P 23.5-B LOAN FROM JAPAN TO FUND COVID-19 RESPONSE
A fresh loan of P23.5 billion from Japan is expected to ramp up government response to the COVID-19 pandemic and the economic crisis in its wake.
On Wednesday, Finance Secretary Carlos Dominguez III and Eigo Azukizawa, Japan International Cooperation Agency (Jica) Philippines chief representative, signed an agreement for a 50-billion yen budget-support loan, which can be disbursed faster than other loans as it did not require prior policy conditions.
“The loan proceeds will automatically be available for withdrawal once the loan is declared effective, which is expected in the last week of July,” the Department of Finance said in a statement.
Four-year grace period
The loan, cofinanced with the Manila-based Asian Development Bank, carried a fixed interest rate of 0.01 percent per annum, with a 15-year maturity period inclusive of a four-year grace period.
“We cannot understate the importance of this particular emergency support loan. As you may know, our deficit-togdp [gross domestic product] ratio will more than double this year as tax collections are down even as the government spends more to beef up our health-care system and to provide relief to families, workers and other sectors hardest hit by the pandemic. We also need to fund our economic recovery program,” Dominguez said.
The Cabinet-level development budget coordination committee had projected this year’s budget deficit to widen to at least 8.4 percent of GDP, or P1.6 trillion.
Stimulus packages
Dominguez said Jica’s latest loan would support government operations, including the hiring of contact tracers and the ramping up of COVID-19 testing, as well as other projects to be rolled out under several stimulus packages pending in Congress.
Finance Undersecretary Mark Dennis Joven said the Philippines had planned to borrow $8.6 billion in official development assistance from bilateral and multilateral sources this year to finance the fight against COVID-19.
So far, a total of about $5 billion in loans had been obtained for the purpose, Joven said.
The latest data from the Department of Budget and Management showed that as of June 30, the agency has already released a total of P374.9 billion for COVID-19 response, the bulk, or P266.2 billion of which, came from discontinued programs, activities and projects under this year and last year’s national budgets; P98.4 billion from special purpose funds, and P10.2 billion from the regular budgets of implementing agencies.