FINANCING TO AID PH COVID-19 RESPONSE AND VACCINATION EFFORTS TOWARD ECONOMIC RECOVERY – DOF, ADB

Press Release | 11 February 2021

During the weekly Department of Health (DOH) Kapihan Session held on February 9, Asian Development Bank (ADB) Principal Health Specialist Dr. Eduardo Banzon reported that ADB was able to mobilize about $20B as part of its COVID-19 pandemic response financing efforts. This raises the regional financial institution’s financing for the health sector by 10% in 2020.

Meanwhile, Department of Finance (DOF) Undersecretary Mark Dennis Y.C. Joven discussed the nature of government loans in relation to securing financing for the pandemic response in a bid to allay apprehensions and correct misinformation surrounding government borrowing from foreign financial entities.

Out of the $20B financing from ADB, about $3.3B went to approved projects for the health sector, the largest ever in its history, and made available as loans, grants, and technical assistance. The funds helped countries address the health aspect of COVID-19 and manage its adverse economic impact by building their health systems’ capacity to test, isolate, and treat the virus patients.

“What we’re trying to do is work with countries to make sure that these interventions and plans are actually being implemented and to provide any added support like technical advice that they would need,” Dr. Banzon said.

The ADB COVID-19 Pandemic Response Option (CPRO), a direct financial support to government interventions for COVID-19 mitigation, extended help to countries in Central Asia and Southeast Asia including the Philippines. The institution also created the Asia Pacific VAccine Access Facility (APVAX), which is a $9B facility to finance access and delivery of COVID-19 vaccines in ADB’s developing member countries (DMC).

On the other hand, DOF Usec. Joven reported that the Philippines is currently in the process of securing a total of $425M loan from ADB purely for vaccinations alone, including logistics and manufacturing. Usec. Joven said that loans should not “always be seen in a bad light” because “ borrowing allows us to fund expenditures without having to impose additional taxes in the short run.”

The DOF Undersecretary emphasized that borrowing also enables the government to fund priority initiatives which are in line with the strategies identified under the Philippine Development Plan 2017-2022 geared toward laying a stronger foundation for inclusive economic growth, reduction of poverty, and a globally competitive economy. Examples are the COVID-19 response, the Build-Build-Build program, and social welfare projects.

Usec. Joven further clarified that borrowing will not collateralize government assets, emphasizing that the DOF will not tolerate any violations of our law such as security interests imposed on government-owned assets. “When we negotiate loans, we always take into consideration debt service payments. We do not borrow money that we do not intend to pay. We want to make it clear that there is no provision in any of the loan agreements signed by the Philippine government under the present administration that includes any form of direct collateral or security interest on any government-owned assets,” he said.

In closing, Dr. Banzon said, “When we develop projects, we always look into the economic analysis, the cost benefit of any particular lending. We insist that whatever financing that ADB would provide to any country would have a weight of return that will benefit the country at multiple levels. When we look into vaccination, this is one of the most cost-beneficial investments countries should be doing. The economic contraction brought about by the pandemic is so severe that the investment in vaccination could lead to the opening up of the economy. The money should lead to a prosperous, resilient and sustainable Philippines.”

“In this time of crisis, every support that we receive from the public and private sectors to help augment the country’s COVID-19 response is greatly valued and shall be lauded for the Bayanihan spirit they demonstrate. Through our whole-of-government and whole-of-nation initiatives, through our collaborative efforts like this, we will successfully defeat this pandemic,” Health Secretary Francisco T. Duque III remarked in a separate statement.