Address government underspending before borrowing new loans for COVID-19, group says

The Philippine government must first find ways to address significant underspending for COVID-19 measures before even considering to borrow new loans, a civil society group said on Thursday. 

Social Watch Philippines issued this call after it released a study authored by Alvic Padilla that looked into COVID-19-related loans from the Asian Investment Infrastructure Bank (AIIB) and Asian Development Bank. 

“We are still in a continuing disaster so there is no time to lose in providing for the needs of our people at the soonest possible time,” Padilla said on Thursday (17 December 2020), two days after it was reported that the Senate approved on final reading two measures extending the validity of the 2020 national budget and the Bayanihan to Recover as One Act (Bayanihan 2). Once enacted, these measures will allow government to spend unutilized funds from the current budget until June next year. 

Citing Department of Budget and Management (DBM) data, Padilla, in a public presentation of his study, stressed that the government spent less than what was programmed during the pandemic. [To read or download a copy of his presentation, please click here. To read or download a copy of the study itself, please click here.]

Instead of spending P3.268 trillion from January to September this year, the national government only utilized P3.022 trillion or 7.5% less than programmed, the DBM said on its website. 

As of September 2020, the government has borrowed $9.9 billion to address COVID-19, based on data from the Department of Finance (DoF).

One of these loans is the $750-million Asian Investment Infrastructure Bank (AIIB) Loan, which, in turn, was the subject of the study undertaken by SWP.

“The national government should strengthen its administrative capability to address underspending of COVID-19 loans,” said Ma. Victoria R. Raquiza, the group’s co-convenor, shortly after the public presentation of the study through an online video conferencing platform. 

This includes “addressing rigidities in the system that has delayed spending for and distribution of aid to a wide swathe of our people negatively affected by the pandemic.”

According to Raquiza, slower fund use is exemplified by the Department of Social Welfare and Development (DSWD), the primary agency in charge of providing aid and relief to the most vulnerable groups. In November, it was reported that the agency failed to utilize its P83-billion allotment for this year, she said.

Raquiza, also a professor at the National College of Public Administration and Governance at the University of the Philippines, reiterated that there is a need to balance the prudent use of funds with the need to be more flexible and lenient in the application of certain rules in order to expedite and fast-track the release of funds for COVID-19 programs. Unless these adjustments are undertaken, then underspending may continue. 

Meanwhile, Padilla’s report entitled “A Scoping Study on the Asian Infrastructure Investment Bank’s COVID-19 Loan to the Philippines,” also called on the government and its creditors to “provide and broaden meaningful spaces” that will allow citizens’ groups to keep better track of the use and effectiveness of COVID-19 loans. 

Once these spaces are made more open and participatory, citizens will be able to “unpack and analyze the performance of agencies implementing critical COVID-19 measures on health, social protection, and economic relief for vulnerable groups,” Padilla’s study said. 

“Citizens’ monitoring of these loans will help ensure that the loan proceeds are spent in the most effective, efficient, and timely manner,” the study said. “It is also essential to monitor the impacts of servicing these debts in tax and budget policies in the long-term and to engage government into taking fiscal measures that will promote sustainable, equitable, and adequate financing for development.” 

Gov’t borrowed money for hazard pay, study says

Health workers express demands for hazard pay during a demonstration held in November 2020 in Manila. (Photo by All UP Workers Union-Manila)

The Philippine government borrowed money to cover the hazard pay of health workers. 

This, among others, was one of several findings of a study that examined one of the many loans that the government incurred for its COVID-19 response. 

Entitled “A Scoping Study on the Asian Infrastructure Investment Bank’s COVID-19 Loan to the Philippines,” the study was undertaken by a special team under civil society group Social Watch Philippines (SWP).  [Download the study here.]

