The Philippines and Japan signed Tuesday an agreement for a 50-billion yen (P23 billion) standby loan that aims to quickly disburse Japanese funding for the Philippine government’s post-disaster response efforts in the event of a national calamity or health emergency.
Finance Secretary Carlos Dominguez III, representing the Philippine government, and Japan International Cooperation Agency chief representative Eigo Azukizawa, on behalf of Japan, signed the accord for the second phase of the Post-Disaster Standby Loan Tuesday afternoon.
Under the agreement, the disbursement of the standby loan to the Philippines will be triggered by either the declaration of a state of calamity; or the declaration of a state of public health emergency.
It said that in the case of theCOVID-19 pandemic or any other public health emergencies, the imposition of an enhanced community quarantine or its equivalent in the National Capital Region or in any other highly urbanized area in the country would trigger the disbursement of the loan.
“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies. The ability to mobilize financial resources without delay is essential to emergency preparedness.,” Dominguez said during the ceremonial signing of the loan agreement at the Department of Finance office in Manila.
Equivalent to about P23.3 billion, the PDSL 2 will be available for quick disbursement in tranches within three years, once the loan is declared effective, and may be extended for an additional three-year period for up to four times.
The Philippines and Japan on July 1 also signed an agreement for a separate 50-billion-yen loan for the COVID-19 Crisis Response Emergency Support Loan which aims to assist the government’s efforts to contain the spread of the coronavirus pandemic and provide economic relief to Filipinos most affected by the crisis.
The CCRESL was processed by the approving authorities from the time it was approved by the Development Budget Coordination Committee on June 10 in only 14 working days until the loan accord signing on July 1.
The PDSL 2 was processed at an even faster pace. From the DBCC approval on Sept. 10, it was processed in two working days until Tuesday’s signing of the agreement, which is by far the fastest loan secured by the Philippines from Japan through official development assistance financing.
The financing package under PDSL, which carries a fixed interest rate of 0.01 percent, will form part of the Philippines’ “financial war chest” for future emergencies, Dominguez said.
The maturity period of the PDSL 2 is 40 years, inclusive of a 10-year grace period.
Dominguez said the loan’s highly concessional terms underscored “the abiding trust between Japan and the Philippines.”