THE Philippine government secured two loans worth a total of $1.25 billion (P63.28 billion) from the Asian Infrastructure Investment Bank (AIIB) and World Bank to help in its fight against the coronavirus disease 2019 (COVID-19) pandemic.
China-backed AIIB said in a statement its board approved the $750-million (P38 billion) loan, which the Philippine government will use for programs to expand testing, enhance quarantine measures, boost social protection and livelihood support, extend relief to small businesses, as well as support agriculture and other affected sectors.
The policy-based loan will be drawn from AIIB’s $10 billion COVID-10 Crisis Recovery Facility which aimed to help the public and private sector cope with the pandemic.
“The focus of our efforts is to help the government tackle the immediate health and economic challenges posed by the pandemic. AIIB’s support will contribute to building economic resilience and ensuring quick recovery,” AIIB Vice President for Investment Operations D.J. Pandian was quoted as saying.
The Beijing-based multilateral lender said it does not have a regular facility for policy-based financing but it extended the financial support “on an exceptional basis” via projects co-financed with the Asian Development Bank and World Bank.
At the same time, the World Bank said it gave the green light for a $500-million (P25 billion) loan to the Philippines to fund efforts mitigating the impact of COVID-10 pandemic on the most vulnerable sectors and provide financial aid to small and medium enterprises (SMEs).
Finance Secretary Carlos G. Dominguez III was quoted as saying the “swift loan approval underlines the strong international confidence in the government’s capability to meet the massive financial requirements of containing this global health emergency.”
The $500-million loan from the World Bank will mature in 29 years and has a grace period of 10 and a half years.
“This new financing can help with the delivery of financial support for struggling families and communities while the country is ramping up efforts to contain the pandemic and reduce its economic impact,” Achim Fock, World Bank Acting Country Director for Brunei, Malaysia, Philippines and Thailand said in a statement yesterday.
Washington-based World Bank said the loan will partially fund the government’s P200-million subsidy program to 18 million poor families affected by the lockdown, as well as the P50-billion wage subsidy program for employees of SMEs.
The new funding will also support other state interventions that will extend financial relief to affected businesses through deferrals of tax payments and credit guarantee schemes.
Citing data from the surveys conducted by the government, the World Bank said the majority of small companies in affected areas in the country had to shut down temporarily due to the enhanced community quarantine imposed in Luzon and some parts of the country in mid-March.
Metro Manila will transition into a general enhanced community quarantine on June 1.
The loans from AIIB and WB will add to the $4.858 billion (P246 billion) that the government has borrowed for pandemic relief efforts as of May 14, based on Finance department data.
In April, World Bank has approved a total of $600 million (P30 billion) of loans for the Philippines’ response to the pandemic — a $100 million (P5 billion) loan on April 23 for the COVID-19 Emergency Response Project and the $500-million (P25 billion) Third Disaster Risk Management Development Policy loan on April 9.
The ADB also approved last month $1.5 billion (P76 billion) worth of loans for the country’s COVID-19 fight and another $200 million (P61 billion) to support the government’s social protection program. — Beatrice M. Laforga