Philippines inks P75-B Japan loan for Visayas, Mindanao projects

MANILA, Philippines — The Philippines sealed two loan agreements cumulatively worth P75.5 billion with Japan to help foot the bill for infrastructure projects in Visayas and Mindanao as the government banks on its "Build, Build, Build" program to reignite the coronavirus-battered economy.

Broken down, the first loan, amounting P57 billion, will be used to partly finance the construction of the Cebu-Mactan Fourth Bridge and the Coastal Road Construction project in the Visayas. The other agreement worth P18.5 billion will augment funding for the Davao City Bypass Construction Project, an undertaking that initially secured P9.27 billion from a loan in 2015.

The deals came as a result of high-level consultations between the Philippines and Japan, the finance department said in a statement. The agreements were signed by Finance Secretary Carlos Dominguez III and Japan International Cooperation Agency (JICA) chief representative Eigo Azukizawa.

"Given the challenging circumstances, these projects bring more support to our economic recovery well beyond their nominal value,” Dominguez said during the signing ceremony.

According to the finance department, both loans carry a 0.10% annual interest for non-consulting services and 0.01% for consulting services. The loans are payable in 40 years inclusive of a 12-year grace period. 

The two agreements with Japan, the country's top bilateral partner, came as the Duterte administration braces for a tough economic recovery from the pandemic and movement restrictions that crippled business activity and tempered consumption and investment. The economy is poised to enter recession this quarter after a 0.2% slump in the first three months.

Lockdowns were just started to ease last June 1, including in the economic centre of Metro Manila, although business operations remain tepid while anxious consumers were still encouraged to stay home unless necessary to go out. As a result, the government is banking on its massive infrastructure program to fix the pandemic's damage and propel the economy to recovery.

Of the loan pacts signed on Tuesday, the P57 billion would be spent to cover 75% of funding requirements of the Cebu-Mactan Fourth Bridge and Coastal Road Construction project, a 3.3-kilometer bridge with elevated viaducts expected to start groundwork in 2021.

The balance of 25% or P18.8 billion will be shouldered by the government, the finance department said. The project is targeted finished by 2029.

Meanwhile, the P18.5-billion Davao City Bypass Project to be funded by another loan is designed to reduce congestion in the city through the construction of a 45.5-kilometer, four-lane bypass road. Despite delays in some infrastructure due to lockdown restrictions, the project is still expected to break ground this year and targeted to service motorists by 2023.

“In a broader sense, I hope that these projects will also contribute to the economic recovery of the country amidst the COVID-19 (coronavirus disease-2019) pandemic as we fully support your government's pronouncement that restarting and accelerating the 'Build, Build, Build' program should be one of many strategies for reviving the Philippine economy,” Azukizawa said.