The Philippines' COVID-19 Debt Swells to Over P1.4 Trillion After Another Loan From Japan
It's going to take a while before the Philippines can pay off its loans from Japan. Earlier this week, the Department of Finance (DOF) announced that it had signed an agreement for another loan worth 30 billion yen, or P12.3 billion, to aid the country's recovery from the COVID-19 pandemic. The loan is expected to sustain the Philippine economy on a "path of high, inclusive growth."
The latest borrowing is part of the COVID-19 Crisis Response Emergency Support Loan (CCRESL 2)'s second phase. Finance Secretary Carlos Dominguez III and Japan International Cooperation Agency (JICA) President Akihiko Tanaka signed the agreement.
According to the Japanese Embassy, the loan "seeks to support the Philippine government’s efforts in promoting COVID-19 vaccination and ensuring the steadfast economic recovery in the post-COVID-19 era."
Under the concessional terms, the repayment period is set to 11 years after a grace period of four. There will be a fixed interest rate of of 0.01% per annum. CCRESL Phase-2 is the second loan support the Philippines has received from Japan.
In July 2020, the first CCRESL was given to the Philippines, making the government the first recipient of the highly concessional loan specifically designed by the Japanese government for the crisis.
The Japanese support extended to the Philippines covers more than three million vaccine donations, grant aid for the procurement of medical equipment and establishment of laboratory surveillance sites, technical assistance for cold chain development, and a provision of Avigan tablets for COVID-19 treatment, among others.
With this latest loan, the Philippines' total COVID-19 borrowings is now roughly P1.4 trillion. The DOF said that the loans will be repaid over a period of 40 years, which began in 2020.
The DOF also said that loan collection will require a "fiscal consolidation program" and an improved revenue collection system.