Japan lends Philippines 50 bil. yen for coronavirus response

02, Jul. 2020

Photo by National Cancer Institute on Unsplash
Photo by National Cancer Institute on Unsplash

MANILA, NNA – Japan has approved a 50-billion-yen ($465 million) low-interest loan to the Philippines as the Southeast Asian country looks for help in stopping its coronavirus spread.

Japan International Cooperation Agency Chief Representative in the Philippines Eigo Azukizawa and Philippine Finance Secretary Carlo Dominguez signed papers Wednesday in Manila to set up the payment, called a COVID-19 Crisis Response Emergency Support Loan.

The loan marks stage one of Tokyo’s program to help developing countries reduce impacts of the disease and stimulate their economies, Japanese ambassador to the Philippines Koji Haneda said.

“We are proud to say that the Philippines is the very first recipient of this highly concessional loan specifically designed by the government of Japan to address the COVID-19 crisis,” Haneda said during a signing ceremony in Manila.

The Philippines will repay the loan, which is co-financed by the Asian Development Bank, at annual interest of 0.01 percent over 15 years with a four-year grace period.

Dominguez said the loan would help bridge a budget gap and forecast that the country’s deficit-to-GDP ratio could more than double this year.

Philippine officials are spending ever larger amounts to improve their healthcare system and provide aid to economic sectors hardest hit by the pandemic. But tax revenue has fallen because of the months-long lockdown it imposed to slow down spread of the virus. Two Philippine state agencies will allocate loan money this year and next.

“This loan will essentially cover part of the drop in our revenues,” he told a virtual press briefing after the signing ceremony.

Loan money will support the government in hiring of contact tracers and increasing the number of testing centers for COVID-19, Dominguez said.

More than 38,500 coronavirus cases have been reported in the Philippines and 1,270 people have died.

The Philippines qualifies for foreign official development assistance loans of $8.6 billion for COVID-19 response and budget support and the country’s finance department says it has already contracted $5 billion of the said amount.