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Why does the Philippines need billions in foreign loans?

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The Philippines&#x27; foreign debt has ran up to $18.4 billion, as it struggles to contain the spread of the COVID-19 pandemic, the Department of Finance said on Friday. The government takes loans yearly because it &quot;forms part of efficient governance,&quot; said Finance Undersecretary Mark Dennis Joven. This is because the interest rate charged from loans are &quot;lower than the growth that we have achieved so far&quot; by using the debt, he said in a public briefing. &quot;Kung nakautang po tayo ng pera, tapos nagbabayad po tayo ng interest at say kunwari .01 percent per annum, pero iyong growth na nadi-derive natin from this pera na ginamit natin, we can generate, say kunwari 5 to 6 percent per annum, then it’s more efficient,&quot; Joven said. (If we borrow money and pay an interest of .01% per annum for example, but the growth that we derive from this money, we can generate, say, 5 to 6 percent per annum, then it&#x27;s more efficient.)&quot;It essentially makes the economy grow faster and this has been happening for the last, say, last 20 to 25 years,&quot; he added. He continued, &quot;Now the question is: Bakit mas malaki iyong nautang natin during the pandemic?&quot;(Why did we borrow more during the pandemic?) Joven said during last year&#x27;s lockdown to arrest COVID-19 infections, some businesses stopped operating, &quot;which also means that consumption is not moving ahead as expected.&quot; This, in turn, reduces the government&#x27;s expected tax revenues, he said.At the same time, the government needs to distribute cash aid to the poor and provide funds to increase healthcare capacity, Joven said. &quot;Essentially, kung hindi po tumatakbo iyong gobyerno or may lockdown or limited lockdown mababawasan po iyong tax revenues, while at the same time tumataas po iyong gastos,&quot; the finance official said. &quot;Kailangan pong i-fill iyong gap in the short run.&quot; (Essentially, if the government is not running, or there is a lockdown or limited lockdown, the tax revenues are reduced, while at the same time, the expenditure increase. The gap needs to be filled in the short run.) Debt &quot;is not only a uniquely Philippine problem,&quot; Joven said, adding that all Southeast Asian countries &quot;have increased their foreign borrowings since last year.&quot;Multilateral funders gave years of grace period for the Philippine loans, which &quot;by that time, we expect the economy to have recovered already and the world to have moved away from this pandemic situation.&quot; &quot;Going back to normal, it would really not be a big problem to pay for all these debts,&quot; he said. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/04/08/21/what-happens-in-an-economic-crisis-ph-risks-losing-gains-due-to-covid-19-pandemic">What happens in an economic crisis? PH risks losing gains due to COVID-19 pandemic</a></li>	<li><a href="https://news.abs-cbn.com/business/04/29/21/imf-philippine-economy-forecast-68-percent-covid-19">IMF says PH economy could grow by 6.9 percent but warns of COVID-19 risks</a></li></ul>President Rodrigo Duterte said the Philippines might return to normalcy in 2023. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/news/03/01/21/pilipinas-baka-sa-2023-pa-makabalik-sa-normal-duterte">Pilipinas baka sa 2023 pa makabalik sa normal: Duterte</a></li></ul>

The Philippines' foreign debt has ran up to $18.4 billion, as it struggles to contain the spread of the COVID-19 pandemic, the Department of Finance said on Friday.

The Philippines' foreign debt has ran up to $18.4 billion, as it struggles to contain the spread of the COVID-19 pandemic, the Department of Finance said on Friday.