No PHL island to be used as collateral for China loans —Diokno

The country’s islands and other territories will not be offered as collaterals for securing loans from China to cover the Duterte administration’s infrastructure initiatives, Budget Secretary Benjamin Diokno said Wednesday.

At 2 percent to 3 percent interest per year, loans from China are more expensive than loans offered by Japan at 0.25 to 0.75 interest.

“There are no collateral requirements, we are not promising to give them [China], for example Palawan, in exchange for loans,” Diokno told reporters during a breakfast forum in Manila.

The government has not yet signed any loan agreement with China. The two bridges project spanning Pasig River is funded by a grant from China.

The Duterte administration has been criticized for having a “soft” stance on the South China Sea disputes amid the “strategic” foreign policy shift from the Philippines’ traditional ally US to China.

The Duterte administration is sourcing soft loans from China and Japan to fund big-ticket infrastructure projects.

Asked if the Philippines might fall into a “debt trap”—such what happened to Sri Lanka, with the majority of its revenue going to debt repayments—Diokno said, “It’s not a concern, it’s an old issue.”

The government is confident that the country’s economy will outgrow its debt accumulation, Diokno noted.

“Our debt-to-GDP (gross domestic product) is at 40 percent, and it should go down to 37 percent by 2022, the end of the Duterte administration,” Diokno said. —VDS, GMA News