DOF: Those fearing default on China loans have no faith in PHL

Fears that the Philippines may default on Chinese loans come from those that have no faith in the country, the Department of Finance (DOF) said Tuesday.

"The Philippines has no history of defaulting on its loans. So why are people saying now that we will default? They have no faith in the Philippines?" Finance Secretary Carlos Dominguez III said in an emailed statement.

"I don't know why people are saying 'There might be a default.' That means to say those people have no faith in their own country," Dominguez added.

The DOF has repeatedly downplayed claims that the Philippines is in danger of drowning in Chinese debt, as loans from China only account for a small percentage of the country's total debt.

As of 2018, the government's project debt exposure to China was recorded at 0.66 percent in relation to total debt, compared with the 9 percent to Japan.

At the end of the term of the Duterte administration, the Philippines' project debt to China is expected to reach 4.5 percent of total debt by 2022, while Japan's will be 9.5 percent.

Last month, however, Senior Associate Justice Antonio Carpio expressed concerns over the loan agreements, specifically over the  P3.6-billion Chico River irrigation loan agreement, saying that China could later seize oil and gas-rich Philippine assets should the country default on payment.

Malacañang has since said that allowing China to seize patrimonial assets of the Philippines should the country fail to pay its debt is a standard clause in such contracts.

Presidential spokesperson Salvador Panelo also called Carpio "unpatriotic" for pointing out the pro-China provisions in the loan agreement.

Meanwhile, the DOF last week said the Philippines did not waive its assets as collateral in the said loan agreement.

Still, Dominguez claimed that there is no risk of losing Philippine assets as he said the Philippines is unlikely to default on its loans.

"The Philippines has never, never defaulted on its loans. The Philippines has not done it even in the worst time and the worst time was right after Marcos," he said.

"Very conservative in the sense that we only borrow to invest in projects that will generate economic gains which are greater than the borrowing cost," Dominguez said, pertaining to the government's borrowing program. — RSJ, GMA News