Phl diversifying ODA sources, eyes $300 M from Spain

The Philippines continues to diversify its sources of cheap funding through official development assistance (ODA) loans as it is set to ink a $300 million deal with Spain.

Finance Assistant Secretary Maria Edita Tan said the Philippines and Spain are discussing the terms and conditions of the ODA loan package to fund various projects particularly infrastructure.

“We have received another offer from an ODA partner and this time it is from the Spanish government for a $300 million loan over the next three years,” Tan said.

Tan said the terms of the package are “very” good and both parties are now crafting the memorandum of understanding (MOU) to be finalized within the next two months.

“We can either tap the euro facility or the dollar facility. For the euro its .25 percent over a 35 year period inclusive of a 10-year grace period, while the dollar facility is 1.15 percent over a 20 year period inclusive of a 10-year grace period, that could cover either projects or program loans,” she said.

When finalized, Tan said the funding would give a savings of about three percent per annum for the national government.

According to Tan, the Spanish counterparts are looking at several projects involving infrastructure, renewable energy, telecommunications, water treatment, solid waste, agriculture, food industry, and tourism.

“Actually we just discovered this facility based on our discussions now, previously we’ve never tapped this facility ,” Tan said.

The 2017 Official Development Assistance (ODA) Portfolio Review Report of the National Economic and Development Authority (NEDA) showed that all indicators of the government’s absorptive capacity for ODA loans — disbursement level, disbursement rate, availment rate and disbursement ratio — registered improvements in 2017 compared to 2016.

ODA loans disbursement level, the amount of actual drawdowns from loan proceeds, rose 11.5 percent to $1.4 billion in 2017 from $1.25 billion in 2016, while disbursement rate, the actual disbursement level as a percentage of target disbursement for the period, improved to 67.21 percent from 61.12 percent.

The availment rate, the total actual spending as a percentage of the scheduled spending from the start of project implementation up to reporting period, rose to 71.5 percent in 2017, faster by six percent from the previous year.

Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia attributed the improvement to better technical capacities of implementing agencies.

“This means implementing agencies are improving their technical capacities and making headway in resolving key issues that cause delays in the execution of programs and projects,” Pernia said.

NEDA said the country’s total outstanding ODA portfolio for 2017 reached $14.72 billion, comprising 352 grants amounting to $2.42 billion and 70 loans amounting to $12.3 billion.

Out of the total, the infrastructure sector has the largest allocation amounting to $6.62 billion or 45 percent of the total amount, followed by social reform and community development of which 26.11 percent of the total has been apportioned.

Japan remained the top provider of ODA to the Philippines in 2017 with loans and grants placed at $5.33 billion, accounting for 36.18 percent of the country’s total ODA portfolio.

It was followed by the World Bank with $3.07 billion (20.88 percent) and the Asian Development Bank with $2.97 billion (20.16 percent).