Philippines’ COVID-19 loans increase after securing fresh funds from new creditor

Vendors such as the woman in the photograph have capitalized on the temporary shortage of and robust demand for face masks in Manila last year. In the meantime, as of December last year, the government has increased its COVID-19 financing by securing additional budget support loans.

The Philippines incurred fresh loans in December 2020 after it secured additional funds from a new creditor to help support its measures to address the coronavirus (COVID-19) pandemic.

From USD 9.914 billion in September 2020, financing agreements intended to curb the health, social, and economic effects of COVID-19 have reached USD 13.364 billion, based on December 15, 2020 data posted on the Department of Finance (DoF) website. [See: DoF: Financing secured for COVID-19 response]

The country’s COVID-19 borrowings grew by more than 30 percent after it was able to secure five new financing agreements as indicated below:

• A USD 20-million project loan financing from the World Bank (WB) Philippines FIRST Social Protection Project that started on November 10, 2020;

• A USD 580-million budgetary support financing loan from the WB Philippines Beneficiary FIRST Social Protection Project that started on November 10, 2020;

• The sale of two Republic of the Philippines bond tranches in December 10, 2020, the first worth USD 1.5 billion with a 2.650 coupon rate that will fall due in 2045 and the second worth USD 1.250 billion with a 1.648 coupon rate that will fall due on 2031;

• A USD 100-million Korea Export-Import Bank-Economic Development Cooperation Fund (EDCF) Program Loan for COVID-19 Emergency Response Program that became effective on December 7, 2020.

As expected, this new set of financing agreements have increased the number of COVID-19 loan packages that the Philippines has received so far.

From 23 loans in September 2020, the number has risen to 28, based on latest data from the DoF. [See: How much loans, grants has the Philippines received for COVID-19?]

One loan package that became effective in December 2020 came from the Korea Eximbank, making it the Philippines’ new creditor after the World Bank, the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), the Agence Francaise de Developpment (French Development Agency), and the Asian Infrastructure Investment Bank (AIIB).

The AIIB’s COVID-19 loan to the Philippines, worth USD 750 million, was the subject of a scoping study conducted by Social Watch Philippines in partnership with Oxfam. [See: A Scoping Study on the AIIB Loan]

Entitled “A Scoping Study on the Asian Infrastructure Investment Bank’s COVID-19 Loan to the Philippines,” the report emphasized the importance of citizens’ monitoring of these loans to “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 added.