Manila secures P23-B loan from Tokyo

THE Philippines secured from the Japanese government on Wednesday a 50-billion yen (P23.5 billion) loan that will be used for budgetary support.

Finance Secretary Carlos Dominguez 3rd and Japan International Cooperation Agency (JICA) Chief Representative Eigo

Azukizawa signed the agreement on the Covid-19 Crisis Response Emergency Support Loan at the department’s head office in Manila.

“Consistent with the demands of this time, and in line with our ‘fast and sure’ approach to development financing, the Philippines and Japan

moved quickly in achieving this

emergency support loan,” Dominguez said after the signing.

According to him, the loan requires no policy conditions prior to disbursement, unlike regular policy-based loans, and would be

immediately available for withdrawal once it is declared effective.

The loan has an annual interest rate of 0.01 percent and will be repaid within 15 years, inclusive of a four-year grace period.

The loan is very important, Dominguez said, as the government’s response to the coronavirus disease 2019 ( Covid- 19) pandemic would more than double its budget deficit this year on the back of lower tax collections amid higher public spending for health care and social relief programs.

Economic managers now estimate that gap to hit P1.56 trillion, or 8.1 percent of the country’s gross domestic product, this year.

“We also need to fund our economic recovery program. This will require us to bridge the wider budget gap with additional borrowings. This facility will help us cover our budget expenditures during this very challenging time,” Dominguez said.

Meanwhile, Japanese Ambassador to Manila Koji Haneda said the loan was part of Japan’s assistance package for developing economies hit by the pandemic.

Tokyo has “high hopes that this loan will be instrumental in helping jumpstart the Philippine economy and running (its) fastpaced recovery,” he added.

Finance Undersecretary Mark Dennis Joven reported that Japan remained the biggest development partner of the Philippines.

He said that since the start of the Duterte administration, total official development assistance (ODA) from Japan already reached 625 billion yen.

“It comprises around half of our ODA portfolio — around 46 percent of the total Philippine ODA portfolio is Japanese, which is our biggest development partner,” he added.

For this year alone, he said 158.46-billion yen worth of loans and 3.317-billion yen in grants were signed between the Philippines and Japan.

“For Covid-19, we have basically $ 500 million in [ loans]. Other than that, we have a Covid- 19 response grant from the Japanese government [worth] 2 billion yen, or P1 billion,” he said.