Philippines to tap $500-million World Bank loan for Ompong aid

MANILA, Philippines — The Department of Finance (DOF)  is ready to tap a standby credit line from the World Bank to support disaster recovery efforts following the onslaught of Typhoon Ompong, once the President declares a state of calamity in the affected areas.

In a statement, Finance Secretary Carlos Dominguez said the DOF intends to utilize the $500 million Disaster Risk Management Development Policy Loan With A Catastrophe Deferred Drawdown Option (CAT-DDO2) program, which was set up by the World Bank for the Philippines in 2015.

Dominguez said the loan facility would provide the government immediate funds to help the government’s disaster relief and reconstruction efforts.

However, the finance chief said a presidential declaration of state of calamity is required to trigger the loan facility, regardless if it covers the whole country or specific areas only.

He said a draft resolution endorsing the declaration would be submitted by the Office of Civil Defense to the National Disaster Risk Reduction and Management Council (NDRRMC) for approval.

“The Office of Civil Defense (OCD) convened a technical working group  last Tuesday (Sept. 18) and agreed to finalize a draft resolution endorsing to the NDRRMC a state of calamity in the Ilocos Region, Cagayan, Central Luzon and the Cordillera Administrative Region (CAR),” Dominguez said.

“The NDRRMC would then have to approve the recommendation for the presidential declaration of a state of calamity,” he said.

According to Dominguez, the loan facility can be accessed 48 hours after the President’s declaration of state of calamity.

This is the second CAT-DDO facility extended by the World Bank to the Philippines. The first one was established in 2011 and expired in 2014.

The loan facility, net of the 0.5 percent front-end fee, has an available balance of $497.5 million as of end-August  2018, Dominguez said.

The DOF said the government can draw up the full amount at any given time within three years of CAT-DDO’s implementation coverage.

National Treasurer Rosalia de Leon, for her part, said the facility is still untouched as there has not been any Presidential declaration of state of calamity yet since its establishment in 2015.

She said the facility provides loans payable in 25 years, inclusive of a 10-year grace period with an interest rate based on the current US dollar six-month London Inter-bank Offered Rate (LIBOR), plus an applicable variable spread.

 “Compared to an issuance in the dollar space for a similar amount and tenor, the CAT-DDO costs less annually,” De Leon said.