Palace: Economic managers evaluating Chinese loans
MANILA, Philippines — Malacañang assured on Monday that the government is “evaluating all kinds of loans” the country is entering into with China after Malaysian Prime Minister Mahathir Mohamad warned the Philippines against falling into the so-called Chinese “debt trap.”
“We will take his advice, and the economic managers are evaluating all kinds of loans that we’re having with the Chinese government,” Presidential Spokesperson Salvador Panelo said Monday in a Palace briefing.
During his two-day official visit in the country, Mahathir warned its Southeast Asian neighbor, which is relying on funds from China to finance its flagship infrastructure projects.
“If you borrow huge sums of money from China and you cannot pay, you know when a person is a borrower, he is under the control of the lender, so we have to be very careful with that,” Mahathir said in a television interview.
President Duterte has been turning to China to help fund its “Build, Build, Build” program which aims to build new highways, railways, airports, piers, and bridges in the next 10 years.
Critics have warned that Duterte’s pivot to China could lead to a “debt trap” which the Asian giant is supposedly using as a geopolitical tool to expand its influence.
Panelo claimed that the economic managers have already explained that the Philippines is “not at a disadvantage” in the China-funded irrigation project in the Cordillera.
The palace official was referring to the Chico River Irrigation project, which was recently questioned by opposition senatorial candidate Neri Colmenares for allegedly being “onerous.”
The project is covered by a 20-year loan with the Export-Import Bank of China as a lender and the Philippine government as a borrower. Upon completion, it will supply water to around 8,700 hectares of agricultural land, benefiting 4,350 farmers and their families, and serve 21 barangays in Kalinga and Cagayan provinces in northern Luzon, according to the government.
But the terms of the funding deal highly favor China, which is guaranteed payments of high-interest rates and preference for Chinese contractors, Colmenares said. /ee