Diokno: PH not in risk over China loans

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(File photo)

Metro Manila (CNN Philippines, November 19) — The country will not fall into a debt trap with China, Budget Secretary Benjamin Diokno said Monday.

The Secretary gave the assurance after United States Vice President Mike Pence warned that China's loans to poorer nations came with strings attached and could build up staggering debt.

Diokno said the administration, especially the National Economic and Development Authority (NEDA), carefully reviewed the projects with China.

"Hindi naman tayo manghihiram kung ang return of investment, ang babalik sa atin, social benefit ay mas mababa sa ten percent. Kasi kung manghihiram ka naman ng three percent, mangungutang ka naman ng three percent tapos balik sa 'yo is 10 percent, no brainer 'yun. Talagang pwede di ba? Ang ibang bansa kasi nanghihiram sila ng hindi nagbibigay ng economic return na mas mataas sa panghihiram nila," he explained.

[Translation: We would not have borrowed if the return of investment, social benefit was less than 10 percent. because if we borrowed at three percent, and the return was ten percent, it would be a no-brainer. Other countries would borrow and do not give an economic return higher than what they borrowed.]

This was echoed by Trade Secretary Ramon Lopez in a briefing on the sidelines of the Asia Pacific Economic Conference (APEC) leaders' meeting in Papua New Guinea on Sunday.

"Of course, ang ating gobyerno [our government] — Department of Finance and other agencies — have reviewed the terms that would be the best for us. Hindi naman tayo papasok [We would not agree] if those are unreasonable terms and terms that are worse than other sources," he stressed.

Diokno also pointed out that the Philippines only has 49 percent debt to gross domestic product (GDP) ratio, which indicates the country's ability to pay its debts.

"May ibang bansa ang debt to GDP ay 100 percent...250 percent. Hindi tayo ganun," Diokno added.

[Translation: Other countries' debt to GDP is 100 percent...250 percent. Ours is not like that.]

Diokno said the country will sign at least 10 infrastructure agreements during Chinese President Xi Jin Ping's visit this week.

So far, funding for 34 of the 75 flagship infrastructure projects under the Build, Build, Build program will come from China.

The government gave its assurance that the country's claims in the West Philippine Sea would not serve as collateral or payment for the loans from China.

"Hindi naman natin pinapangako 'yung ganun e. Bibigyan natin 'to, in return to our loan, pambabayad 'to. Walang ganun. Talagang straightforward ang loan," Diokno said.

[Translation: We are not promising that. We will be paying back our loan. Nothing else. It is a straightforward loan.]