Financing for the government’s coronavirus disease 2019 (Covid-19) pandemic response has climbed to $10.1 billion (P486.92 billion) as of November 4, the Department of Finance (DoF) reported on Friday.
Finance Secretary Carlos Dominguez 3rd
At a virtual economic briefing hosted by the Philippine embassy in Washington, D.C., Finance Secretary Carlos Dominguez 3rd said that although battling “the pandemic is costly,” the country “quickly accessed emergency loans from our development partners and commercial markets at very low rates, tight spreads and longer repayment periods.”
During his presentation, the Finance chief showed that the new figure was composed of budgetary support from the Asian Development Bank worth $3.8 billion; World Bank, $1.20 billion; Japan International Cooperation Agency, $917.9 million; Asian Infrastructure Investment Bank, $750 million, and Finance Development Program, $275 million.
The total amount includes the $2.35 billion secured from the issuance of US dollar-denominated global bonds, $595 million worth of loans for Covid-19 specific projects, $100-million Export-Import Bank of Korea budgetary support, and $26.36 million worth of grants for pandemic-specific projects.
“With our enduring financial strength, we will meet these obligations,” Dominguez said.
These borrowings the government has secured at concessional rates will help cover its revenue shortfall this year, according to him.
“This year, we expect to collect less in taxes as we increase spending in healthcare and relief measures,” the Finance chief said.
His remarks come after the government’s projected revenue collections for 2020 were reduced from the P2.61 trillion estimated in May to P2.52 trillion in August. The latest forecast is equivalent to 13.4 percent of the country’s gross domestic product.
Projected disbursements for this year rose by P110.0 billion to P4.34 trillion, equivalent to 23.0 percent of GDP.
“We appreciate the importance of continuing our fiscal discipline to ensure the resilience of our economy. Despite the many populist excuses to grow the deficit and bury future generations in debt, the Philippines has chosen the path of fiscal prudence,” Dominguez said.
He added that the government’s goal was to land its deficit-to-GDP ratio in the middle range of its Southeast Asian neighbors and credit rating peers around the world.
Given its revenue and disbursement plans, the government’s deficit target over the medium term is expected to increase from 8.4 percent to 9.6 percent of GDP in 2020, from 6.6 percent to 8.5 percent in 2021 and from 5.0 percent to 7.2 percent in 2022.
“This conservative approach will allow us to continue accessing the financing we need at favorable terms for the Filipino people,” Dominguez said.
“The battle against Covid-19 is going to be a marathon, not a sprint. We need to maintain our fiscal stamina. We should have ample ammunition to outlast this enemy,” he added.