result, the government was able to develop a four-pillar strategy to shield the Filipino people against the adverse impact of the pandemic and craft a recovery program to gradually jumpstart the economic activities.
This strategy has a combined value of 1.74 trillion pesos or 9.1 percent of the gross domestic product (GDP). It covers the following: (1) providing poor and low-income households, small-business employees and other vulnerable groups emergency and wage subsidies; (2) marshalling the country’s medical resources and ensuring the safety of healthcare frontliners; (3) fiscal and monetary actions to finance emergency initiatives and keep the economy afloat, and (4) an economic recovery plan to create jobs and sustain growth under a post-quarantine scenario.
PHILIPPINE PANDEMIC RESPONSE SPENDING
On Friday, the Department of Budget and Management (DBM) reported that the government has now spend almost 354 billion pesos to curb the spread of the coronavirus, and to provide relief for those affected by the lockdown.
In a breakdown presented by the DBM, 247 billion pesos were sourced from pooled savings, 97 billion pesos came from unprogrammed appropriations, while 11 billion pesos came from the reallocation of subsidy programs.
Last March, Congress gave President Rodrigo Duterte a budget of 275 billion pesos to be re-appropriated for the coronavirus response.
Of the 247 billion pesos released from pooled savings, the biggest slice was dedicated to the a month’s worth of the social amelioration program at 100 billion pesos. The Department of Social Welfare and Development had a remaining balance of 96 billion pesos.
Local government units were provided a total of 37 billion pesos. Around 8.5 billion was dedicated to the Department of Agriculture for food security, while 2.5 billion pesos was given to repatriated overseas Filipino workers.
The Department of Health was also given P1.9-billion for RT-PCR kits to detect the coronavirus. P400-million was provided to the Philippine General Hospital, while 243 million pesos was given to the police and the military for temporary treatment and monitoring facilities.
Of the 97 billion pesos from unprogrammed appropriations, 51 billion was given to the DOF for small business wage subsidies, while 46 billion pesos was allotted to the DOH for supplemental funding.
(Katrina Elaine Alba)
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