THE Department of Finance (DoF) and Export-Import Bank of Korea (KEXIM) exchanged loan documents Tuesday for a $50-million facility intended to fund feasibility studies and various preliminary activities for infrastructure projects.
Finance Secretary Carlos G. Dominguez III said the $50-million facility (P2.73 billion) will fund the bulk of the total cost of Philippines-Korea Project Preparation Facility (PKPPF) worth $71 million (P3.87 billion).
The balance will be shouldered by the Philippine government through its implementing agencies.
The loan, as approved by the NEDA Board, will be used on pre-feasibility and feasibility studies, detailed engineering designs as well as safeguard assessment analyses.
“These are necessary and integral aspects of any project as they help us determine whether a particular project is economically viable and sustainable over the long term… Rigorous analyses also guide us in determining the best sources of financing for any given project,” Mr. Dominguez said during his speech at the event yesterday.
According to Mr. Dominguez, the loan has a zero interest rate and is payable over 40 years with a 10-year grace period, while the service charges are set at 10 basis points on each disbursement.
He said the funds will speed up the implementation of several major projects for water and irrigation, flood control as well as for roads and bridges.
The loan is earmarked to support projects implemented by Department of Public Works and Highways and the National Irrigation Administration. Currently, the government is considering around 15 projects to be funded by the facility.
Public Works Secretary Mark A. Villar said during the event that some projects being considered are the Pampanga river basin flood project, the Agusan river basin flood project, the Panay river basin flood control project and the Bicol river basin flood control project.
Mr. Villar said the Central Luzon link expressway project Phase 2 as well as the Zamboanga City bypass road will also benefit from the facility.
The latest financing forms part of the second tranche of the South Korean government’s $1-billion pledge to the Philippines.
Last year, the DoF and KEXIM also signed a $173-million loan agreement for the construction of the Cebu International Container Port.
Mr. Dominguez said overall, the government will leave around P1.4 trillion worth of projects in the pipeline for the succeeding administration.
“During the ASEAN-Korea Commemorative Summit in November 2019, Korean President Moon Jae-in referred to the Philippines as the ‘future of Asia.’ If the PKPPF signing and our two countries’ continued cooperation are any indication, the future looks very promising, indeed,” KEXIM) Chief Representative Sungho Jang said. — Beatrice M. Laforga