China-led lender OKs $750M loan to PH for COVID-19 response

The China-led Asian Infrastructure Investment Bank (AIIB) on Thursday (May 28) approved a second loan to the Philippines, worth $750 million, for COVID-19 response.

Finance Undersecretary Mark Dennis Y.C. Joven told the Inquirer that the Beijing-based lender approved on Thursday night the fresh financing to be used in fighting COVID-19.

As earlier reported by the Inquirer, the AIIB will co-finance the Manila-based lender Asian Development Bank’s (ADB) COVID-19 active response and expenditure support (Cares) program.

In April, the ADB approved $1.5 billon for the Philippines’ $2.25-billion Cares program.

Prior to this COVID-19-related loan, the Philippines had only availed itself of one loan from the AIIB —$500-million worth in 2017 for the Metro Manila Flood Management Project, which was co-financed by the Washington-based World Bank.

According to documents, the Cares program was expected to result in the following:

Increase in coronavirus testing capacity to 8,000 a day in May
Reduced turnaround time for test results to 48 hours or less by July
Coverage by the Philippine Health Insurance Corp. (PhilHealth) of all COVID-19 patients, health care workers by July

The Cares program would also:

Provide funding for conditional cash transfers and emergency cash subsidies to 4.4 vulnerable households by July
Fund emergency subsidy for 13.6 million households by July
Fund $600 million worth of economic stimulus programs for businesses, including those in the agriculture sector, by December
Fund wage subsidies for at least 1 million MSMEs also by December
Absorb revenue loss from tax relief for 1 million MSMEs by December

Results expected from the Cares program included:

Reduction in infection rate from every three to four days to every 30 days or more by December
Reduction of poverty rate to less than 18 percent by April 2022 from 20.7 percent projected last April

As of mid-May, the Philippine government had borrowed from foreign lenders and secured grants worth a total of nearly $5 billion for COVID-19 response.

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Edited by TSB

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