IBON Foundation claims Duterte infra program will result in debts

November 14, 2018

IBON Foundation on Thursday claims the administration's "Build, Build, Build" will cause growing indebtedness of the country to China.

The think-tank's executive director, Rosario Guzman , said in a forum at UP the government's infrastructure project is "worrisome".

"In (Pres. Rodrigo) Duterte's hybrid Build, Build, Build, they are the one who will build the facility. And to build a facility, he needs to loan money because we don't have a capacity to build that ambitious infrastructure program," she said.

She said from the beginning, the Duterte administration knew they will need "easy, fast and huge funding." "And China has the capacity to provide it," she added.

She said this is why the Duterte administration "softened" its stance against China. However, the US and Japan remain as key sources of assistance for the Philippines.

Guzman said IBON Foundation is worried with what it called "death book diplomacy of China"

"It simply means, the terms and reference China put on their investment deals," she explained.

She said out of the P1.5 trillion project costs, around P785 billion will be from China's official development assistance (ODA) program.

The projects create different railways, roads and bridges, irrigations, flood controls, hydro-electric power; and command centers in Manila and Davao.

"The Chinese ODA has a loan rate of 2 to 3 percent as compared with .25 percent of Japanese ODA. It's really a commercial rate. So if we loan on that in the name of ODA, you'll really be in debt," Guzman said.

She said "the Philippine government will also be forced to collateralize state assets to China".

Citing Sri Lanka, it was unable to pay the onerous debt to China causing them to formally handed over its strategically located Hambantota port.

As of August 2018, Guzman said P7.1 trillion outstanding government debt is 43 percent of  gross domestic product.

"We are not yet in huge debt with China but we are heading towards that direction," she said. Ella Dionisio/DMS