PHL secures new P12-B loan from Japan

The Philippine government started administering second COVID-19 booster shots nationwide on April 25. — PHILIPPINE STAR/ RUSSELL PALMA

THE PHILIPPINES secured a new ¥30-billion (around P12.3-billion) loan from Japan, which will be used to fund programs to help the economy recover from the coronavirus disease 2019 (COVID-19) pandemic, the Department of Finance (DoF) said.

Finance Secretary Carlos G. Dominguez III and Japan International Cooperation Agency (JICA) President Tanaka Akihiko signed the agreement for the second phase of the COVID-19 Crisis Response Emergency Support Loan (CCRESL 2) in Tokyo, Japan on Monday.

The DoF in a statement said the loan proceeds would support the Philippines’ “plans in vaccinating its target population against COVID-19 and expanding the capability of its healthcare system to meet the challenges of possible public health emergencies in the future.”

The loan package carries concessional lending terms of 0.01% fixed rate annually, with a repayment period of 15 years and a grace period of four years.

These are the same terms as the first phase of the CCRESL, which was worth ¥50 billion, signed in July 2021.

“JICA understands well the value of this program for our recovery and competitiveness in the new economy… The support continues with today’s signing of this ¥30-billion loan agreement to aid the Philippine government’s COVID-19 response measures, Mr. Dominguez was quoted as saying.

During the pandemic, Japan has provided the Philippines with over three million COVID-19 vaccines; budgetary support financing through the CCRESL and the second phase of the Post-Disaster Standby Loan worth a total of $867 million; and a COVID-19 grant aid worth $25.18 million.

Mr. Dominguez said that JICA remains the country’s largest official development assistant (ODA) partner, citing ¥1 trillion worth of financing for the flagship infrastructure projects under the “Build, Build, Build” program.

“As we intensify our climate action projects, we hope to also secure additional financing for natural and health-related disaster response programs,” he said.

The Philippines has borrowed P1.31 trillion and received grants worth P2.7 billion for its COVID-19 response from 2020 to Jan. 14, 2022.

“The loans will have to be repaid over a period of 40 years starting 2020. This will require a fiscal consolidation program and improved revenue collection,” the DoF said in an economic bulletin dated April 16.

Mr. Dominguez last week said the Philippines has to grow “better than 6% per year, over the next five or six years” to be able to reduce the debt incurred during the pandemic.

National Government debt hit a record P12.09 trillion at the end of February. In 2021, the debt-to-GDP ratio hit a 16-year high of 60.5%, higher than the 60% threshold considered manageable by multilateral lenders for developing economies. — Tobias Jared Tomas