A Senior Philippine Government Official said his country would not fall into a debt trap as it expanded its infrastructure spending with loans from China and other Governments.
Finance Secretary Carlos Dominguez made the comments in Beijing on Wednesday after meeting Chinese officials to discuss President Rodrigo Duterte’s “Build, Build, Build” infrastructure programme aimed at improving the country’s industries and economic development.
“We are determined not to fall into any debt trap with any lenders, whether it is China or Japan or the US or our own lenders,” Dominguez said.
Dominguez is in the Chinese capital on a four-day trip along with Philippine Foreign Affairs Secretary Teodoro Locsin.
Dominguez said the Philippines had learned from its debt crisis in the 1970s and had ways to prevent that from happening again.
“No project is financed unless it goes through [a] very rigorous system and approved by the cabinet and the president,” Dominguez said when asked if he was worried that Manila would fall heavily into debt to China.
“We will only fund projects that are economically viable and that benefit our people.”
He said Manila was “fully supportive” of China’s “Belt and Road Initiative”, and Duterte was expected to attend the second belt and road forum in Beijing in April.
In a press conference with Chinese Foreign Minister Wang Yi, Philippine Foreign Affairs Secretary Teodoro Locsin said China would not rise “by stepping on others but by helping others rise alongside them”.
“Without the new China, there will be no prospect for the developing world to grow into emerging economies,” Locsin said. “It would still be, as throughout the second half of the last century, that we were at the mercy of Western powers which are at the whim of Western markets, which on whim can turn us away as they did throughout the neocolonial period.”
Manila’s continued support for President Xi Jinping’s signature infrastructure drive is critical as it comes under attack from critics who claim that China uses loans and grants to expand its geopolitical clout.
The critics include US Vice-President Mike Pence, who has warned of “debt traps” for developing nations.
Malaysian Prime Minister Mahathir Mohamad has also called for his country to rethink belt and road projects, citing high costs.
Dominguez said the Philippines would draw lessons from its own history as well as that of other countries, and would make sure that it managed its debt properly.
“We make sure we can fund around 20 per cent of these projects by ourselves, and we can borrow, hopefully at very easy terms, the balance,” he said.
Dominguez said the Philippines’ foreign debt was “very manageable” at less than a quarter of its total debt. The Philippines’ debt to GDP ratio fell from 42 per cent in 2016 to 41.5 per cent now, he said.
Both China and Japan have committed to funding some of the Duterte administration’s 75 priority projects.
By 2022, loans from China would account for 4.5 per cent of the Philippines total debt, while those from Japan would be about 9.5 per cent, according to the official Philippine News Agency. Dominguez met Chinese Vice-President Wang Qishan on Tuesday.