RP to get P23-billion yen loan from JICA

MANILA, Philippines - State-owned Japan International Cooperation Agency (JICA) has vowed to extend financial assistance to the Philippine government initially worth P23 billion to bankroll disaster recovery and rehabilitation efforts after tropical storm Ondoy and typhoon Pepeng wreaked havoc on the country.

JICA is set to sign today two agreements worth P23 billion or ¥44.99 billion covering the Agricultural Credit Support Project (ACSP) and the Logistics Infrastructure Development Project (LIDP).

JICA officials are scheduled to ink a P15.53 billion or ¥30.38 billion LIDP to be implemented by the Development Bank of the Philippines (DBP) that would provide medium- and long-term financial assistance to build distribution infrastructures for local communities and the private sector all over the country.

The loan aims to expand distribution infrastructures though an optimal mix of marine and intra-island transportation, including facilities for roll on, roll off terminal, toll roads, local government unit (LGU) roads, maintenance equipment, packaging, transport, and distribution facilities.

The Japanese officials are also scheduled to sign a loan agreement for the P7.45 billion or ¥14.61 billion ACSP to be undertaken by the Land Bank of the Philippines.

The loan will be used to provide financing to small farmers and fisherfolk, including qualified agrarian reform beneficiaries, small and medium enterprises as well as large agribusiness enterprises.

The ACSP funds, according to JICA, would be channeled to eligible sub-projects such as farm or agribusiness production activities, working capital funds, and fixed asset acquisition requirements.

JICA said the official development assistance (ODA) loans are expected to contribute to the country’s disaster recovery and rehabilitation efforts in agriculture and infrastructure sectors.

“Moreover, in view of the economic downturn, JICA is hopeful that ACSP and LIDP will provide financing to stimulate the Philippine economy,” the Japanese lender said.

The two ODA loans to be implemented from 2009-2014 have a maturity of 30 years, inclusive of a 10-year grace period at 1.4 percent interest per annum.

The soft loan packages would come from the multi-billion-dollar facility Japan has committed to help developing countries in Asia cope with the effects of the global financial crisis.

The Philippines has adopted the policy of tapping more ODAs than foreign commercial borrowings to save on cost. ODAs charge much lower interest rates than commercial loans.

The government to book a record budget deficit of P250 billion or 3.2 percent of gross domestic product (GDP) this year from P68.1 billion or 0.9 percent of GDP last year but hopes to get back on the fiscal consolidation path and achieve a balanced budget by 2013.