The Department of Finance (DOF) has secured a total of US$13.36 billion in loans and grants from external sources for the government’s COVID-19 response programs in 2020, and is now working to raise US$1.46 billion (P70 billion) from multilateral lenders, the Philippines’ bilateral partners and/or the domestic market for the procurement of vaccines to inoculate at least 50 million Filipinos against this lethal virus.
The P70 billion forms part of the P82.5 billion budget required to provide COVID-19 vaccines to inoculate adult Filipinos. The remaining amount of P12.5 billion will come from the P2.5 billion that is a portion of the budget of the Department of Health (DOH) under the 2021 General Appropriations Act (GAA), while P10 billion will come from the funds allocated for the COVID-19 vaccination program under Republic Act (RA) No. 11494 or the Bayanihan To Recover As One Act (Bayanihan 2).
The Asian Development Bank (ADB), World Bank (WB) and Asian Infrastructure Investment Bank (AIIB) are among the sources of funding for the vaccine fund.
“We will fully recover from this crisis once a safe and effective vaccine becomes available to us, on the strength of our enduring macroeconomic fundamentals,” Finance Secretary Carlos Dominguez III said.
The ADB has so far been the biggest loan provider to help finance the Philippines’ COVID-19 response programs.
As of December 15, ADB has approved and signed with the DOF a total of US$3.93 billion in loans and another US$8 million in grants related to the government’s pandemic response measures.
A total of US$2.27 billion in loans has been secured by the DOF from the World Bank (WB), while another US$750 million will be provided by the Beijing-based Asian Infrastructure Investment Bank (AIIB).
The government of Japan, through its Japan International Cooperation Agency (JICA), has signed a US$458.95-million loan with the DOF for the second phase of its Post-Disaster Standby Loan to the Philippines and another US$458.95 million loan for the government’s COVID-19 Crisis Response Emergency Support program in the third quarter of 2020.
Japan has also extended a US$18.36-million non-project grant aid for the provision of medical equipment to the DOH.
France’s L’Agence Française de Développement (APD) has provided US$276.2 million, while Korea, through its Korean Export-Import Bank–Economic Development Cooperation Fund (KEXIM-EDCF), has pledged US$100 million.
A total of US$5.1 billion was raised through the issuance of US-dollar denominated global bonds in April and December.
Dominguez said the Philippines’ strong financial position, which was the result of the prudent economic and fiscal policies that President Duterte pursued since he assumed office in 2016, has enabled the Philippines to “quickly access emergency loans from our development partners and the commercial markets at very low rates, tight spreads and longer repayment periods.”
“Our strong macroeconomic fundamentals—the products of President Duterte’s hard-won policy battles—make us hopeful that the pain brought about by this coronavirus crisis will be short and our recovery will be strong,” Dominguez said.
The country’s strong fundamentals on the Duterte watch are reflected, said Dominguez, in the country’s low inflation rate, the strong peso, high and stable sovereign credit ratings that are within striking distance from the sterling ‘A’ grade; and the low coupon rates and high premiums of the government’s recent US dollar-denominated global bond issuances, to name a few.
Dominguez said the government’s strong fiscal profile has enabled it to quickly put together a comprehensive COVID-19 response strategy when the President decided in March to place the entire Luzon and other parts of the country on a strict lockdown to save human lives and protect communities from the virus.
The strategy has provided targeted assistance amounting to P183.2 billion to about 18 million Filipino families most affected by the economic repercussions of the pandemic, and another P45.8 billion in wage subsidies for around 3.1 million workers of small businesses. The total of P229 billion in lifeline assistance extended to these sectors make it the largest social protection program in the country’s history, Dominguez said.
In 2021, as the government rolls out its economic recovery program, Dominguez said the “most important and largest stimulus measure” will be the P4.506 trillion General Appropriations Act (GAA) for 20211, which was signed into law by President Duterte last December 28.
Dominguez said the 2021 budget “will provide us with some of the heftiest tools necessary to rebuild our economy,” which the government projects to expand by 6.5 to 7.5 percent in 2021.
The Congress has also extended the validity of the Bayanihan to Recover as One Act or the Bayanihan 2 Law to June 30, 2021 and the 2020 General Appropriations Act (GAA) until December 31, 2021.
Both bills were certified by the President as urgent to provide the government more leeway in spending the unspent funds under these two measures to help pump prime the economy in 2021.
As of Nov. 30, 2020, the government has yet to utilize P110 billion under the 2020 budget and P38 billion under Bayanihan 2, according to Senate data.
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