The Department of Finance (DOF) will draw this week $80 million of the World Bank’s standby loan extended to the Philippines to support the national government’s disaster relief and rehabilitation efforts in provinces devastated by Typhoon “Odette.”
Finance Secretary Carlos G. Dominguez III said they will tap the $500 million Disaster Risk Management Development Program with a Catastrophic Deferred Drawdown Option (CAT-DDO4) to provide the government immediate access to funds for its ongoing efforts.
”This week, the DOF will draw $80 million from the World Bank disaster financing loan to fund the amount with cover in the 2021 budget,” Dominguez said in a statement.
He said the Philippine government will draw another $120 million from the same standby loan facility in the first week of January when the loan cover will be available in the 2022 national budget.
Dominguez issued the statement in response to the calls of two Senators for the government to do a cash sweep of undisbursed funds and savings in the state coffers to provide funds for the relief and reconstruction efforts in Odette-hit areas.
A presidential declaration of a state of calamity or a public health emergency is required to trigger the release of the funds available under the US$500 million WB standby loan facility.
President Duterte declared on Dec. 21 a state of calamity in six Odette-battered areas: Regions 4B (Mimaropa–Mindoro, Marinduque, Romblon and Palawan), 6 (Western Visayas), 7 (Central Visayas), 8 (Eastern Visayas), 10 (Northern Mindanao) and 13 (Caraga).
The DOF said the CAT-DDO4 aims to strengthen the Philippines’ institutional capacity to manage risks from climate change, natural disasters and disease outbreaks.
This standby loan facility was approved by the WB Board last Nov. 17, and the loan agreement for this facility was signed between the WB and the Philippines, represented by the DOF, on Nov. 29, 2021.
Net of a 0.5 percent front-end fee, the CAT-DDO4 has an available balance of $497.5 million as of December this year.
In a related development, the Duterte administration has also jacked up the government’s domestic borrowings for January next year.
In a memorandum posted on Thursday, Dec. 23, the Bureau of the Treasury said the national government will sell P200 billion worth of debt papers in the first month of next year, more than double against the P70 billion program for this month.
In January, the government will borrow P60 billion through Treasury bills, while it is looking to raise P140 billion via the sale of Treasury bonds (T-bonds).
The Treasury has increased its regular three-month, six-month and one-year IOUs from P10 per offer to P15 billion, broken down into P5 billion each for 364-day, 182-day papers and 91-day securities.
Auction for the short-term papers will be held on Jan. 5, 12, 19, and 26.
T-bonds, meanwhile, will be sold at P35 billion per offer. The seven-year papers will be auctioned off on Jan. 6, the four-year IOUs on Jan. 13, 10-year securities on Jan. 20 and on Dec. 27 for the seven-year instruments.