THE Philippines has less than two weeks to tap a $500-million loan facility from the World Bank that it can use for the rehabilitation of areas devastated by Typhoon Ompong (international code name Mangkhut).
Documents from the World Bank available on its web site showed that the $500-million Catastrophe Deferred Drawdown Option (CAT-DDO) is set to expire in less than two weeks.
The Philippines received two CAT-DDOs from the World Bank with an effectivity of three years. The first one was approved in 2011 and was closed in 2014, and the second one was approved in 2015 and is set to expire on September 30.
However, the National Economic and Development Authority (Neda) said the Philippines has an option to extend the loan.
Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that the loan will be part of the discussions at a special meeting at the National Disaster Risk Reduction and Management Council on Thursday.
Based on World Bank documents, 99.5 percent or $497.5 million of the first $500 million CAT-DDO loan was disbursed.
“As the CAT-DDO policy program drew from the various agencies’ regular programs funded by internal budget, the DRM [disaster-risk management] capacity-strengthening momentum was maintained after the CAT-DDO resources had been disbursed, and continued beyond the loan’s closing date,” the World Bank said.
However, based on a status report as of March 2018, the second CAT-DDO, which is set to expire in less than two weeks, only has 0.5 percent or $2.5 million of the loan disbursed to the government. Finance Secretary Carlos G. Dominguez III said that, as of end-August, the loan facility has an available balance of $497.5 million.
The fund has been left untouched because a presidential state of calamity has not been declared since the CAT-DDO 2 was extended by the World Bank in 2015. Based on Neda documents, the CAT-DDO has a Libor-based interest rate that is charged on disbursed and outstanding amounts.
The applicable interest rate is the prevailing rate for International Bank for Reconstruction and Development loans at drawdown. In addition, there is a front-end fee of 0.50 percent and a renewal fee of 0.25 percent on the loan amount.
“The calculation of the average maturity of DDOs begins at loan effectiveness for the determination of the applicable maturity premium, but at withdrawal for the remaining components of the spread,” Neda documents read.
The documents said up to the full loan amount is available for disbursement at any time within three years from loan signing. Amounts repaid by the borrower are available for drawdown, provided that the closing date has not expired.
The drawdown period may be renewed up to four times. A front-end fee of 0.50 percent of the loan amount is due within 60 days of effectiveness date of the project and may be financed out of the loan proceeds. The renewal fee is computed as 0.25 percent of the undisbursed balance.