THE Philippine government has so far secured $7.761 billion or roughly P385.95 billion in loans and grants from foreign lenders to boost its war chest against the Covid-19 pandemic.
Data from the Department of Finance (DOF) showed that $7.63 billion or about P379.44 billion in budgetary support financing was already raised as of July 1, including from the issuance of $2.35 billion dollar-denominated global bonds. Of the $7.63-billion budgetary support financing, $5.11 billion or P254.12 billion has been disbursed to the government.
On top of this, a total of $126.36 million or about P6.28 billion in grant and loan financing has been provided to support various projects to be implemented by agencies involved in Covid-19 response.
Of the total financing of $7.761 billion, six came from Manila-based Asian Development Bank, four from Washington-based World Bank and two from Agence Française de Développement (AFD) of France, two from Japan—including the $458.95-million Covid-19 Crisis Response Emergency Support Loan signed on Wednesday with the Japan International Cooperation Agency (Jica) and $18.36 million in nonproject grant aid from the Japanese government—and one from China-led Asian Infrastructure Investment Bank.
While the original amount of nonproject grant aid extended by the Japanese government was ¥2 billion or less than P1 billion as provided through the exchange of notes dated June 8, the DOF noted that the agent agreement, which will provide a basis for procurement, has yet to be signed.
The government also earlier raised $2.35 billion from the US dollar market with the lowest coupon rate ever in the country’s history.
Finance Undersecretary Mark Dennis Y.C Joven, who heads the DOF’s International Finance Group, said on Wednesday the government intends to tap a total ODA of $8.6 billion (about P427.8 billion) this year, to be used essentially to fund the government’s fight against the pandemic.
The government borrows mostly from the local debt market and the rest from external sources to finance its spending requirements and to cover its budget deficit, especially at this time that the gap is expected to more than double to P1.613 trillion or 8.4 percent of GDP from only P660.2 billion or 3.4 percent of GDP in 2019.
The wider budget gap projected by the government’s economic team this year is due to the expected drop in state revenues while it ramps up its spending to deal with the Covid-19 pandemic.
The country’s debt-to-GDP ratio is also seen to increase to 49.8 percent this year from 39.6 percent last year.
As of end-May this year, the government’s total outstanding debt swelled by 12.3 percent to P8.89 trillion from P7.916 trillion in the same period in 2019.
The national government’s budget deficit for the first five months of the year has ballooned to P562.2 billion, nearly 695 times the previous year’s budget gap of only P809 million for the period.
Image credits: Roy Domingo