Financing will not be a problem in securing coronavirus disease 2019 (Covid-19) vaccines as government with the private sector have made the allocations a priority to start the economic recovery phase the soonest possible.
Trade and Industry Secretary Ramon Lopez said the government assessed that the agreements signed with governments, drug manufacturers and those committed by big business ensured that the country will have more than enough vaccines before the end of the year.
Finance Secretary Carlos Dominguez III said the government had generated $1.46 billion or about P70 billion from multilateral lenders, bilateral sources as well as the local market for the government counterpart.
According to him, this figure will comprise the bulk of the required P82.5 billion budget to provide vaccines for adult Filipinos or about 60 million of the population to achieve herd immunity.
Among the sources for the $1.3 billion vaccine fund are the World Bank ($500 million), the Asian Development Bank ($400 million) and the Asian Infrastructure Investment Bank ($300 million).
The remaining P12.5 billion will then be sourced from the Covidd-19 vaccination program under the Bayanihan 2 (P10 billion) and from a portion of the Department of Health’s 2021 budget (P2.5 billion).
“So far, we have raised a total budget of P82.5 billion… and I figure that a conservative cost of inoculation per individual is going to be around P1,300, P1,150 for the vaccine itself and around P200 for the syringes etc.,” Dominguez explained.
For Socioeconomic Planning Secretary Karl Kendrick Chua, the country has the capacity to withstand the pandemic given its strong macroeconomic fundamentals but rebooting would have to be quick.
“Basically, we entered the pandemic with a very strong fiscal position. We achieved the highest revenue-to-GDP (gross domestic product) ratio and the lowest debt-to-GDP ratio,” Chua stressed.
For 2021, the International Finance Group (IFG) is targeting to secure a total of $23.71 billion in financing from external sources to bridge the budget deficit and provide funds for priority projects including vaccine purchases.
Of this amount, $8.06 billion (34 percent) will be contracted for budget support purposes, while $15.65 billion (66 percent) will be for project financing.
The government plans to secure a total of $7.67 billion in loans and grants from multilateral institutions, $10.54 billion from bilateral partners; and raise $5.5 billion from the commercial markets or through sovereign bonds.
Costly war vs Covid
The government borrowed a total of $17.06 billion from external sources in 2020 to support of programs in response to the pandemic and to maintain the infrastructure buildup.
“Out of the total external financing contracted in 2020, $15.44 billion went to emergency requirements for our Covid-19 response, while the remaining $1.62 billion was earmarked for other initiatives including ‘Build, Build, Build’ infrastructure projects,” Finance Undersecretary Mark Dennis Joven, who heads the IFG, said.
Joven said $14.52 billion in loans for budget support was obtained by the Department of Finance in 2020 to help cover the deficit of P1.38 trillion ($27.81 billion or 7.6 percent of GDP) resulting from reduced revenue collections of revenue agencies and the massive spending requirements of Covid-19 response programs.
The remaining amount of $2.54 billion in project loans was successfully negotiated by the IFG in 2020 to support the government’s key projects that will be implemented over several years starting in 2020.
Of the $14.52 billion bridge loan, some $8.05 billion was through Official Development Assistance and $6.47 billion was through overseas sovereign issues.
Released to the government since last year was $12.18 billion out of the $14.52 billion borrowed.
The need for emergency funding in the battle against Covid-19 raised external financing in 2020 by 75.43 percent compared with 2019.
“This also represents an overall 33-percent expansion of the external borrowing program from 2016 to 2020,” Joven said.
Most of the foreign financing was sourced from cheaper multilateral loans.
“The government has consistently availed debt for budget support, recognizing that program loans and global bonds provide more flexibility in terms of utilization,” he said.
Grants and technical assistance quantified also amounted to $859.53 million last year, of which $26.74 million is intended for Covid-19 response.
“Such assistance included various donations, such as testing kits, masks, personal protective equipment, ventilators, face shields, and others, from China,” Joven said.