PH won’t fall into ‘debt trap’ in dealing with loans from China–Palace
Credit to Author: The Manila Times| Date: Mon, 11 Mar 2019 09:14:48 +0000
THE Philippines will not fall into a “debt trap,” Malacañang said, as Malaysian Prime Minister Mahathir Mohamad warned President Rodrigo Duterte to be careful in dealing with loans from China.
In a press conference, Palace spokesman Salvador Panelo said the Philippines’ economic managers continued to carefully evaluate loan agreements with China to ensure that “we are not at the disadvantage.”
“Of course, we will take his advice and the economic managers are evaluating all kinds of loans that we are having with the Chinese government,” Panelo told reporters.
“With respect to the Chico Dam, I think the eco[nomic] managers have already explained that we are not at the disadvantage,” he said.
Panelo was referring to the Chico River Pump Irrigation project, which China funded, along with Kaliwa Dam and railway projects, particularly between Manila and Bicol.
Mahathir, who recently visited Manila, warned the Philippines about the consequences of entering into unfair loan deals with China.
In an interview with ABS-CBN News Channel, Mahathir said the Philippines should avoid repeating the mistakes of other countries, which were forced to give up its infrastructure investments to China because they could no longer pay.
Mahathir last year canceled a number of Chinese-funded projects worth $22 billion awarded by his embattled predecessor Najib Razak, who is facing a massive financial scandal.
“If you borrow huge sums of money from China and you cannot pay—you know when a person is a borrower he is under the control of the lender. So we have to be very careful with that,” Mahathir had said.
Duterte plans to spend trillions of pesos to bridge the Philippines’ infrastructure gap, and to do so he sought the help of Beijing and other countries for funding to reduce the strain on his government’s budget.
Critics warned that the Philippines could be the next victim of China’s “debt trap diplomacy,” where Beijing gave “friendly” loans to bankroll infrastructure projects in financially weak states in exchange for control over strategic assets.
But Finance Secretary Carlos Dominguez 3rd had said this was unlikely to happen in the Philippines, saying that Chinese loans would account for just 4.5 per cent of the country’s total debts by the time Duterte steps down in 2022.
He said Duterte’s ambitious infrastructure push would be funded mostly via new taxes and loans with “the lowest possible interests rates and the longest possible term arrangements.”
“We borrow with great prudence, aware that it is their taxpayer and their children who will pay for this debt,” Dominguez had said. “We made sure the country got the best deals possible.” CATHERINE S. VALENTE
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