(File photo)
MANILA – A Department of Finance (DOF) official on Friday addressed questions on the government’s decision to borrow money to fund the coronavirus disease (Covid-19) vaccination program, citing its long-term benefits.
In a Laging Handa briefing, Finance Assistant Secretary Mark Dennis Joven said the government is faced with two options -- to vaccinate people to lessen deaths or to not borrow from fund sources and not vaccinate people and register more deaths.
“I don’t know with you but I don’t want to be in a situation like some other countries where deaths have spiraled, infection rates have spiraled so bad that it would be harder for the economy to recover. I think it’s practical to address the problem now so that mas mabilis rin po yung economic recovery after (I think it’s practical to address the problem now so that economic recovery would be faster),” he said.
The government has allocated PHP72.5 billion for the Covid-19 vaccination program, around PHP60 billion of which was sourced through loans from the World Bank (WB), Asian Development Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB) while PHP12.5 billion came from the national budget.
Joven said the government has booked around USD600-USD700 million worth of Covid-19 vaccines.
He said the government has not yet signed the other contracts for vaccine procurement “but we have locked in the supply already.”
Loans for vaccine procurement have long payment terms and low interest rates, the main reason why the government tapped the multilateral lenders instead of commercial sources, he said.
He said the lenders have designed a system wherein the grace period for payment is at least three years after the loans have been drawn out and repayment will start on the fourth year. The loan term is as long as 20 years.
This loan term is advantageous to the government, he said, noting that the health crisis has also resulted in economic issues “so over the short term it would be more burdensome for us to pay for these vaccine loans immediately.”
“So basically, by that time (or after the grace period) we expect the economy to have recovered already and for the world to have moved away from this pandemic situation. So, going back to normal it would really not be a big problem to pay for all these debts,” he added. (PNA)
