China commits $7.34b so far in soft loans to Philippines

November 14, 2017

China has committed a combined $7.34 billion in soft loans and grants so far to the Philippines for the implementation of 10 big-ticket projects, construction of two bridges in Metro Manila and two drug rehabilitation facilities in Mindanao, and assistance in the rehabilitation of war-torn Marawi City in Mindanao.

According to Department of Finance (DOF) data, the loans committed by Beijing to Manila now total $7.19 billion for projects in the infrastructure, energy and public safety sectors, while grants amount to $148.22 million, the DOF said in a statement Tuesday.

The DOF’s International Finance Group (IFG) reported to Secretary Carlos Dominguez III last weekend that the assumed loan amount pledged by China account for 85 percent of the total cost for 10 projects.

These cover soft loans under the first “basket” of projects that include $234.92 million for the Kaliwa-New Centennial Water Source in Quezon province; $72.49 million for the Chico River Pump Irrigation Project in North Luzon; and the $2.91 billion Philippine National Railways South Long Haul Railway—or a total estimated loan amount of $3.21 billion.

For the second basket of projects, the Philippines and China agreed to line up an estimated total of $3.98 billion in loans that​ may include $947.64 million for the Subic-Clark Railway; and $424.81 million for the Davao City Expressway.

​The IFG said the agreements for several of these projects are set to be signed between officials of the two governments during the Philippines-China bilateral meetings to be held on the sidelines of the ASEAN + (China, Japan, Korea) Summit.

Chinese Premier Li Keqiang will represent Chinese President Xi Jinping during the ASEAN Summit and Related Meetings, and is expected to witness the signing of the bilateral agreements.

China has also provided a total of $148.22 million in grants, of which $99.27 million will be used for the construction of the Binondo-Intramuros bridge and the Estrella-Pantaleon bridge across the Pasig River to help ease traffic in Metro Manila.

The grant amount, which covers 100 percent of the total cost for the projects, also includes $22.95 million for the construction of two drug rehabilitation facilities; $23 million to aid in Marawi’s rehabilitation program, and donation of heavy equipment worth $3 million also for the government’s reconstruction efforts in Marawi, the IFG said.

Dominguez said the record inflows of grants and soft loans from China are among the fruits of President Duterte’s foreign policy rebalancing geared toward accelerated integration with the country’s ASEAN neighbors and East Asian trading partners China, Japan and South Korea. DMS