By Chino Leyco
The Philippines gets another budget boost from the World Bank to support the government’s relief fund for Filipinos recovering from the devastation wrought by the coronavirus pandemic.
World Bank
(Reuters / MANILA BULLETIN)
The Washington-based lender announced Friday that it approved a new $500 million loan for the Philippines’ COVID-19 response in mitigating the impact on poor and vulnerable households, as well as to provide financial relief to small and medium enterprises (SMEs).
The fresh financing to the Philippines will also support “urgent needs” created by the global health crisis, the World Bank said.
The country’s fresh financing, which is under the Philippines Emergency COVID-19 Response Development Policy Loan, will be paid in 29 years, but the World Bank gave the government a 10.5-years grace period.
“The COVID-19 pandemic has badly hurt millions of poor and vulnerable Filipino families, particularly daily wage earners,” Achim Fock, World Bank acting country director for Philippines said in a statement.
“This new financing can help with the delivery of financial support for struggling families and communities while the country is ramping up efforts to contain the pandemic and reduce its economic impact,” he added.
Last month, the bank already backed two separate loans for the Philippines. First, the $500 million on April 9 for disaster risk management programs, and second, the $100 million on April 23 for healthcare needs.
World Bank said the new $500 million loan should be used for the government’s cash subsidy to 18 million poor and vulnerable Filipinos badly hit by COVID-19, including the monthly cash transfers given to 4.3 million beneficiaries of the Pantawid Pamilyang Pilipino Program (4Ps).
The fund will also back the expansion of social assistance to 13.6 million households that are not 4Ps beneficiaries and repatriated overseas Filipino workers, Wold Bank said.
Likewise, the new funding should support government efforts to alleviate the financial burden faced by SMEs through a two-month wage subsidy and additional financial relief through deferrals of tax and social security payments.
The bank added that the loan will support the government’s credit guarantee scheme program, which aims to ensure SMEs will continue their business operations and keep their current employees despite the pandemic.
For his part, Finance Secretary Carlos G. Dominguez III said, “We thank the World Bank for its prompt action on this financial support for the Duterte administration's efforts to provide immediate relief to poor and low-income Filipinos plus small business workers .”
“This swift loan approval underlines the strong international confidence in the government's capability to meet the massive financial requirements of containing this global health emergency,” Dominguez said.
Measures to contain the spread of COVID-19 such as travel restrictions and quarantines have severely affected small firms and their workers especially in sectors such as tourism, transport, agriculture, retail, and construction.
According to a rapid survey conducted by the government, 77 percent of micro and small firms and 62 percent of medium-sized firms had to close due to the enhanced community quarantines. Those that remained open suffered a 66.5 percent drop in sales.
“Government assistance to these firms can help prevent businesses from closing permanently and in the process save millions of jobs as the economy starts to recover,” World Bank said.
In response to the pandemic, the World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response.
It is increasing disease surveillance, improving public health interventions, and helping the private sector continue to operate and sustain jobs.
Over the next 15 months, the World Bank will be deploying up to $160 billion in financial support to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery, including $50 billion of new IDA resources in grants or highly concessional terms.