THE Philippines is planning to borrow $23.71 billion (P1.14 trillion) from foreign lenders this year to plug its ballooning deficit amid the pandemic, a Finance official said over the weekend.
“We are planning to source a total of $7.67 billion (P369 billion) in loans and grants from multilateral institutions, $10.54 billion (P507 billion) from our bilateral partners; and raise $5.5 billion (P264 billion) from the commercial markets this year,” Finance Undersecretary Mark Dennis Y.C. Joven said in a statement over the weekend.
Around 66% or $15.65 billion of the loans will be in the form of project financing, while 34% or $8.06 billion will support the national budget.
The Asian Development Bank (ADB) has set a $3.568-billion (P172-billion) lending program for the Philippines this year. Half of the amount or $1.75 billion (P84 billion) will go to the first phase of the South Commuter Railway Project, and the rest for other infrastructure projects.
The World Bank is also looking to grant $1.588 billion (P76 billion) in loans to the Philippines this year, after lending $1.87 billion (P90 billion) in 2020.
The government has tapped the World Bank for a $500-million loan to fund its mass vaccination drive against the coronavirus disease 2019 (COVID-19), while the ADB committed to lend at least $350 million.
This year, the government is planning to raise P3 trillion from domestic and external lenders to help fund the budget deficit that is seen to hit 8.9% of gross domestic product.
“The government has consistently availed debt for budget support, recognizing that program loans and global bonds provide more flexibility in terms of utilization,” Mr. Joven, who heads the Department of Finance’s International Finance Group (IFG), said.
In 2020, the government obtained $17.06 billion (P820 billion) in loans from external sources, of which $7.73 billion (P372 billion) came from multilateral lenders.
“Because of a higher emergency funding requirement in light of COVID-19, the amount of external financing contracted in 2020 increased by 75.43% year on year. This also represents an overall 33% expansion of the external borrowing program from 2016 to 2020,” Mr. Joven was quoted as saying in the statement.
The $17.06-billion foreign loans last year consisted of 85% or $14.52 billion in budget support and the rest worth $2.54 billion were in project loans meant to cover the funding needs of multi-year projects rolled out in 2020.
Around 90% or $15.44 billion (P742 billion) was used for the pandemic response, while $1.62 billion (P78 billion) went to infrastructure projects. — Beatrice M. Laforga