Philippines, Japan ink P23.3 billion post-disaster loan

MANILA, Philippines — The Japanese government has provided the Philippines access to a P23.3 billion (50 billion yen) loan facility that aims to support the country’s post-disaster response efforts in the event of a calamity or  worsening health crisis.

During a ceremonial signing yesterday, Finance Secretary Carlos Dominguez and Japan International Cooperation Agency (JICA) chief representative Eigo Azukizawa finalized the agreement for the 50 billion yen Post Disaster Standby Loan (Phase 2).

Dominguez said the loan facility would also improve the country’s  preparedness against emergencies, especially amid the ongoing COVID-19 crisis.

“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies. The ability to mobilize financial resources without delay is essential to emergency preparedness,” Dominguez said.

In a press briefing following the signing, Finance Undersecretary Mark Joven said the facility would allow the quick disbursement of funds which can be triggered upon the declaration of a state of calamity or public health emergency.

He said the facility could also be triggered by the imposition of a lockdown in the National Capital Region and other highly urbanized cities.

“In other words, the worsening of a quarantine or lockdown will be a trigger under this PDSL Phase 2. It is a budget support facility, so basically it will help in funding all post-pandemic activities to revive the economy, along with health sector support,” Joven said.

The PDSL 2 will be available for quick disbursement in tranches within three years once the loan is declared effective. It may be extended for an additional three-year period for up to four times.

The loan carries an interest rate of 0.01 percent per annum, payable in 40 years, inclusive of a 10-year grace period.

Last July 1, the Philippines and Japan also signed an agreement for the 50-billion yen COVID-19 Crisis Response Emergency Support Loan (CCRESL) which aims to assist the government’s efforts to contain the spread of the coronavirus pandemic and provide economic relief to Filipinos most affected by this global crisis.

The Philippines was the first country to receive financing support from this JICA facility.

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, the bulk or P2.22 trillion, of which will come from domestic sources. The remaining P785.61 billion will be sourced from external lenders.