Japan is Phl’s top lender in 20 years

MANILA, Philippines — Japan emerged as the Philippines’ biggest source of foreign loans over the past 20 years as Manila sought Tokyo’s assistance in funding connectivity and transportation projects to fill in its infrastructure gap.

Records show the Philippines sourced from Japan nearly 72 percent or $14.13 billion of its $19.65-billion foreign loans in the past two decades.

Meanwhile, the European Union accounted for over 15 percent of the official development assistance (ODA) received by the Philippines at $3.04 billion, while China contributed around six percent at $1.18 billion.

Another East Asian nation, South Korea, made up 5.6 percent of total at $1.1 billion. The US and the Middle East comprised the remaining one percent at $160 million and $20 million, respectively.

Finance Undersecretary Mark Dennis Joven said the administrations of former presidents Gloria Arroyo and Benigno Aquino III shared roughly 60 percent of the loan volume in the past two decades. The Duterte administration, on its own and in just four years, accumulated the remaining 40 percent.

The Duterte leadership obtained $7.94 billion worth of ODAs from July 2016 to December 2020, of which more than 77 percent or $6.12 billion came from Japan.

The Arroyo administration acquired $6.06 billion in loans throughout its nine-year term, and sourced over half of the financing from Japan at $3.2 billion.

Under Aquino, the country received $5.64 billion of ODAs from its partners, and Japan posted above 85 percent of that assistance at $4.81 billion.

Defending President Duterte’s borrowings, Joven said the Philippines has to increase its funding from abroad to spend five percent of its gross domestic product on infrastructure. He said the government was left with no choice but to borrow to sustain its development gains against the challenges posed by the pandemic.

The government plans to borrow a total of P3.02 trillion this year to bankroll its pandemic efforts, especially the vaccination program, which is deemed crucial for the economy’s recovery.

On an 85:15 ratio, the bulk of the borrowing will be acquired from domestic sources at P2.58 trillion, while the remaining P442.36 billion will be sourced from foreign lenders in the form of bonds and loans.