THE Philippine government signed on Monday a US$300 million loan agreement with Beijing-based Asian Infrastructure Investment Bank (AIIB) for the purchase of its Covid-19 vaccines.
Finance Undersecretary Mark Dennis Y.C Joven, who heads the Department of Finance’s (DOF) International Finance Group, confirmed this to BusinessMirror.
With the signing of the $300-million AIIB loan, the government through DOF has finally completed securing loans amounting to US$1.2 billion (around P58.5 billion) which the country needed for its purchase of Covid-19 vaccines.
Apart from the country’s loan with AIIB, the DOF has already signed loans worth $500 million from World Bank and $400 million from Asian Development Bank on March 19.
Finance Secretary Carlos G. Dominguez III on Monday said the “prompt and substantial financing extended by the country’s multilateral partners will help the government achieve its target of inoculating 70 million Filipinos or 100 percent of the adult population.”
The government, Dominguez added, is fully committed to accelerating the rollout of its national vaccination program in order to safely reopen the economy and restore the jobs lost since Covid-19 sparked a pandemic last year.
“Our multilateral partners’ swift response to our call for support reflects their confidence in the Philippines’s capability to effectively implement our Covid-19 response measures, including our national vaccination program,” he said at the virtual launching of Philippine loan agreements for vaccine procurement.
Dominguez said that under the terms of these loans, the multilateral institutions will help the Philippine government purchase the vaccines through their stringent procurement rules and guidelines and then pay the vaccine suppliers directly.
The finance department has also since clarified that the government’s budget for Covid-19 procurement remains at P82.5 billion, of which 70 billion will come from unprogrammed funds that will be unlocked by collecting additional revenues or by securing additional financing from the Philippines’s multilateral partner-institutions.
The balance of P11.6 billion will be sourced from savings and other arrangements with the Philippines’s bilateral or multilateral partners through official development assistance financing.
Joven also told BusinessMirror that they do not see the need yet to tap the $100 million (roughly P4.8 billion) earmarked for Covid-19 vaccine purchase.
“No need yet. It’s for standby once we deplete the $1.2 [billion],” Joven said.
As for the remaining P12.5 billion, P10 billion will be sourced from funds allocated for the Covid-19 vaccination program under Republic Act (RA) 11494 or the Bayanihan To Recover As One Act (Bayanihan 2) while P2.5 billion already forms part of the budget of the Department of Health under the 2021 national budget.
As of March 17 this year, the government has so far secured $14.29 billion in loans and grants from foreign lenders for its Covid-19 response, based on the list provided on the DOF web site.
However, the DOF pointed out that the “figures are rebased to reflect 2020 average exchange rates.”
The DOF list also did not yet include $1.2-billion loans that the government recently secured for vaccine purchase.
According to Joven, debt secured to support the budget related to the government’s Covid-19 response should be differentiated from the debt specifically secured for vaccines.
“Budget support loans go to the Treasury and get spent in the manner provided by the GAA [General Appropriations Act]. Vaccine project loans are paid directly to the supplier and does not come under the control of the Treasury,” Joven told the BusinessMirror.
The finance official also explained that there was a need to rebase the amount of financing for the government’s Covid-19 response listed on the web site since the “drawdown is not one-time and functional currency is in pesos.”
Image credits: Roy Domingo