Diokno says Philippines won't fall into "debt trap" with getting loans from China
Budget Secretary Benjamin Diokno on Monday said the Philippines will not fall into a "debt trap" as they are very careful in processing their agreements with the China government.
"We are very careful. There is a very rigorous process. We go through the National Economic and Development Authority ( NEDA). They evaluate," Diokno said in a forum at Quezon City.
He said they will not agree if the loan rate will fall below 10 percent return of investment.
Diokno said Chinese borrowing funds one-third of the Duterte Administration's massive infrastructure building program.
He said the country’s low debt-to-GDP (Gross Domestic Product) ratio is the basis of the administration to avail of loans from the Chinese government.
“Our basis in getting loan is the debt-to-GDP ratio... (which is) how much is our debt compared to our economy. Our debt-to-GDP ratio is at 40 percent and declining. The rule of thumb is if a country has a debt-to-GDP ratio of 60 percent to 60 percent. It's okay and we are even lower than 60 percent," he explained.
He said the agreements between the Philippine government and China has no strings attached as they have terms and conditions which does not include giving lands and waters to China.
"We did not promise those kind of things like giving lands in return for our loan. This is straight forward loan. There are terms and we don't promise land and fisheries," he said.
He said the terms to be made under the Chinese official development assistance ( ODA) should be around 25 to 30 years with an interest rate of three percent.
"Under ODA, I think the term should be 25 to 30 years and interest rate of three percent," he said.
He assured the public that 99 percent of Filipino workers will benefit from the government's infrastructure program.
China is also eyeing around 10,000 Filipino overseas workers for expatriates in China under a government-to-government program.
"China is willing to hire our overseas Filipino workers. it's G-to-G, not through a thrid party. They will be paid better," he said.
He added China purchased at least $2 billion worth of fruits from the Philippines but these will have to be delivered. Around 1.5 million Chinese tourists arrived this year, he said.
Earlier, Diokno said the Philippines and China are expected to sign "at least" 10 loan agreements for huge infrastructure projects with an estimated cost of P292 billion during the visit of Chinese President Xi Jinping in the country on November 20 and 21.
Diokno said this visit will strengthen the relationship between the two countries and will give great benefits for the Philippines.
"It will lead to greater trade between China and the Philippines, more tourist from China and of course they will co-finance this infrastructure. So those are our expectations that it will further strengthen our relationship," he said. Ella Dionisio/DMS
