COVID-19 pandemic delays funding for three major DND projects


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The government ‘s move to prioritize its coronavirus disease 2019 (COVID-19) pandemic response has prompted the allocation of funds for three major military modernization projects to be postponed, according to the country’s defense chief.

Defense Secretary Delfin Lorenzana, in an online press briefing on Thursday, when asked if any modernization contracts would be completed before President Rodrigo R. Duterte’s term ends next year.

“Medyo naaantala nang kaunti dahil nga yung pera, hindi na-allocate dahil ginamit sa COVID (response),” Lorenzana said.

Lorenzana said these include the signing of the Philippine Navy’s corvette (small warship) procurement program, which provides for the acquisition and construction of two modern corvettes equipped with missiles and other high-tech armaments and sensors by South Korean shipbuilder Hyundai Heavy Industries.

Also set for signing are the contracts for the acquisition of six offshore patrol vessels, to be built by Australian defense contractor Austal, which has a shipyard in Balamban, Cebu, and the Philippine Air Force’s multirole fighter aircraft.

“So these are the big-ticket items na naghihintay magkaroon ng pera,” Lorenzana said.

He expressed hope, however, that finances will be supplied for these projects, as they are all covered by “multi-year financing,” which only requires a down payment to push through and can be paid over a five- to ten-year period.

According to Lorenzana, this payment method is known as soft financing and can be provided by the manufacturers’ host governments.

Meanwhile, he stated that it is up to the Department of Finance to determine whether such a funding strategy is feasible.


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