bus commuters amid covid
In this August 19, 2020, photo, bus commuters in Commonwealth, Quezon City wear face-shield as the government eases lockdown restrictions to general community quarantine l.st August 19, 2020.
The STAR/Michael Varcas
Virus-induced foreign borrowing bloats to $8.96 billion
Ian Nicolas Cigaral (Philstar.com) - September 16, 2020 - 6:07pm

MANILA, Philippines — Foreign creditors sustained lending to the Philippines’ coronavirus response even as the economy has all but fully reopened 6 months into the pandemic fight, finance department data showed.

With tax revenues still seen weakening this year despite business restarting, the Duterte administration secured $8.96 billion worth of foreign loans, grants and securities from March to September 14. 

The latest tally was up 10.2% from $8.13 billion raised as of August 5 when the data was reported. The government has heavily relied on incurring bigger debts to bridge the gap between revenues and spending poised to widen to record-levels by yearend.

The list represents borrowings already agreed upon by the Philippines and lenders, which may or may not have been credited to state coffers as of posting. Figures also only cover foreign debts, and do not include peso liabilities which account for the bulk of the debt pile.

From last month, data showed the fund pool increased as a result of two loan agreements with Asian Development Bank (ADB) cumulatively worth $700 million. Loans were payable for 15 years, inclusive of a 3-year grace period, and charged with corresponding interest.

In total, the Manila-based lender has so far shelled out $3.43 billion, making ADB the country’s biggest lender to the pandemic rescue program. Of the total amount, only $8 million was in the form of grants and no longer need to be repaid.

Following ADB’s lending were proceeds from the government’s twin foreign bond sales. In April, the government raised $2.35 billion from offering offshore investors 10- and 25-year debt papers which they can hold into until maturity while getting paid 2.457% and 2.95% interest, respectively.

Washington-based World Bank also accounted for a huge share of funding for coronavirus programs at $1.67 billion in the current tally, data showed.

The China-led Asian Infrastructure Investment Bank, another multilateral agency, also loaned out $750 million. The Japanese government, on its own and through the Japan International Cooperation Agency, also gave out a combined $477.31 million to the pandemic response, part of which was for the purchase of medical equipment by the health department.

 Agence Française de Développement, the French aid agency, likewise extended $275.7 million in loans.

To replace revenues lost from virus-battered consumers and businesses, the government said it is to be expected to borrow more and fund the economy’s needs. Borrowings have started to trickle down to the state’s balance sheet in the form of debt reaching a record P9.16 trillion as of July. 

According to official assumptions, the uptrend in debt is likely to persist with outstanding obligations hitting P10.16 trillion by yearend and to P11.98 trillion next year.

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