By NG Seruela
The Department of Finance (DOF) on Friday (April 30) said the country’s foreign loans will serve the purpose of reducing deaths of Filipinos due to COVID-19.
DOF Undersecretary Mark Dennis Joven said in a Laging Handa public briefing that the foreign loans are significant because the Philippines is currently faced with a choice of “vaccinating people to lessen deaths, or not borrowing money and not vaccinating people which will result in more deaths.”
He said that as of April 28, 2021, the Philippines has secured a total of around $18.4 billion in foreign borrowings, $16.26 billion of which is for budget support and $2.14 billion for project financing.
“So when we say budget support, it means it’s to augment the national budget, it’s to spend for all regular programs under the national budget. While when we refer to project loans or project finance, it means we borrow money for a particular project such as the building of a particular road or a particular bridge or a particular subway, for example,” he explained.
Joven said the $16.26 billion consists of $6.93 billion from multilateral sources, $1.32 billion from bilateral sources, and $8 billion from commercial facilities. He explained that multilateral sources are “financing institutions operated by multiple countries,” while bilateral sources are from specific countries.
“Now for the commercial, that is the third kind of budget support, foreign budget support facilities around $8 billion have been secured. So $8 billion secured from commercial facilities, means that ito po iyong pag-isyu natin ng foreign denominated bonds na binenta po natin sa mga foreign investors. So these total around $16.36 billion,” he continued.
Joven said that due to the restrictions, the tax revenues are reduced while the country’s expenditures increase.
“So by the way on the expenditure side, iyong paggastos po, we have normal or programmed expenditures to run a government. On top of that, because of the pandemic, we need to address or we need to give money for social amelioration, we need to provide money to increase healthcare capacity, we need additional money to basically to support the poor.
“Essentially, kung hindi po tumatakbo iyong gobyerno or may lockdown or limited lockdown, mababawasan po iyong tax revenues, while at the same time tumataas po iyong gastos, so kailangan pong i-fill iyong gap in the short run,” he said.
The DOF executive also said the need to borrow money stems from the effects of the pandemic, as well as some economic restrictions.
“So over the short term, hindi ho talaga natin mababayaran, it would be more burdensome for us to pay for these vaccine loans immediately. That’s why itong mga multilateral funders, they’ve designed a system where may grace period po for at least three years from the time we draw the facility, and then debt repayment comes in on the fourth year…until the 12th to 20th year after the drawdown.”
He assured that by the time the economy has recovered, and the world has “moved away” from the pandemic, paying the loans will “not be a big problem.”
“So, I don’t know with you, but I do not want to be in a situation like some other countries where, you know, deaths have spiraled, infection rates have spiraled so bad that it would be harder for the economy to recover. I think it’s practical to address the problem now, immediately, so that mas mabilis rin po iyong economic recovery after,” he added. -jlo
