Japan lends 50 billion yen to Philippines for disaster, health crisis response
MANILA, NNA – Japan is lending another 50 billion yen ($474.8 million) to the Philippines that can be used to respond to natural disasters and disease outbreaks such as the coronavirus pandemic.
Under the second phase of the Post-Disaster Standby Loan (PDSL 2), Manila can withdraw about 23.3 billion pesos in tranches following a disaster or public health crisis.
The Philippines can use the funds when it declares a state of calamity, public health emergency, or when the government imposes the strictest level of its quarantine restriction, the finance department said.
“We hope we will never need to quickly disburse from this loan package. But its availability assures us that we will have ample ammunition to support our budgetary needs in the event a crisis happens,” Philippine finance secretary Dominguez said in a speech during the signing of the loan deal with Japan on Tuesday.
The government can expend the PDSL 2 funds within three years. It can extend the disbursement up to four times for additional three-year periods.
The loan has a repayment period of 30 years and a grace period of 10 years, and a fixed interest rate of 0.01 percent per annum.
The latest loan marks the second time Japan extended this type of financing to the Philippines, according to the Japanese embassy.
In 2014, it extended a similar loan after a super typhoon killed thousands a year earlier.
The Philippines is the first among Japan’s partner countries to receive a post-disaster standby loan through JICA that can be used for health-related disasters, according to Eigo Azukizawa, Japan International Cooperation Agency chief representative to the Philippines.
Earlier this year, Japan extended 2 billion yen ($18.9 million) of grant aid to Manila to supply medical equipment and establish laboratory surveillance sites. It also lent 50 billion yen to serve as budgetary support for the Philippines’ coronavirus response.
The restrictions imposed to curtail the spread of the Covid-19 pandemic reduced government revenues to 1.7 trillion pesos ($35 billion) in the first seven months of the year, which is 7 percent lower than the same period in 2019.
Rising government spending and lower revenue collections could increase the country’s debt-to-gross domestic product ratio 9.6 percent this year, according to the finance department.
The government has so far secured loans of $8.83 billion to finance its efforts to address the impact of the pandemic.
Some $5.98 billion of that is in the form of budget support financing from its development partners such as the Japan-led Asian Development Bank, the World Bank, the China-led Asian Infrastructure Investment Bank, the French Development Agency, and JICA.
The finance department said the total borrowings to support government spending for the country’s recovery from the pandemic and investments in infrastructure and social services could reach 3 trillion pesos ($62 billion) for 2020 and 2021.
Because of this, the department projects the country’s debt-to-GDP ratio to rise to 54 percent this year from a historic low of 39.6 percent in 2019.