PH ‘sinking deeper and deeper’ into debt

MANILA, Philippines — As presidential spokesperson Harry Roque Jr. wished rigor mortis on critics of the Duterte administration, the country’s economic managers scrambled to stop the economy itself from “sinking deeper and deeper” as President Duterte himself bemoaned earlier this week.

To accomplish the mission, Finance Secretary Carlos Dominguez III had earlier conceded that the country would need at least $1.3 billion in foreign loans from the World Bank, the Asian Development Bank (ADB) and the Beijing-based Asian Infrastructure Investment Bank (AIIB).

The funds will be used to finance a Department of Health plan to vaccinate all 100 million Filipinos by 2023—25.35 million Filipinos in 2021, 44.63 million in 2022 and 41.77 million in 2023, since by that time the Philippines is expected to have a total population of 112.89 million.

But developments have made the task doubly hard and the Philippines has increased the amount it has requested from the World Bank by at least $100 million a month for the past three months, documents seen by the Inquirer showed.

Last December, the Philippines sought a $300-million facility to finance its COVID-19 emergency response program, but that amount was increased to $400 million in January.

Advanced payments

This month, the amount was again increased to $500 million (about P24 billion) to meet advance payments to buy COVID-19 vaccines and their related costs.

Aside from the World Bank, the ADB has also committed to lend the Philippines at least $325 million under its regional financing scheme called Asia-Pacific Vaccine Access Facility.

With at least $825 million coming from the World Bank and the ADB, Finance Undersecretary Mark Dennis Joven declined to comment on who would underwrite the remaining $425 million but he said the Department of Finance would release the information once the loan requests are approved.

Constraints

The loan with the World Bank, which is funding 14 projects worth more than $3 billion for the Philippines, is still scheduled to be taken up by its Washington-based board on March 24.

An AIIB representative told the Inquirer they were also reviewing the vaccine financing requests from member countries, including the Philippines.

Joven explained that some of the World Bank and the ADB loans “needed to be expanded to cover vaccines on top of the original scope” because the Philippines needed more money for advance payments on vaccines.

According to ADB documents, the Philippines needed to settle $50 million in advance payments in January this year for as many as six vaccine supply agreements.

“However, high-income and upper middle-income countries have entered into supply agreements with vaccine developers for more than 6 billion vaccine doses, significantly affecting the future supply of vaccines for developing countries,” the ADB said.

“The COVID-19 vaccines global access facility … has only contracted about 1.3 billion doses. It aims to provide free vaccine doses for up to 20 percent of these countries’ populations. However, there is no firm timeline yet as to when the supplies will start,” the ADB added.

But even with the foreign loans now in the pipeline, the Philippines still faces constraints in vaccine financing—“the government estimates that P82.5 billion (about $1.7 billion) will be required to provide vaccines to approximately 55 percent of the country’s population—still short of its plan to vaccinate all Filipinos by 2023.”