The government and the World Bank recently signed a $500-million loan agreement that would enable the Duterte administration to augment the government’s urgent financing requirements arising from the crisis spawned by the coronavirus disease 2019 pandemic.
Finance Sec. Carlos Dominguez III and Achim Fock, the WB acting country director for Brunei, Malaysia, Philippines, and Thailand, signed the agreement on the Third Risk Management Development Policy Loan that aims to strengthen the country’s capacity to prepare for, respond to, and recover from, natural disasters, including health emergencies like the Covid-19 crisis.
The loan accord, which was signed April 10, follows two earlier Risk Management Development Policy Loans signed in 2012 and 2015 between the government and the WB.
Dominguez said the third budget-support loan is programmed for accelerated disbursement by April 30, 2020 to help support the immediate financing requirements of the government resulting from the impact of the Covid-induced crisis.
"We thank the World Bank for its swift action on this facility in support of disaster risk management, coming at this critical time when the Philippines, like most other countries worldwide, is struggling to cope with the devastating health, social and economic impacts of the coronavirus pandemic," he said.
"This USD500-million facility, which is just one of several financial assistance programs made available to the Philippines by the World Bank during this global health crisis, bolsters the Duterte administration's overall efforts to provide instant relief to the poor and other hardest-hit sectors, and strengthen our healthcare system," he added.
In an earlier statement following the Bank’s approval of the loan last April 9, Mr. Fock said: “The World Bank is committed to supporting efforts to strengthen the Philippines’ capacity to prepare for, and respond to, natural disasters as well as health and economic shocks like Covid-19.”
The loan is payable in 29 years, inclusive of a 10-and-a-half-year grace period.
According to the WB, the loan would support policy reforms undertaken by the government in the area of disaster risk management, including the implementation of an emergency cash transfer program during times of crisis.
The loan also aims to support the adoption and implementation of a unified disaster rehabilitation and recovery planning framework by the national government and local government units; the development of multi-year investment plans for seismic risk reduction and retrofitting of important government buildings; and the promotion of integrated hazard and risk analysis in physical planning, and in support of policy development.
On top of this financing package, the WB has also earmarked a $100-million fast-track loan to to enable the Department of Health to procure personal protective equipment gears for medical front-liners, along with testing and laboratory materials, quarantine areas, isolation rooms and other essential equipment to fight Covid-19.
The loan is under the WB’s recently launched $14-billion Fast Track Covid-19 Facility. According to the WB website, the Fast-Track facility “will help developing countries strengthen health systems, including better access to health services to safeguard people from the epidemic, strengthen disease surveillance, bolster public health interventions, and work with the private sector to reduce the impact on economies”.
The Covid-19 Fast Track Facility would be financed as follows: $2.7 billion from the International Bank for Reconstruction and Development, $1.3 billion from the International Development Association, $6 billion from the International Finance Corp., (including $2-billion from existing trade facilities), complemented by reprioritization of $2-billion of the Bank Group’s existing portfolio.
It would also include policy advice and technical assistance drawing on global expertise and country-level knowledge.
The Philippines is eligible for $100 million at IBRD regular terms, with a waiver of the first year of commitment fees.
As an IBRD member-country, it is also eligible to receive further financing assistance from IBRD within its normal exposure limits.