The Philippines and Japan on Wednesday signed an agreement for a 50-billion yen (around P24-billion) loan to help in the government’s efforts to contain the spread of the coronavirus disease 2019 and provide economic relief to Filipinos affected by the global health crisis.
Given the Philippines’ urgent need for budgetary support to address the COVID-19 emergency, the loan was processed in less than a month, the quickest ever secured under Japan’s official development assistance package and in keeping with the “fast and sure” approach adopted by the two countries since 2017.
Finance Secretary Carlos Dominguez III, on behalf of the Philippines, and Japan International Cooperation Agency chief representative Eigo Azukizawa, representing the government of Japan, signed the agreement for the COVID-19 Crisis Response Emergency Support Loan on Wednesday afternoon.
“I am sure we shall soon prevail over this emergency. We will return to our growth path and recover our economic momentum. What will be unchanged is the deep friendship and cooperation between our two countries,” Dominguez said.
Ambassador Haneda said the emergency support loan was a part of Japan’s assistance package for developing economies hit by the COVID-19 pandemic.
“We are glad that we are the first donor-country to be able to offer such a loan to the Philippines. The strong ties between Japan and the Philippines, particularly on the economic front have been tried and true for many decades,” Haneda said.
He said the government of Japan has “high hopes that this loan will be instrumental in helping jumpstart the Philippine economy and running [its] fast-paced recovery.” Julito G. Rada
The CCRESL was approved by the Development Budget Coordination Committee on June 10 and was processed by the approving authorities of both countries in 14 working days.
Dominguez thanked the teams from Japan and the Philippines who both worked hard through the period of the quarantines imposed in both countries to speed up the processing of the loan.
“For all those involved in the negotiations, this is a real heroic effort,” he said.
Dominguez underscored the importance of the loan in helping the government cover its budget expenditures through additional borrowings to beat the pandemic and fund its economic recovery program.
The government faces a doubling of its deficit-to-GDP ratio this year, as tax collections are down even as it accelerates state spending to strengthen the healthcare system and provide social protection to families and workers hit the hardest by the pandemic.
Equivalent to about P23.54 billion or $50.45 million, the yen loan package carries concessional lending terms of 0.01 percent fixed interest rate per annum with a maturity period of 15 years inclusive of a 4-year grace period.
The CCRESL from Japan is designed as a co-financing operation complementing the Asian Development Bank’s COVID-19 Active Response and Expenditure Support program alongside prospective loans from other development partners, and will form part of the 2020 gross financing program as revised in light of COVID-19 response measures, the DOF said.
To be implemented from 2020 to 2021 by the Department of Health and the National Economic and Development Authority, the CCRESL will be utilized retroactively for the government’s COVID-19 response efforts undertaken since April 2020.
The loan will also help cover the budget expenditures already made or about to be made by the government. The loan proceeds will automatically be available for withdrawal once the loan is declared effective, which is expected in the last week of July.