MANILA – The Philippines became the first recipient of Japan’s emergency support loan for COVID-19 affected economies with the early disbursement on Aug. 14 of its 50-billion yen financing package to the Duterte administration that aims to assist its ongoing efforts to contain the further spread of the coronavirus pandemic and provide economic relief to Filipinos most affected by this global health crisis.
On behalf of the government, Finance Secretary Carlos Dominguez III thanked Japan for disbursing the 50-billion yen COVID-19 Crisis Response Emergency Support Loan (CCRESL) in a record period of only 44 days after the signing of the agreement on this assistance package last July 1.
“We thank Tokyo and JICA for the release in record time of this emergency support loan for the Duterte administration’s COVID response that has made the Philippines the first recipient of Japan’s assistance program for economies battered by the coronavirus-induced global health and economic crisis,” Dominguez said. “This underscores the strong partnership between Japan and the Philippines under the Duterte presidency and the top priority that the Japanese government has given to our country as its development partner, especially at this time of the COVID-19 pandemic.”
Dominguez mentioned that despite the restrictions resulting from the quarantines imposed to curb the spread of COVID-19, officials of both countries were able to speed up the process of making the loan effective and ready for disbursement.
The CCRESL became effective on Aug. 11 and was quickly disbursed by the Japanese government through the Japan International Cooperation Agency (JICA) after only three days.
Given the Philippines’ urgent need for budgetary support to address the COVID-19 emergency, it took only less than a month to secure all the documents necessary for the declaration of the effectiveness of the 50-billion yen CCRESL.
This is the quickest loan that was ever secured under Japan’s Official Development Assistance (ODA) financing package and in keeping with the “fast and sure” approach adopted by the two countries since 2017.
The CCRESL was approved by the Development Budget Coordination Committee (DBCC) last June 10 and was processed by the approving authorities of both countries in only 14 working days until the July 1 signing of the loan accord.
Describing their efforts as “heroic,” Dominguez had earlier thanked the teams from Japan and the Philippines that both worked hard through the period of the quarantines imposed in both countries to speed up the processing of the loan.
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 significant increase in its deficit-to-GDP (gross domestic product) 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.
The CCRESL package carries concessional lending terms of 0.01 percent (one hundredth of a percent) fixed interest rate per annum with a maturity period of 15 years inclusive of a 4-year grace period.
According to the DOF, the CCRESL from Japan is designed as a co-financing operation complementing the Asian Development Bank (ADB)’s COVID-19 Active Response and Expenditure Support (CARES) 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.
To be implemented from 2020 to 2021 by the Department of Health (DOH) and the National Economic and Development Authority (NEDA), 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. - PR
(Photo courtesy of Department of Finance)