Philippines borrows $7.5 billion from World Bank

MANILA, Philippines — The Philippines has borrowed more than $7.5 billion (P400 billion) from the World Bank to fund mainly the government’s pandemic response, according to the Department of Finance (DOF).

Finance Secretary Carlos Dominguez said yesterday the Philippines had to borrow from the multilateral bank to finance the government’s procurement of vaccines against COVID.

In particular, Dominguez said the Philippines received $7.53 billion or around P395.13 billion worth of financing provided in 22 agreements from the Washington-based World Bank.

Broken down, Dominguez said 15 of the 22 deals were reached during the pandemic. These loans amounted to $6.15 billion or about P323 billion, which the government utilized for its pandemic response efforts, especially at the height of the COVID lockdowns.

Dominguez said the trilateral policy, entered into with the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank to finance the Philippines’ response to the pandemic, proved to be beneficial in keeping the country’s economy afloat.

The finance chief also said the trilateral approach was first proposed in 2017 in a bid to coordinate the grant of loans and eliminate overlapping functions, cut financing costs and promote efficiency and responsiveness.

Further, Dominguez said the trilateral mechanism could be adopted by the multilateral institutions in mobilizing green funds to bankroll sustainable projects in climate-risk countries.

“This would be a more feasible and accessible option rather than subjecting countries to the tedious processes imposed by various organizations offering climate financing,” he said.

Last week, the DOF warned the next administration that it may need to consolidate its finances to make sure that debts amassed during the pandemic are paid up. The DOF also admitted that it would take at least four decades for the government to repay its pandemic debts.

“The loans have to be repaid over a period of 40 years starting in 2020. This will require a fiscal consolidation program and improved revenue collection,” DOF chief economist Gil Beltran said.

The DOF said the Philippines had borrowed P1.3 trillion as of January to fund the government’s pandemic response.

The bulk of the financing at P559.08 billion was raised by the Bureau of the Treasury through bond issuances, while the rest was obtained from multilateral and bilateral partners.