We're fighting COVID-19 with foreign loans

posted January 29, 2021 at 12:05 am
by  Ernesto M. Hilario
"Prudent debt management is important to ensure that people most affected by the pandemic will not bear the burden of servicing these debts."

News reports since last year have been constantly telling us that the government has been ramping up testing, contact tracing and treatment for the dreaded COVID-19 pandemic. This year, the government has been trying to get as many doses of vaccines from several countries as possible, such as the US, China and UK, in order to acquire herd immunity from the disease and allow us to return to what's been described as the “new normal.”

So far, so good. The message we've been getting from Malacañang is that we don't have to worry at all about the government's response to the coronavirus because they've got our backs covered.

But wait. We know that making test kits available to all, conducting extensive contact tracing and ensuring prompt treatment of those infected with the virus would cost a lot of money. And where will the government raise enough funds with the economy in the doldrums arising from nearly one year of draconian lockdowns that led to the shutdown of many enterprises and the loss of many jobs?

Where else, but from abroad?

The Philippines is borrowing money from several multilateral lenders to help bankroll its programs in response to the pandemic.

The Department of Finance has raised, as of December 15 last year, a total of $12.72 billion in budgetary support financing from various sources: Asian Development Bank (ADB), World Bank (WB), Asian Infrastructure Investment Bank (AIIB) and the Japan International Cooperation Agency (JICA), among others. In addition, grant and loan financing amounting to a total of $641.36 million have been contracted in support of various projects to be implemented by agencies involved in COVID-19 response.

The loan from the China-led AIIB worth $750 million will go to the COVID-19 Active Response and Expenditure Support (CARES) Program. This program is co-financed by another loan from ADB worth $1.5 billion.

The AIIB loan provides budgetary support to the Philippine government’s efforts to mitigate the adverse impact of COVID-19 on health and economic opportunities. The loan agreement was signed on June 5, 2020.

The CARES Program seeks to implement measures to minimize the pandemic’s adverse impact: (1) enhanced quarantine to reduce the infection rate; (2) expanded medical services to step up testing and care for affected populations; (3) social protection and livelihood support to help mitigate the immediate impacts on livelihoods and employment; (4) a small business relief program; (5) support for agriculture and other economic sectors; and, (6) local government support.

Given the scale of the foreign loans contracted by the Philippine government to fight COVID-19, civil society groups led by Social Watch Philippines (SWP) want to monitor how the gargantuan amount would be spent in the interest of transparency and accountability as part of good governance.

Social Watch asserts that while new borrowings allow the government to finance urgently needed public services, these will eventually be paid using taxes collected from the Filipino people.

While borrowings are not necessarily bad, and may be needed in some cases, prudent debt management, it says, is important to ensure that people most affected by the pandemic will not bear the burden of servicing these debts.

Hence, citizens need to monitor and ensure that COVID-19 loan proceeds are spent in the most effective, efficient, and timely manner because any misuse, abuse, or wastage will have dire human and social consequences.

Citizens should also monitor how these loans affect the country’s debt burden and ensure that government’s debt management will not sacrifice the people’s welfare in its budget and tax policies.

The Citizens’ Monitoring of the AIIB COVID-19 Loan Project seeks to educate, mobilize, and capacitate civil society organizations or CSOs to expand spaces for their meaningful participation in budget and program administration of the loan and ensure effective and responsive implementation, and conduct citizens’ assessment on policy and operational issues and identify recommendations to improve policies and mechanisms of both government and the AIIB.

Social Watch Philippines is leading the project in line with its mission to monitor and hold the government to account on its commitments to social development, including the UN Sustainable Development Goals. For the past two decades, SWP has been engaging national and inter-governmental processes to mobilize sufficient, sustainable, and equitable financing for development.

SWP pursues national budget monitoring and advocacy along with other CSOs in the Alternative Budget Initiative network. It also provides skills, tools, and training to non-state actors to analyze, monitor, and engage fiscal issues through the People’s Public Finance Institute.

But the question is: Will the Duterte administration allow citizens' monitoring of how foreign loans contracted to fight COVID-19 are being spent?

Last week, if we recall right, Duterte expressed annoyance over questions raised over the procurement of vaccines for COVID-19. Why should doubts over vaccine procurement be raised at all, he asked.

We believe, however, that citizens are on the right track in asking questions over vaccine procurement running into billions of pesos. Didn't Duterte himself time and again say that he wants to get rid of corruption in the country? During the presidential campaign in 2016, he vowed to stop both illegal drugs and corruption in six months. After four-and- a-half years of his six-year term, we're afraid he has not succeeded mightily on both counts, despite his pledge to bear down hard even on a whiff of corruption.

It's time for right-thinking citizens to demand that the government take decisive steps to send the incorrigibly corrupt behind bars.

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Topics: Ernesto Hilario , COVID-19 pandemic , Department of Finance , foreign loans , CARES Program
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