Carlos Dominguez douses ‘debt trap’ fears in China loans

CLARK FREEPORT, Pampanga, Philippines — Finance Secretary Carlos Dominguez III has doused fears of a “debt trap” in the government’s dealings with China to finance its ambitious Build Build Build projects.

“This is totally unfounded. The financing we availed of are soft loans at the lowest possible interest rates and the longest possible term arrangements,” Dominguez told journalists on the sidelines of the Sulong Pilipinas 2018 Philippine Development Forum here the other day.

Dominguez said the estimated project debt to China would only constitute .65 percent of the government’s total debt from the current .11 percent.  

“By 2022, when most of the financing for the Build Build Build program should have been accessed, our project debt to China will constitute around 4.5 percent of the total debt. So there is no danger of us being drowned by Chinese debt,” Dominguez said.

He assured the public that the government borrows with great prudence and is aware that it’s the taxpayers who will pay for the debt.

“We always keep in mind that the money we borrow come from the taxes dutifully paid by the people of the countries that have continued to generously support us. We make sure that the funds we borrow are wisely used and will produce sufficient economic benefits to make the debt service easier down the road,” he said.

Dominguez said that all projects are approved by the National Economic and Development Authority Board without any interference from the Chinese.

As for Chinese-funded projects, he said the government has asked China to submit three names as bidders for their project.

If the bidders fail to perform well, they would be accountable to their government.

Friends with  China, US

The country can maintain friendly relations with the US and China, according to former president and now Speaker Gloria Macapagal-Arroyo.

“We are friends with China, but being friends with China doesn’t mean that we are not friends with the United States. There is no conflict in friendship between two important friends,” Arroyo said during the inauguration of a new building of the Bases Development and Conversion Authority in Clark Global City in Pampanga.

She later told reporters that the US and China “are both very important to the world and to the region, and our friendship with them is very important to us, and their friendship with each other is also very important to us.”

US Ambassador Sung Kim and Hungarian Ambassador Jozsef Bencze attended the event.

“We want Ambassador Kim to be here so that the American investors will be more high profile, so that the people will remember that America is a sheer friend of the Philippines,” Arroyo said.

She said the US envoy’s presence signifies the country’s continuing friendship with the US.

“We are very happy that Ambassador Kim is here together with our Hungarian ambassador... I am very proud of the American investments here. I am very proud that Texas Instruments is here, a billion-dollar investment with $3 billion in revenue. Also Michael Kors and many others,” she said.

She asked the two ambassadors to bring more investments to the country.

“There’s plenty of room for more investments and we hope that there would be a lot of new investments coming from the United States, from Europe and of course from our Philippine investors. We hope that more people know about the American investments and we also hope that more American investments will come, now that we have this beautiful Clark Global City and the New Clark City as well,” she said.

Another House leader, Rep. Luis Raymund Villafuerte of Camarines Sur, slammed President Duterte’s critics over what he described as their “misguided nationalism with their knee-jerk criticism of the Chief Executive’s pragmatic and legal approach” to Manila’s conflict with Beijing over the West Philippine Sea.

“President Duterte’s critics have prematurely assailed what is actually a diplomatic master stroke in his administration’s decision to explore a possible joint and constitutional commercial exploration with China of the resources-rich West Philippines Sea,” he said. – With Jess Diaz