MANILA, Philippines — The Philippine government has raised $8.83 billion in financing support from foreign lenders to fund its COVID-19 response efforts, the Department of Finance (DOF) said.
In a report before the House committee on appropriations, Finance Secretary Carlos Dominguez said the Philippines was able to secure $8.83 billion in foreign loans and grants from foreign development partners and the offshore commercial market as of end-August.
Of the total amount, $5.98 billion came in the form of budgetary support financing from various multilateral institutions, Dominguez said.
The DOF chief’s presentation showed that $3.3 billion of this figure came from the Asian Development Bank (ADB), followed by the World Bank which has extended $1.2 billion in budgetary financing.
The Asian Infrastructure Investment Bank (AIIB) has also provided $750 million in loans, while the Japan International Cooperation Agency (JICA) and the Agence Francaise de Developpement extended $458.95 million and $275.7 million, respectively.
Meanwhile, $2.35 billion of the total COVID-19 financing as of end-August came from the government’s recent global bonds issuance, which fetched the Philippines’ lowest ever coupon rate in the US dollar market.
”The remaining $496.36 million is composed of grant and loan financing from our development partners for various COVID-19 specific projects,” Dominguez said.
The Philippine government is ramping up its borrowings this year to plug its budget deficit, which is now expected to widen to P1.82 trillion or 9.6 percent of the gross domestic product due to COVID-19.
For 2020, the Philippines is programmed to raise P3 trillion from borrowings, bulk or P2.22 trillion of which will come from domestic sources. The remaining P785.61 billion will be sourced from external lenders.
Another P3.03 trillion is in the borrowing program for 2021.
Budget documents showed that the government’s outstanding debt is expected to hit P10.16 trillion by the end of 2020, before further increasing to P11.98 trillion in 2021.
These would translate to a debt-to-gross domestic product level of 53.9 percent for 2020 and 58.1 percent for 2021, according to Dominguez. In 2022, the debt-to-GDP level is projected to swell further to 59.9 percent.
“The projections are still lower when compared to the country’s all time high debt level of 71.6 percent of GDP in 2004,” Dominguez said.