More loans to stimulate postpandemic PH rebound
MANILA, Philippines – The Philippines has secured a new $ 600 million loan from the World Bank, bringing the country’s total pandemic-related foreign borrowing accumulated since March last year to $ 24 billion, or about 1,200 billion pesos.
This loan and another $ 300 million from the World Bank expected to be approved on December 21 will add to the country’s total outstanding debt, both external and domestic, which has already swelled to 11.97. trillion pesos at the end of October, compared to 8.22 trillion pesos. from the end of 2019, or before the pandemic.
Approved on December 10 and administered by the Department of Finance (DOF), the new $ 600 million funding is a Development Policy Loan (DPL) specifically for Sub-Program 3 “Philippines Promoting Competitiveness and Enhancing Resilience to Natural Disasters 3. “
It aims to support government reform programs designed to position the country “for a competitive and resilient economic recovery” in the face of the adverse effects of the COVID-19 pandemic, according to the World Bank.
DPLs provide rapid disbursement assistance to countries undertaking reforms.
The reform programs to be funded by the new loan, the third in a series of DPLs, include “changes to the Retail Trade Liberalization Law to promote private investment, reduce the cost of doing business and expansion of broadband services to promote investment. in information and communication technologies, ”the World Bank said in a statement on Saturday.
“These reforms are crucial to removing immediate and long-term obstacles to growth, paving the way for an inclusive recovery,” said World Bank Director for Brunei, Malaysia, the Philippines and Thailand, Ndiamé Diop .
As many Filipinos worked from home and school children turned to e-learning amid the protracted COVID-19 pandemic, Diop said that “reforms that promote competition in broadband telecommunications and Mobiles will benefit a large portion of the underserved population by increasing coverage and quality of service, increasing their access to markets and access to distance education and health services.
In addition, reforms that lower trade costs and improve the business environment should benefit all businesses, but especially small and medium-sized enterprises, which will have access to a larger market for their products and services, added Diop. .
The World Bank noted that in the East Asia and Pacific region, the Philippines was lagging behind in attracting foreign direct investment (FDI), in general, and foreign retail players, in particular, due to the ceiling on foreign capital authorized in various economic sectors. sectors. Pending in Congress is a bill, certified by President Duterte as urgent, that seeks to amend the Retail Liberalization Act that will lower the capitalization requirement for foreign retailers to $ 500,000 from 2.5 millions of dollars.
“Reforms in the retail sector should promote investment by leveling the playing field between domestic and foreign operators, thereby creating jobs, widening consumer choices and increasing the influx of new technologies,” said the Minister. World Bank.
The new World Bank loan will also support funding for the ongoing implementation of the Philippine Identification System (PhilSys), or National Identity Card.
“The government introduced PhilSys as a digital ID platform to foster the digital economy and increase access to public services. This should increase access and improve the delivery of public services by providing Filipinos with a unique and verifiable digital identity, ”said Rong Qian, World Bank senior economist for the Philippines.
The other World Bank loan to be approved on December 21 is the second additional COVID-19 emergency funding of $ 300 million, mainly for booster injections.
This will bring the cumulative World Bank funding for this Department of Health (DOH) administered project to $ 900 million, including the $ 100 million extended last year and the $ 500 million obtained last March. .
Also for the boosters and expansion of the immunization program, the government expects an additional $ 500 million in loans, or $ 250 million each, from the Asian Development Bank (ADB) and the Asian Bank for Infrastructure and Development. investment (AIIB) led by China. These multilateral lenders pay global vaccine suppliers directly for doses ordered by DOH.
Finance Secretary Carlos Dominguez III said earlier that of the 396 billion pesos set aside in the 2022 peso 5,000 billion national budget proposal, 45 billion pesos of unscheduled funds were to be spent on injections of reminder and that this would come mainly from loans.
Of the total external borrowing for the COVID-19 response of $ 24 billion from March last year to today, $ 21 billion has been pumped into the national budget to finance larger spending and close the deficit budget, Dominguez said.
To date, $ 19.8 billion has already been paid to the government, he added.
Dominguez said most of the funds obtained from foreign sources were spent on vaccines.
As for the remaining $ 2.4 billion in loans and grants from multilateral lenders and bilateral development partners, he said they were intended for specific COVID-19 response projects implemented by the DOH, including half had been disbursed. These projects include the purchase of laboratory equipment, medical supplies and vaccines.
As a reminder, a total of $ 1.2 billion in loans was granted by the World Bank, ADB and AIIB in the Philippines in March for the national mass immunization program.
Due to the pandemic-induced recession last year that weakened revenue collection and increased government spending to tackle COVID-19, the country’s outstanding debt at the end of 2020 reached 10,250 billion pesos. Of this amount, 6.95 billion pesos came from local sources, while 3.3 billion pesos was borrowed from external sources. As of October of this year, domestic debt still accounted for the bulk, 8.47 billion pesos, of outstanding bonds, while foreign loans amounted to 3.5 billion pesos.
—WITH A REPORT BY ARIANNE SUAREZ, INQUIER RESEARCH
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