DOF says AIIB open to local currency financing for infra projects

The Asian Infrastructure Investment Bank (AIIB) is open to using local currency in financing loans for the Philippines’ infrastructure program, the Department of Finance (DOF) said Thursday.

The bank has expressed that it is open to the possibility of financing loans at the local denomination, the department said in a statement.

“We explore other possibilities and we are looking at the possibility of variable interest rate, we are looking at the possibility of local currency financing,” AIIB President Jin Liqun was quoted as saying in the statement.

Last week, members of the Philippine economic team were in Beijing to discuss infrastructure issues and challenges with their Chinese counterparts.

“We are quite sensitive to interest rates. Although they may seem small amounts, we do not want to reverse the trend of lowering our spreads,” Finance Secretary Carlos Dominguez III said.

“So it is very encouraging that you are considering variable spreads. I was hoping for an update on it. We are happy about the local currency bonds as well,” he said.

Year-to-date, the Philippine peso has depreciated by P3.65 to close at P53.46:$1 on Wednesday from P49.810:$1 on January 3, the first trading day of 2018.

The AIIB and the World Bank agreed last year to co-finance the $500-million flood control management project which will modernize 26 pumping stations and build 20 new ones in Metro Manila.

Earlier this year, Finance Secretary Carlos Dominguez III pitched three more projects for possible AIIB funding:

• Metro Manila Bus Rapid Transit System (Phase 3 from Bonifacio Global City to Ninoy Aquino International Airport)

• Pasacao-Balatan Tourism Coastal Highway in Camarines Sur

• Camarines Sur Expressway Project (San Fernando-Pili Section)

The government plans to spend over P8 trillion on its Build, Build, Build infrastructure program until 2022, largely funded by tax revnue.

This year alone, the Philippines plans to roll out over 70 big-ticket projects, cumulatively valued at $35.5 billion or P1.1 trillion. —VDS, GMA News