Philippines, Japan sign ¥50-B standby loan for post-disaster response

The Philippines and Japan on Tuesday inked a JP¥50-billion (roughly P23 billion) loan agreement to support the government’s immediate budgetary needs for post-disaster response upon the declaration of a state of calamity or health emergency.

The loan accord was signed by Finance Secretary Carlos Dominguez, on behalf of the Philippines, and Japan International Cooperation Agency (JICA) Chief Representative Eigo Azukizawa, representing Japan, in Manila.

Under the JP¥50-billion Post-Disaster Standby Loan, the disbursement of the standby loan to the Philippines will be triggered by either a declaration of a state of calamity; or declaration of a state of public health emergency.

In the case of the current COVID-19 pandemic or any other public health emergencies, the imposition of an enhanced community quarantine (ECQ) or its equivalent in the National Capital Region (NCR) or in any other highly urbanized area in the country will also trigger the disbursement of the loan.

“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies. The ability to mobilize financial resources without delay is essential to emergency preparedness,” Dominguez said.

Equivalent to about P23.3 billion, the Japanese loan will be available for quick disbursement in tranches within three years, once the loan is declared effective, and may be extended for an additional three-year period for up to four times.

“Again, we express our heartfelt gratitude to the people and the Government of Japan, represented here today by His Excellency Ambassador [Koji] Haneda and by JICA Chief Representative Eigo Azukizawa. This loan package is an added testament to the treasured solidarity between our countries,” Dominguez said.

For his part, Haneda said that “as a calamity prone country like the Philippines, Japan fully understands the value of safeguarding lives, infrastructure and livelihood.”

“Filipinos can count on Japan to remain responsive to the call of times as a true friend closer than a brother. What we have persistently build together during the time of Prime Minister Abe, we will continue to sustain under Japan's new leadership. With the utmost support of everyone, we will bring Japan-Philippines partnership on to the next level,” the Japanese envoy said.

On July 1, the Philippines and Japan also signed an agreement for a separate JP¥50-billion yen loan for the COVID-19 Crisis Response Emergency Support Loan (CCRESL), which aims to assist the government’s efforts to contain the spread of the coronavirus pandemic and provide economic relief to Filipinos most affected by this global crisis.

The CCRESL was processed by the approving authorities from the time it was approved by the Development Budget Coordination Committee (DBCC) last June 10 in only 14 working days until the loan accord signing on July 1, according to the DOF.

The latest JP¥50 billion was processed at an even faster pace, the Finance department said.

“From the DBCC approval last September 10, it was processed in only 2 working days until today’s signing of the agreement, which is by far the fastest loan secured by the Philippines from Japan through Official Development Assistance (ODA) financing,” it said.

The financing package under Post-Disaster Financing Loan carries a fixed interest rate of 0.01%. It has maturity period of 40 years, inclusive of a 10-year grace period.

Dominguez said it will form part of the Philippines’ “financial war chest” for future emergencies.

“Of course, we hope we will never need to quickly disburse from this loan package. But its availability assures us that we will have ample ammunition to support our budgetary needs in the event a crisis happens. This facility is an important element in our overall resilience,” the Finance chief said. -MDM, GMA News