Philippines has 'very strong fiscal position' to get COVID-19 loans — ADB
MANILA, Philippines — The Philippines' debt is not a source for concern and the country has a "very strong" fiscal position to contract loans for its COVID-19 response, the Asian Development Bank (ADB) said Monday.
ADB country director for the Philippines Kelly Bird said Manila's expected debt levels are "relatively low" for a country with a BBB plus debt rating.
"The Philippines has a very strong fiscal situation coming into the crisis. They have significant fiscal space, they have a fiscal program that was announced a few months back for 2021 and 2022. The debt levels are increasing but they understand, (it) would be around 54 to 58 percent of GDP (gross domestic product) around 2022," Kelly said at a press briefing.
"So that's relatively low for a country that has a triple B plus rating, so at this point in time, the country has quite strong fiscal fundamentals and so therefore debt is not really a concern," he added.
The Philippines is planning to borrow P73.2 billion to buy vaccines for 60 million Filipinos. About P40 billion will be sourced from multilateral agencies ADB and World Bank, while P20 billion will come from domestic sources like the Land Bank of the Philippines, Development Bank of the Philippines, and government-owned or controlled corporations.
About P13.2 billion will be sourced from bilateral sources. The country's budget deficit from January to October hit P940.6 billion, increasing by almost three-fold from the P348.3 billion posted in the same period last year.
Bird said the $9 billion ADB Asia Pacific Vaccine Access Facility or APVAX offers rapid and equitable support to the lender's developing members. He noted that there is a request by the Philippine government for approximately $325 million from the rapid response component of APVAX. The component covers financing vaccine procurement and logistics costs.
"The Philippines can access between $400 (million) and $500 million lending for vaccine procurement. At the moment, the government has requested approximately $325 million from the first component of the facility—that’s the vetted response component. And that’s dedicated for financing the procurement of vaccines," Bird said.
"ADB is working very closely and intensely with the government even over the Christmas and New Year period to carry out technical background work and preparing the vaccine project," he added.
Kelly said the funding for COVID-19 vaccine is over and above the ADB's 2021 lending pipeline.
"This is a new facility and it will not impact the lending pipeline for the Philippines for 2021 to 2023. And as I’ve mentioned, we approved our new lending pipeline last week, and that provides for funding on infrastructure, health projects, employment projects up to about $9.4 billion over that period. But this vaccine financing is over and above the lending pipeline," he said.
Members have to present a complete needs assessment and produce a national vaccination allocation plan. To be eligible for the facility, the vaccine should have been selected for procurement via COVAX on behalf of its participating countries or the vaccine manufacturer is prequalified by the World Health Organization or the vaccine is authorized by a stringent regulatory authority.
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