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rundowns
COVID-19 Special Issue Volume 40, Issue 4
PHILIPPINE’S TOTAL DEBT
UNENDING CYCLE
PH Loan Series
I
Amiel Rose AQUINO
t is indeed true wars are very expensive, and in order to win a war we need a lot of money—a lot of it. The COVID-19 pandemic brought so many nations down their knees, leaving economies to bleed; the Philippines is not an exemption. In order to sustain financial support to battle this pandemic, donations were given, as well as series of domestic and global loans were granted:
MARCH 23, 2020
MARCH 18, 2020
MARCH 15, 2020
The Treasury received a ₱300 billion credit line via a bond repurchase deal by the Bangko Sentral ng Pilipinas. Given that a bond repurchase was made, The Treasury must pay
To fund local relief efforts, the World Bank granted a $100 million loan line
To initially help respond to the coronavirus outbreak, the Asian Development Bank (ADB) allowed a $3-million grant (about ₱150 million). Succeeded by the declaration of Metro Manila under community quarantine; strict
it back with more money in a shorter time.
(about ₱5 billion).
measures along with curfew hours were imposed.
MARCH 26, 2020
APRIL 9, 2020
APRIL 10, 2020
President Rodrigo Duterte was given additional powers to realign the funds under
As the number of cases arises Finance Secretary Carlos Dominguez III admits that this year’s economy will foresee
the 2019 and 2020 budget for three months as the Republic Act 11469 or the Bayanihan
“zero growth” and may even contract. Another $5.6 billion (about ₱280 billion) from the World Bank and ADB, three folds higher than the original borrowing plan capped at ₱100 billion.
Another $500 million (about ₱25
to heal as one takes effect. Philippines was also declared under state of national emergency.
APRIL 28, 2020
billion) loan was given by the World Bank.
APRIL 27, 2020
The Treasury raised $2.35 billion (about ₱119 billion) by offering 10- and 25-year dollar bonds to global investors, which will be paid with low interest.
APRIL 24, 2020
Additional $200 million (about ₱10 billion) was granted again by the ADB to continue layout the government’s emergency cash aid to poor Filipino households.
Another loan granted by the ADB was a $1.5 billion (about ₱76 billion) loan to further strengthen our COVID-19 response programs.
MAY 7, 2020 The United States government added another ₱298 million to the coronavirus response fund, providing ₱768 million (about $15.2 million) to our COVID-19 response budget.
MAY 15, 2020 In order to subsidize the second tranche of cash aid release under the Social Amelioration Program, President Duterte asks Congress’ to help to find additional funds.
MAY 29, 2020 The China-led Asian Infrastructure Investment Bank approves another $750 million (about ₱38 billion) loan, under specific conditions. The World Bank again also approves a new $500 million (about ₱25 billion) credit line.
JUNE 29, 2020 Two loan agreements were agreed upon between Philippines and the Agence Francaise de Developpement (AFD) amounting ₱14B to fund the Build, Build, Build Program and to help revive the economy from the pandemic aftermath. Taxes are the main source of funds in every nation. As our list of loans becomes longer, the years to pay it becomes longer. In the long run this debt may take a toll in the following years with the following implications.
HIGHER TAXES EVERYWHERE In order to pay the country’s loans in full and in allotted time, Filipinos are looking towards a future with higher taxes everywhere. Lawmakers are finding ways to boost and generate funds to help revive our economy. Their particular interest—the Digital Market. Last May 19, 2020, Congressman Joey Salceda filed House Bill No. 6765 or the Digital Economy Taxation Act, which aims to collect tax on digital services such as those offered by Facebook, Google, Netflix and Spotify as well as for digital retailers like those on the Lazada and Shopee. "[These] companies are making a killing because of isolation but are not paying enough taxes," Salceda
JUNE 17, 2020
MAY 31, 2020
MAY 29, 2020
The first COVID-19 loan from a bilateral
Government
The China-led Asian
partner was granted by Japan International Cooperation Agency (JICA). A new ₱23.5 billion Japan loan was given to support hiring of contact tracers, maximize testing and among other anti-pandemic projects.
borrowings for COVID-19 response reaches $4.858 billion (about ₱246 billion) as of mid-May.
Infrastructure Investment Bank approves another $750 million (about ₱38 billion) loan, under specific conditions.
discusses. With this bill it could generate an estimated 29.1 billion pesos (nearly $573 million) annually and help the country recover from the impact of the virus. Additionally, Sen. Ramon “Bong” Revilla Jr. filed Senate Resolution No. 410 which backs up Salceda’s proposed imposition by including those who make a living in online streaming and such jobs alike. HIGH UNEMPLOYMENT RATE An increase in tax always opt to boost economic revenue and induce employment but if not carefully analyzed increase in tax might complicate economic growth and result in mass unemployment. As taxes become higher small business owners
will most likely struggle. Many businesses will close henceforth, a decrease in jobs for our workers. OTHER COLLATERALS Most of our borrowings greatly rely upon Chinese money. These grants however, apply special conditions which are not publicly stated. In the following years, the interests will continue to grow and we can’t comply with the allotted period, we are looking towards other means to pay it back. Numerous people are concerned with the so-called "Chinese debt trap,” recalling Sri Lanka’s experience, which was forced to lease its Hambantota port to Chinese operators in order to cope with its debt to Beijing.
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