The Department of Finance (DoF) has secured foreign loans worth $5.67 billion or P333.42 billion for 12 projects this year to improve the country’s transportation, defense, digital technology, healthcare and agriculture.
DoF said the government received the total fund under concessional official development assistance (ODA) agreements.
With these, the Philippines can pay low or nearly zero interest rates offered by foreign governments and multilateral or bilateral institutions.
“That is why we make sure that we enter into partnerships with very trusted partners and that the terms of our agreements are very concessional and cost-effective so we can deliver more projects that create lasting impact for generations,” Finance Secretary Ralph Recto said.
61.3% debt-to-GDP ratio
The country’s debt-to-GDP (gross domestic product) ratio stood at 61.3 percent as of the third quarter, which the DoF said remained “manageable” or lower than the International Monetary Fund’s threshold of 70 percent.
DoF said the government is mobilizing the loans to construct the Metro Manila Subway Project (Phase 1), the country’s first underground railway system, and the Laguna Lakeshore Road Network Project, a 37.5-kilometer road on the country’s largest lake that will connect trade hubs in Metro Manila to those in nearby provinces such as Subic Bay in Zambales and Clark in Pampanga.
The Asian Development Bank (ADB) said job opportunities for 3.47 million residents along Laguna Lake can arise once developers complete its road network in 2027.
“The project will help link people to jobs and business opportunities, reduce transport costs and traffic congestion, and improve the efficiency of the overall transport network in Metro Manila and nearby regions,” ADB Country Director for the Philippines Pavit Ramachandran said.
The other projects include the Dalton Pass East Alignment Alternative Road Project, the Bataan-Cavite Interlink Bridge Project, the Samar Pacific Coastal Road II Project, the New Dumaguete Airport Development Project, the Maritime Safety Capability Improvement Project Phase III, and the Infrastructure for Safer and Resilient Schools Project.
DoF also signed financing agreements to implement the Philippines’ First and Second Digital Transformation Program, the Second Sustainable Recovery Program, and the Build Universal Health Care Program.
To mitigate climate change and ensure the livelihood of farmers, who are the most vulnerable group to natural disasters, DoF also secured loans for the Value Chain Innovation for Sustainable Transformation in Agrarian Reform Communities Project, and the Climate Change Action Program Subprogram 2.
With these projects, DoF expects production and investment activities in the country to accelerate toward an annual economic growth of 6 to 8 percent until 2028.
With increasing government revenues, DoF also projects less reliance on loans at 56 percent debt-to-GDP ratio by 2028 from 61.3 percent as of the third quarter this year.