The Philippines and Japan yesterday signed a 50-billion yen, or approximately P23.5 billion, loan agreement that aims to assist the Philippine government’s coronavirus disease 2019 (COVID-19) response.
The Department of Finance (DOF) said in a statement given the Philippines’ urgent need for budgetary support to address the COVID-19 emergency, the loan was processed in less than a month, the quickest that was ever secured under Japan’s official development assistance (ODA) financing package.
Carlos Dominguez, DOF secretary, on behalf of the Philippines, and Japan International Cooperation Agency chief representative Eigo Azukizawa, representing the government of Japan, signed the agreement for the COVID-19 Crisis Response Emergency Support Loan (CCRESL) at the DOF office in Manila.
The loan proceeds will automatically be available for withdrawal once the loan is declared effective, which is expected in the last week of July.
The yen loan package carries concessional lending terms of 0.01 percent fixed interest rate per annum with a maturity period of 15 years inclusive of a four-year grace period.
Koji Haneda, Japanese ambassador to the Philippines, said the emergency support loan is part of Japan’s assistance package for developing economies hit by the COVID-19 pandemic.
The CCRESL was approved by the Development Budget Coordination Committee last June 10 and was processed by the approving authorities of both countries in only 14 working days until the signing of the loan accord at the DOF.
Dominguez underscored the importance of the loan in helping the government cover its budget expenditures through additional borrowings to beat the pandemic and fund its economic recovery program.
The government faces a doubling of its deficit-to-gross domestic product ratio this year as tax collections are down, even as it accelerates state spending to strengthen the health care system and provide social protection to families and workers hit the hardest by the pandemic.
The CCRESL from Japan is designed as a co-financing operation complementing the Asian Development Bank’s COVID-19 Active Response and Expenditure Support Program alongside prospective loans from other development partners, and will form part of the 2020 gross financing program as revised in light of COVID-19 response measures, the DOF said.
To be implemented from 2020 to 2021 by the Department of Health and the National Economic and Development Authority, the CCRESL will be utilized retroactively for the government’s COVID-19 response efforts undertaken since April 2020.
The loan will also help cover the budget expenditures already made or about to be made by the government.
Mark Joven, DOF undersecretary, told reporters in a virtual press conference after the signing that Japan’s COVID-19 related assistance so far comprises of $500 million in loans, and a grant from the Japanese government in the amount of 2 billion yen, or P1 billion.
“The total amount of loans (from Japan) we’ve signed for the year amounts to 158.46 billion yen, and total grants signed amounts to 3.137 billion yen,” Joven said.
“Since the start of the administration, total Japanese ODA amounts to around 625 billion yen. It comprises almost half of our ODA portfolio, around 46 percent of total Philippine ODA portfolio is Japanese, which is our biggest development partner,” he added.
Meanwhile, Joven said the intended total ODA facility which the government will tap for the year will amount to around $8.6 billion.
“We’ve already contracted around almost $5 billion,” Joven said.
