THE Philippines secured a US$750-million loan from the Asian Infrastructure Investment Bank (AIIB) on May 29 as part of a coordinated international effort to stave off the worst public health and economic effects of the Covid-19 pandemic.
The budgetary support, cofinanced with the Asian Development Bank (ADB), will go toward increasing the government’s testing capacity, bolstering vulnerable sectors (including agriculture) and providing conditional cash transfers and emergency assistance to poor households.
Additionally, at least one million micro, small and medium-sized enterprises, of which 58% are registered to women, will benefit from wage subsidies.
The Philippines is one of the first developing countries globally and the first in Southeast Asia to have introduced strict quarantine measures to limit the spread of the disease. The lockdown measures are expected to take a heavy toll on the country’s economic growth with the International Monetary Fund estimating that gross domestic product could see a sharp contraction from 6.2% to 0.6% for 2020.
“The focus of our efforts is to help the government tackle the immediate health and economic challenges posed by the pandemic. AIIB’s support will contribute to building economic resilience and ensuring quick recovery,” says AIIB vice president, investment operations, D.J. Pandian.
While the bank does not have a regular instrument for policy-based financing, it is extending such financings on an exceptional basis under the Covid-19 Crisis Recovery Facility (CRF) to support its members through projects cofinanced with the World Bank or the ADB. The CRF, created as part of the coordinated international response to counter the pandemic, has an initial size of US$5-US$10 billion to support AIIB members’ urgent economic, financial, and public health needs and quick recovery from the crisis.