THE GOVERNMENT expects to sign three loan agreements with China this year, with interested parties already lining up to bid for project contracts, the Department of Finance (DoF) said.
Finance Assistant Secretary Maria Edita Z. Tan said in a press briefing on Thursday that the Philippines could secure its first official development assistance (ODA) from Beijing in the “second to third quarter of 2018.”
The planned first ODA agreement will cover the P2.7-billion Chico River Pump Irrigation project, which will provide water to farms in Cagayan and Kalinga. Ms. Tan, who heads the DoF’s International Finance Group, added that ODA for the P10.9-billion New Centennial Water Source-Kaliwa Dam Project and the P151.3-billion Philippine National Railway South Commuter Line is also set to be signed in the third or fourth quarter.
The state is relying on a mix of foreign borrowings, budgetary allocations and private funding for its massive infrastructure spending plan that is expected to reach beyond P8 trillion by 2022.
Although details of the ODA arrangements are still being finalized, Socioeconomic Planning Secretary Ernesto M. Pernia has said that the Philippines can tap Chinese funding with interest rates of 2-3% per annum “at best,” compared to 0.25-0.75% for Japanese ODA.
Mr. Pernia has pointed out that, while more costly than those of Japan, China’s rates are still lower than those commanded by commercial banks.
The administration of President Rodrigo R. Duterte has been marked by, among others, a political shift towards Beijing after he announced in a speech before businessmen during a visit to Beijing in October 2016 his “separation from the United States.”
But critics have said Manila’s conciliatory approach to Beijing — especially over their maritime dispute in the South China Sea — has so far yielded little in terms of economic benefits nearly halfway into Mr. Duterte’s term.
Manila expects work to start this year on about $2 billion worth of ODA-funded projects, forming part of $9 billion worth of funds committed by China and Japan over the next five years.
Ms. Tan said China will choose three contractors to vie for each of the Philippine projects. “For the Chico River and Kaliwa Dam, they already submitted three (contractors) each,” Ms. Tan said.
The Finance official, however, said such pacts will still have to secure the approval of the central bank’s Monetary Board and Mr. Duterte himself. — M. L. T. Lopez