THE government on Wednesday signed a $500-million loan agreement with the World Bank, the proceeds of which will fund the coronavirus containment efforts and aid small-business workers and the vulnerable population.
In a statement Thursday, the Finance department said the Emergency COVID-19 Response Development Policy Loan (ECRDPL) is scheduled for disbursement by the third week of June.
The bank’s board approved the loan late last month.
“This is the third loan accord that we have signed with the World Bank that is designed to assist us in swiftly responding to the challenges brought about by the COVID-19 emergency. The World Bank has always been our reliable partner in strengthening our country’s economic resilience,” Finance Secretary Carlos G. Dominguez III was quoted as saying.
Mr. Dominguez and Achim Fock, World Bank acting country director for Brunei, Malaysia, Philippines and Thailand, signed the agreement on Wednesday.
The loan matures in 29 years, inclusive of a grace period of 10 and a half years.
According to the Department of Finance, the loan will fund the government’s P200-billion emergency subsidy program for vulnerable members of the population as well as the P51-billion wage subsidy program directed at employees of small businesses.
Mr. Dominguez said ECRDPL replaces an earlier proposal for additional financing of a current project which strengthens the government’s financial resilience to natural disasters and climate change.
“The change is in view of World Bank’s advice to specifically come up with a new development policy loan on the country’s COVID-19 response instead of a supplemental financing package for the Promoting Competitiveness and Enhancing Resilience to Natural Disasters project,” he said.
The latest loan agreement follows the $100-million loan agreement for the COVID-19 Emergency Response Project which the government also entered into with the World Bank in late April.
The two parties also signed a $500-million Third Disaster Risk Management Development Policy Loan (DRM DPL3) agreement on April 9 which can also be used to fund efforts to contain the coronavirus outbreak.
So far, the government has obtained $1.7 billion of loans from the Asian Development Bank to finance its COVID-19 (coronavirus disease 2019) response, and a $750-million co-financing facility from the Beijing-based Asian Infrastructure Investment Bank.
For 2020, economic managers expect the budget deficit to increase to the equivalent of 8.1-9% of gross domestic product (GDP) as government revenue is expected to decline as the economy worsens while spending increases due to the pandemic.
Outstanding debt is expected to hit P9.589 trillion this year, equivalent to 49.8% of GDP. — Beatrice M. Laforga