Foreign aid for Covid war chest now $9.4 billion

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THE Department of Finance (DOF) has so far secured over $9.4 billion or roughly P455 billion in loans and grants from foreign lenders to beef up the government’s war chest against the Covid-19 pandemic.

According to the updated list of DOF as of September 14, the DOF has raised a total of $8.956 billion (or about P433.65 billion).

However, the list did not include yet the newly signed loan agreement between the Philippines and Japan on Tuesday, amounting to ¥50 billion (or about P23.3 billion) to aid the government’s post-disaster response efforts in the event of a national calamity or health emergency.

Of the $8.956 billion in financing secured by the DOF as of September 14, budgetary support financing amounted to $8.33 billion, while grant and loan financing reached $621.36 million.

Moreover, $6.86 billion of the total $8.33 billion in budgetary support financing from the Asian Development Bank, World Bank, Asian Infrastructure Investment Bank, Japan International Cooperation Agency (Jica), and dollar-denominated global bonds have been disbursed to the government.

Japan loan

On Tuesday, Finance Secretary Carlos G. Dominguez III and Jica Chief Representative Eigo Azukizawa signed the accord for the second phase of the Post-Disaster Standby Loan (PDSL).

The financing package under PDSL, which carries a fixed interest rate of 0.01 percent, will form part of the Philippines’s “financial war chest” for future emergencies, Dominguez said.

In the case of the current Covid-19 pandemic or any other public health emergencies, the imposition of an enhanced community quarantine (ECQ) or its equivalent in the National Capital Region (NCR) or in any other highly urbanized area in the country will also trigger the disbursement of the loan.

“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies. The ability to mobilize financial resources without delay is essential to emergency preparedness,” Dominguez said at the ceremonial signing of the loan agreement at the DOF office in Manila.

The government borrows to finance its spending requirements as well as to cover its budget deficit.

As tax collections are down amid the pandemic, the Development Budget Coordination Committee (DBCC) projects the country’s budget deficit to more than double to 9.6 percent of GDP or P1.815 trillion from only 3.4 percent of GDP or P660.2 billion last year.

The DBCC also expects the country’s debt-to-GDP ratio this year to increase to 53.91 percent of GDP—a level that it has not seen in over a decade—from a record low of 39.6 percent of GDP last year.

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