The Philippines and the Asian Development Bank signed Thursday a loan agreement that will allow the government to gain access to up to $1.5 billion in budgetary support for its stepped-up efforts against the coronavirus disease 2019.
The loan for the COVID-19 Active Response and Expenditure Support program of the Philippine government is under the ADB’s Countercyclical Support Facility Pandemic Response Option.
ADB said the quick-disbursing budget-support facility would help countries like the Philippines in mitigating the severe economic shocks caused by the COVID-19 pandemic and bankrolling measures to prevent the further spread of the highly contagious virus.
Finance Secretary Carlos Dominguez III signed the loan agreement on behalf of the Philippine government while ADB country director for the Philippines Kelly Bird signed on behalf of the bank.
Dominguez said the loan was part of the national government’s external financing program this year to help fund the necessary programs to defeat COVID-19 and bridge the higher deficit requirement estimated at P990.1 billion (around $19.5 billion) brought about by the pandemic’s economic fallout.
“We thank the ADB under the leadership of President Masatsugu Asakawa for swiftly responding to the Philippines’ call for funding support in this time of crisis. We thank the bank as well for streamlining its operations to quickly deliver its assistance and for tripling the size of its response package from $6.5 billion to $20 billion to help developing member-countries combat COVID-19,” Dominguez said.
Asakawa reiterated the ADB’s strong commitment to providing swift and effective assistance to help the Philippines mitigate the economic and social impacts of the pandemic.
“Our new financing, the largest budget support ever to the Philippines, is part of a well-sequenced support package that will provide financial and technical advice to help the government meet the challenges posed by a crisis that is wreaking havoc both globally and nationally,” Asakawa said.
Under the terms and conditions of the CARES loan, the first $500 million that the Philippines can tap from the ADB’s CPRO facility will be disbursed in US dollars amounting to $250 million and the euro equivalent of the other half of the amount.
The portion of the loan is payable in 10 years inclusive of a three-year grace period. The remaining $1 billion will be divided equally into the US dollar and Euro equivalents. The amount is payable in five years inclusive of a three-year grace period.
The disbursement of the first $1 billion tranche is expected this month while the remaining $500 million may be disbursed on or before June 20.
Asakawa commended the Philippine government for “its strong leadership and decisive actions to halt the spread of COVID-19 and quickly implementing financial assistance packages to families and small businesses to address the economic downturn.”
The ADB was among the first multilateral development institutions to provide assistance to the Philippines’ COVID response efforts with its delivery of a $3-million grant for the government’s purchase of medical supplies for health workers.
It also approved an emergency grant of $5 million for the Philippines to leverage private-sector donations for a food distribution program that has benefited 55,000 poor households in Metro Manila and neighboring areas.