The Philippines has secured a new $600-million loan from the World Bank, bringing the country’s total pandemic-related foreign borrowings, accumulated since March last year, to $24 billion, or about P1.2 trillion.
This and another $300-million World Bank loan expected to be approved on Dec. 21 will add to the country’s total outstanding debt, both external and domestic, which has already ballooned to P11.97 trillion as of end-October from P8.22 trillion as of end-2019, or prior to the pandemic.
Approved on Dec. 10 and to be administered by the Department of Finance (DOF), the $600-million fresh financing is a development policy loan (DPL) specifically for the “Philippines Promoting Competitiveness and Enhancing Resilience to Natural Disasters Sub-Program 3.”
It is aimed at supporting government reform programs designed to position the country “for a competitive and resilient economic recovery” from the adverse impact of the COVID-19 pandemic, according to the World Bank.
To be funded by the new loan, the third in a series of DPLs, are reform programs that include “amendments to the Retail Trade Liberalization Act to promote private investments, reduction in the cost of doing business, and expansion of broadband services to promote investments in information and communications technology,” the World Bank said in a statement on Saturday.
As many Filipinos worked from home and schoolchildren turned to online learning amid the prolonged COVID-19 pandemic, Diop said “reforms that promote competition in broadband and mobile telecommunications will benefit a large portion of the underserved population by increasing coverage and quality of service, increasing their access to markets, and access to remote education and health services.”
The World Bank noted that in the East Asia and the Pacific region, the Philippines was a laggard in attracting foreign direct investments (FDIs), in general, and foreign retail players, in particular, due to the ceiling on foreign capital allowed in various economic 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 million.
The new World Bank loan will also sustain funding for the ongoing implementation of the Philippine Identification System (PhilSys), or the national ID.
The other World Bank loan to be approved on Dec. 21 is the $300-million COVID-19 emergency second additional financing, mainly for booster shots.
This will bring the World Bank’s cumulative financing for this Department of Health (DOH)-administered project to $900 million, including the $100 million extended last year and the $500 million that was obtained last March.
Finance Secretary Carlos Dominguez III earlier said that of the P396 billion set aside in the proposed P5-trillion 2022 national budget, P45 billion in unprogrammed funds were to be spent on booster shots and that this would come mainly from borrowings.
Of the total external borrowings for COVID-19 response of $24 billion from March last year to present, $21 billion was injected into the national budget to finance bigger expenditures and address the budget gap, Dominguez said.
To date, $19.8 billion had already been disbursed to the government, he added.
Due to the pandemic-induced recession last year which weakened revenue collections and jacked up public expenditures to fight COVID-19, the country’s end-2020 debt stock climbed to P10.25 trillion. Of the amount, P6.95 trillion was sourced locally, while P3.3 billion was borrowed from external sources. As of October this year, domestic debt still accounted for the bulk, or P8.47 trillion of the outstanding obligations, while foreign loans accounted for P3.5 billion. (©Philippine Daily Inquirer 2021)