The USD750 million loan agreement between the Philippines and the AIIB sets performance targets of the government’s COVID-19 response measures. The AIIB loan, in turn, forms part of the Asian Development Bank’s COVID-19 Active Response and Expenditure Support (CARES) Program. [See: ADB Gender Monitoring Matrix]

This table is part of the Gender Monitoring Matrix of the Asian Development Bank’s CARES program. ADB Gender Monitoring Matrix]

One of the expected outputs of the ADB CARES program — as indicated in its Gender Monitoring Matrix — is that the government is expected to ensure that “by October 2020, frontline health workers, of whom 75% are women, should already enjoy health insurance coverage through PhilHealth, receive a special risk allowance of 25% of salary plus hazard pay, P100,000 compensation for severe infection, and a P1 million benefit in case of death.”

These findings indicate that the government has raised substantial cash to cover hazard pay of health workers, among others. 

As of September 2020, the government’s total debts for its COVID-19 response has reached USD 9.914 billion, the study said. 

With government’s substantial borrowing for COVID-19, the study called on civil society groups to further monitor how these funds are used. 

“Citizens’ monitoring of these loans will help ensure that the loan proceeds are spent in the most effective, efficient, and timely manner. It is also essential to monitor the impacts of servicing these debts in tax and budget policies in the long-term and to engage government into taking fiscal measures that will promote sustainable, equitable, and adequate financing for development,” the study said.  

Proceeds from these loans should also be used efficiently and should be properly accounted for, the study said. 

“Transparency and accountability on COVID-19 loans are crucial because any misuse, abuse, or wastage will have dire human and social consequences,” the study said. 

It added: “While borrowings are not necessarily detrimental, and may even be necessary in some situations, prudent debt management is important to ensure that people most affected by the pandemic will not bear the burden of servicing these debts.”

New study seeks further monitoring of COVID-19 programs to help ensure effectiveness, transparency

Health workers hold a rally to seek the release of their hazard pay in this photo taken in November 2020 in Manila. The provision and release of hazard pay are among the expected outputs that the government must comply with as part of its Covid-19 loan agreements. (Photo from All UP Workers Union-Manila)

Civil society groups should further monitor how government agencies use budgets and deploy measures against the pandemic, especially since the country borrowed billions of dollars to fund these programs.

This was among the several recommendations of a newly-released study that examined the Asian Infrastructure Investment Bank’s COVID-19 loan to the Philippines. [Download study here.]

“Citizens must further unpack and analyze the performance of agencies in implementation of critical COVID-19 response measures on health, social protection, and economic relief for vulnerable groups,” said the study entitled “A Scoping Study on the Asian Infrastructure Investment Bank’s COVID-19 Loan to the Philippines.”

Released in early December 2020, the study was undertaken by a special team put together by civil society organization Social Watch Philippines. [See: AIIB Loan Project Brief]

The AIIB loan forms part of the Asian Development Bank’s COVID-19 Active Response and Expenditure Support (CARES) Program. [See: ADB Cares program]

Worth USD750 million, the AIIB loan is just a portion of the total USD9.9 billion that the Philippines borrowed to mitigate the health and socio-economic effects of the pandemic. [See: List of the Philippines’ COVID-19 loans]

Unlike the Philippines’ previous borrowings, the AIIB loan does not have any conditions but sets expected outputs of COVID-19 programs.

One of the loan’s expected health outputs is that by July 2020, turnaround time for coronavirus testing from sample collection to the generation of results should be reduced to 48 hours or less.


Citizens and groups interested in checking how COVID-19 loans are spent should also “look at effectiveness and efficiency in the delivery of specific programs, identifying implementation (including targeting) issues…”

Other recommendations including examining the effectiveness of COVID-19-related programs at the local level, accounting for fiscal and economic impacts of COVID-19 financing, and the effects of the coronavirus measures on the lives of women.

“Transparency and accountability on COVID-19 loans are crucial because any misuse, abuse, or wastage will have dire human and social consequences,” the study said.

It added: “While borrowings are not necessarily detrimental, and may even be necessary in some situations, prudent debt management is important to ensure that people most affected by the pandemic will not bear the burden of servicing these debts.”