DEPARTMENT of Finance (DOF) Secretary Carlos G. Dominguez said the Philippine government plans to borrow P140 billion from China for the county’s infrastructure projects.
The Official Development Assistance (ODA) will finance three infrastructure projects with a total cost of P164.9 billion, including the Chico River Pump Irrigation Project (P2.7 billion), the New Centennial Water Source-Kaliwa Dam Project (P10.9 billion), and the Philippine National Railway South Commuter Line (P151.3 billion).
According to Dominguez, they were negotiating with the Chinese government to grant the loan with an annual interest rate of lower than 2 percent.
The finance secretary added that the government will sell $200 million in panda bonds in China by October or November.
Panda bonds are yuan-denominated bonds issued in China by international issuers composed of foreign governments and companies.
Negotiations include grants that China would provide to two bridge projects along the Pasig River: Binondo-Intramuros bridge (4.6 billion) and Estrella-Pantaleon bridge (1.4 billion).
Despite the news of sub standard Chinese-built projects in Africa, Domingez assured that the matter was discussed already with the Chinese government. “We have had assurances from them that they will make sure that the bridges they construct here will be of robust and international quality,” he said.
Dominguez said the two governments were still in the process of “firming up the commitments” on a project-to-project basis.
The Monetary Board, the highest policy-making body of the Bangko Sentral ng Pilipinas (BSP), approved the planned issuance of panda bonds, according to National Treasurer Rosalia V. de Leon.
Meanwhile, the Philippine government is still waiting for the approval of the People’s Bank of China.
“Normally, it takes some time for feasibility studies to be completed. After the plans are in place, the loans will be negotiated. Financing always follows the plan,” said Dominguez.
The finance secretary also mentioned that in October of last year, Chinese President Xi Jinping committed about $9 billion in ODA and commercial loan financing for the Philippines.