Government secures $7.76 billion foreign loans, grants for COVID measures

MANILA, Philippines  — The government has so far secured $7.76 billion in loans and grants from foreign lenders to finance measures that address the coronavirus disease 2019 or COVID-19 pandemic, the Department of Finance (DOF) said.

Based on a report posted on the DOF’s website, the government has raised a total of $7.63 billion in budgetary support financing from multilateral agencies, as well as the offshore commercial debt market, for COVID-19 response as of July 1.

The DOF said $5.11 billion of this amount has already been disbursed to the government.

In addition, the DOF said $126.36 million in grants and loans have been secured in support of various projects to be implemented by agencies involved in COVID-19 response.

The government is ramping up its borrowings this year to plug its budget deficit, which is now expected to widen to P1.613 trillion or 8.4 percent of gross domestic product due to COVID-19.

According to DOF data, the Asian Development Bank (ADB) had the largest share in the foreign borrowing portfolio, extending $2.6 billion in loans so far for the government’s measures against the pandemic.

This comprises the $1.5 billion loan for the COVID-19 Active Response and Expenditure Support Program (CARES) and the $200 million financing for the Social Protection Support Project, both of which were signed last April.

Last June, the bank also provided a $400 million loan under the ADB Support to Capital Market Generated Infrastructure Financing and another $500 million financing support under the ADB Expanded Social Assistance Program.

On top of these, ADB has also extended grants amounting to $3 million under the COVID-19 Emergency Response Project and $5 million under the Rapid Emergency Supplies Provision.

Meanwhile, budgetary support loans from the World Bank as of July 1 amounted to $1.2 billion.

This includes the $500 million Third Disaster Risk Management Development Policy Loan, $500 million Emergency COVID-19 Response Development Policy Loan, and the $200 million loan for the Social Welfare Development and Reform Project II.

The bank also provided $100 million in project loan financing for the COVID-19 Emergency Response Project.

In addition, the Philippines and the Asian Infrastructure Investment Bank (AIIB) last month signed a $750 million loan agreement for the CARES program.

The Agence Française de Développement likewise extended $165.42 million in loans for the Expanding Private Participation in Infrastructure program and another $110.2 million for the Inclusive Finance Development Program.

Just this week, the Philippines and Japan International Cooperation Agency also finalized the $458.95 million agreement for the COVID-19 Crisis Response Emergency Support Loan.

The government of Japan also provided $18.36 million in grants for the provision of medical equipment to the Department of Health.

Aside from multilateral and bilateral partners, the government has also tapped the offshore commercial debt market to raise funds for its COVID-19 response efforts.

Last April, the Philippines issued $2.35 billion in US dollar-denominated global bonds with maturities of 10 years and 25 years.