ADB extends ₱76-B loan to boost local COVID-19 fight

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(FILE PHOTO)

Metro Manila (CNN Philippines, April 24) — The Asian Development Bank has approved a $1.5-billion (about ₱76 billion) loan to boost the Philippines' coronavirus response, with the bulk of the amount to be released in the coming week.

The Department of Finance said in a statement that Secretary Carlos Dominguez III signed the loan deal with ADB Country Director Kelly Bird on Thursday, which will form part of the ₱310-billion borrowing plan set by the agency to fund COVID-19 interventions.

Of the amount, $1 billion (about ₱50 billion) will be released before end-April, while the rest will be remitted to authorities between now and June 20, the DOF said. The money is meant to mitigate "the severe economic shocks caused by the COVID-19 pandemic," as well as to improve control over the spread of infections.

The Health Department said there are early signs that the COVID-19 curve may be flattening. President Rodrigo Duterte has extended the strict stay-at-home rules for Metro Manila, Central Luzon, Calabarzon, and other provinces with a high number of cases until May 15 to control the spread of the virus.

The government often borrows just a fourth of its financing needs from external sources to minimize leakages from currency conversions. However, the virus outbreak pushed the economic team to resort to increased offshore borrowing to fund the gap and procure the needed laboratory and hospital equipment, as well as provide subsidies to struggling sectors, as fast as possible. The DOF said the total budget gap may stand at ₱990.1 billion.

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ADB President Masatsugu Asakawa said the financing deal is the largest budget support the bank has extended to the Philippines so far. Other member-economies also availed of loans from the regional lender.

The loan is payable in 10 years, which includes a three-year grace period to give more time for the Philippines to recover from the health and economic crisis.

Budget Secretary Wendel Avisado said in a taped task force meeting which aired Friday morning that the government has so far spent ₱352 billion out of the ₱397 billion funds which have been freed up under the 2020 national budget to address unplanned efforts amid the global pandemic.

Last month, the ADB approved a $3 million (about ₱150 million) grant for the purchase of medical supplies for hospitals, and a $5 million (at least ₱250 million) aid for food distribution covering 55,000 poor families in the greater Manila area.

Earlier, the Washington-based World Bank approved a $500 million (about ₱25 billion) loan to the Philippine government.