DOF lauds proposed $5 billion COVID-19 crisis recovery facility

MANILA, Philippines — The Department of Finance (DOF) has welcomed the Asian Infrastructure Investment Bank (AIIB)’s plan to launch a $5-billion financing facility to support the recovery of countries severely impacted by the coronavirus disease 2019 (COVID-19).

In a text message to reporters, Finance Secretary Carlos Dominguez said the Philippine government welcomes the China-backed AIIB’s proposed facility and will present to the AIIB its own COVID-19 response measures.

“This is a very welcome initiative from AIIB. We will definitely present to them our plans for combating the contagion and for the long term strengthening of our healthcare system,” Carlos Dominguez said.

In a statement, AIIB said it is proposing to its board of directors the creation of a $5-billion facility to support the quick recovery of public and private entities adversely affected by the COVID-19 pandemic.

According to the AIIB, the facility could be used to support emergency public health needs, such as health infrastructure for emergency preparedness. It could also support clients whose infrastructure investments are severely impacted by the pandemic.

It could also provide the financing needed to preserve the productive capacity of select sectors, including manufacturing, that have been hit by COVID-19.

AIIB said the size of the facility could be increased depending on client demand.

It is also exploring how it can use its Project Preparation Special Fund to help its members whose economies are being particularly impacted by COVID-19.

 “AIIB will do its part to rapidly respond to the financing needs of its members and clients in close partnership with other international development institutions. I believe this new facility will help our clients to overcome immediate financial pressures and maintain critical long-term investments that otherwise may not be possible,” AIIB president and chairman of the board Jin Liqun said.

Earlier, Dominguez said the DOF, together with the Department of Health (DOH), will look into the financing packages to be offered by AIIB to improve the country’s public health infrastructure.

He said the government is also in talks with multilateral institutions to seek concessional financing of up to $2 billion.

So far, the government has received a grant of $3 million from the Asian Development Bank (ADB) and a loan facility of $100 million from the World Bank. The ADB also recently approved a $5 million grant for the distribution of food items to poor households in Luzon.

The finance chief said the Philippine government is prepared to increase the country’s borrowings to cushion the impact of COVID-19.

The National Economic and Development Authority estimates that economic growth may range between negative 0.6 to 4.3 percent this year if the impact of the pandemic is felt until June.

The DOF said the Philippines’ deficit level may also breach four percent of the gross domestic product this year, higher than the initial estimate of 3.6 percent, as the government prepares to increase spending despite a projected drop in revenues.