No debt trap in foreign financing deals: DOF chief

DAVAO CITY – Finance Secretary Carlos Dominguez on Wednesday reiterated the Philippines is not falling into a debt trap when the government made financing deals with the People’s Republic of China and Japan for the country's strategic infrastructure projects.

“This is totally unfounded,” Dominguez said in a speech during the opening of the Sulong Pilipinas Workshop held at the SMX Convention Center here on Wednesday.

Dominguez opened Sulong Pilipinas, an annual consultative conference between the Duterte administration and the private sector.

Dominguez said the financing that the government obtained are soft loans at the lowest possible interest rates and longest possible term arrangements.

He said the estimated project debt to China would constitute 0.65 percent of the 0.11 percent of the country’s current total debt. The project debt to Japan will increase from the current 3.17 percent to 8.90 percent of the total debt of the Philippines at the end of the year, he added.

“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 our total debt.”

The finance chief explained that for every PHP100 the Philippines owes, "we will owe China PHP4.5." The projected debt to Japan will be around twice as large or 9.5 percent of total debt, he said.

“We borrow with great prudence, aware that it is the taxpayer and their children who will ultimately pay for this 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,” he said.

Dominguez further said it was wrong to say that the Philippines owes its projects from the government of China or Japan, for that matter.

“It is the people of China who pay their taxes there who are supporting us. It is the people of Japan who pay their taxes there who are supporting the Filipino people,” he said.

It is for this reason that the government takes great care so that the funds the Philippines borrow are wisely used and produce sufficient economic benefits to make the debt service easier down the road.

“Let me reiterate, in the face of uninformed criticism, this administration is not about to allow the country to be drowned in debts to China,” he said.

He underscored the need for the country to get the best deals possible in all the financing agreements assuring that the cardinal tenets of fiscal discipline are carefully observed.

“We learned much from a previous administration’s scandalous mismanagement of Chinese projects and financing. During that time, the previous leadership allowed Chinese state-owned enterprises to dictate what projects will be undertaken here,” he said.

Dominguez assured the government has made clear to the Chinese side that the Duterte administration will protect the country from unnecessary projects driven by agencies outside the Philippines. (PNA)