THE PHILIPPINES currently has $1.892 billion worth of loans with China to finance key infrastructure projects, according to the Department of Finance (DoF).
Finance Undersecretary Mark Dennis Y.C. Joven told reporters that the Export–Import Bank of China (China EximBank) is evaluating projects it is planning to finance, including three bridges in Metro Manila, a flood control project in Mindanao and the proposed Subic-Clark railway project.
Currently, Mr. Joven said the country has $4.6 billion worth of official development assistance (ODA) loans and grants from China to support projects that are at least in the initial procurement stage.
Mr. Joven said the loan agreements the country is sealing with China feature more Philippine control over the procurement process.
“In Japanese loans, the project’s financing comes first before the procurement and implementation starts while for China-funded projects, the amount of the loan contract comes in at a later stage (since procurement takes place first) You cannot compare apples to apples with the Japanese because it takes a longer time to contract the loan for the Chinese. But then what’s the advantage? The advantage is basically you have better control over the procurement process,” he said.
China’s loans are all project-based loans which always take a longer time to process than the quick-disbursing program loans meant for budget support.
“The Chinese projects, once they get approved, they get implemented rather quickly and you can see it in the bridges. So are we happy with them, because (the) terms are beneficial to us. We pay a very good interest rate, the terms are good, and the projects are okay,” Finance Secretary Carlos G. Dominguez III added.
However, he noted that the government experienced “difficulties in getting approvals and understanding each other” when its representatives were dealing with their Chinese counterparts to negotiate the loan agreements.
Mr. Dominguez said the loan agreements with China contain provide safeguards for both parties.
Mr. Joven said the projects financed by China had to be bankable to ensure both sides’ interests are protected.
As of 2020, China was the country’s sixth biggest source of ODA with $620.74 million in loans and grants, or 2.02% of the total foreign aid portfolio.
Japan remained the largest source of foreign aid financing for the Philippines with $11.185 billion in total ODA, or 36.44% of the portfolio. — Beatrice M. Laforga