The unprecedented spending for the government’s coronavirus response has already cost the Philippines nearly $9 billion in new debt since the pandemic began, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said they have already secured a total of $8.83 billion as of end-August, equivalent to roughly P428.91 billion in borrowings for the Duterte administration’s COVID-19 response efforts.

Dominguez said the multibillion dollar financing came from the country’s development partners and private banks.

The finance chief explained the government needed to increase its borrowing for the year due to its weak “revenue generation capacity” amid restriction on movement, or lockdowns, that curtailed economic activities.

“Given all that has happened in the past months, we expect to collect significantly less revenue than projected at the start of the year, even as we spend more for our people,”

Dominguez said, noting tax collections have contracted by 12 percent since January.

Of the total COVID-19 borrowings, $5.98 billion was budget support financing from the Asian Development Bank, the World Bank, the Asian Infrastructure Investment Bank, a development agency of France, and the Japan International Cooperation Agency.

Meanwhile, the government raised $2.35 billion from its latest global bond offering, which Dominguez said had “fetched our lowest ever coupon in the US dollar market.”

The remaining $496.36 million is composed of grant and loan financing from the Philippines’ development partners for various COVID-19 specific projects, the finance chief added.

“Total borrowings for 2020 and 2021 are projected to reach ₱3 trillion to support priority expenditures necessary for the country’s swift recovery from the COVID-19 crisis and public investments in infrastructure and social services,” Dominguez said.

Despite the increased borrowings, Dominguez said the government’s debt ratio, or the proportion debt to the country’s economy, will remain manageable.

The debt-to-gross domestic product (GDP) ratio is projected to settle at 54 percent this year and reach 58 percent in 2021, and 60 percent in 2022.

“The projections are still lower when compared to the country’s all-time high debt level of 71.6 percent of GDP in 2004, Dominguez said.

“Crises in the past could often be remedied with legislation and spending that restores confidence in the economic sector where the crisis started. This is not the case for the COVID-19 pandemic and the economic crisis it has caused,” Dominguez said.

“There is no knock-out punch for the situation until a safe and effective vaccine is ready for mass distribution,” he added.

Dominguez said the coronavirus induced crisis is “a test of fiscal stamina.”

“How a country’s economy performs during COVID-19 and how quickly it can bounce back once the crisis is over will depend on its economic resilience. This is why we have been consistent with our approach: we will do what is necessary, but we will not be wasteful,” he added.