Trade Secretary Ramon Lopez on Sunday night clarified that only 20 percent of the P8.2 trillion for the government's six-year infrastructure plan will be loaned from outside the Philippines.
"In terms of loans, ang pinu-project doon 80 percent local, domestic loans and only 20 percent ang foreign loans," Lopez said in a press conference in China.
The trade secretary did not say if the foreign loans will come from China.
"Even as we speak of 'yung 'Build, Build, Build' and financing that growth and the infrastructure program, we are not really talking of loans na heavy," he added.
In an article on Forbes, Corr Analytics founder Anders Corr said that the Philippines may be forced into a "virtual debt bondage" because of the P8.2 trillion infrastructure program of the Duterte administration.
Corr said if the Philippines would loan the amount from China, the Asian power may charge the country an interest rate between 10% and 15%.
"More likely according to my analysis, at 10% interest the new debt could go to $452 billion, bringing Philippines’ debt:GDP ratio to 197%, second-to-worst in the world," he said.
He added: "That understates the burden to the Philippines, as existing national government debt would also accrue interest over that time, and such interest was not included in the analysis."
In his article, Corr assumed that a big chunk of funds that will be spent on the Duterte administration's infrastructure program will come from China.
Lopez, however, belied that the Philippines will be forced into a debt bondage from any country or China.
He said the infrastructure plan will spur jobs and eventually bring growth in the country's economy.
Defense Secretary Delfin Lorenzana, who also faced members of the Philippine media in the press conference in China, said the Philippines will not sink into deeper debt because of foreign loans.
"I'm not an economist but I was listening to the talk this morning, and the World Bank President said that there are several trillions loanable amount with one percent interest lang. Plus about eight trillion with negative interest. 'Yun ang ating dapat kunin eh. Negative interest 'yun eh," he said.
Lorenzana assured that the Duterte administration's economic managers will closely look at the loan offers from financial institutions.
"Hindi tayo mababaon sa utang," the Defense chief said. —ALG, GMA News
MANILA, Philippines — The Chinese government has offered a $500-million loan to the Philippines, which can be used to procure defense equipment, Defense Secretary Delfin Lorenzana revealed Sunday.
On the sidelines of the Belt and Road Forum in Beijing, Lorenzana said that the Philippines might procure defense equipment from China.
This announcement comes after representatives of Chinese arms manufacturer Poly Technologies Inc. paid a courtesy call to President Rodrigo Duterte in Beijing.
"We are not saying that we will buy from them or we will not buy from them but if we need anything from the Chinese defense industry, we are going to procure using the loan that they are going to offer to us," Lorenzana said.
Lorenzana noted that the loan from the Chinese government will be on standby as the Philippines will only use it once the military's modernization fund has been used up.
On Monday, the Philippine government will sign a letter of intent to deal with the Chinese arms company.
"What we discussed was we will be signing tomorrow a document on intent, intent only... It's just a letter of intent to deal with them because they are offering us a wide array of defense equipment," the Defense secretary said.
The defense chief noted that the army, the Navy and the Air Force will be involved in selecting the equipment that will be procured from the Chinese manufacturer.
"We are not going to choose for them. They are going to choose for themselves, what they need from the Chinese defense industry," Lorenzana said.
Lorenzana noted that arms from the Chinese manufacturer passed specifications of the North Atlantic Treaty Organization.
Chinese President Xi Jinping on Sunday launched the Belt and Road Initiative, pledging $124 billion for his new Silk Road plan to expand links among Asia, Africa and Europe.
Duterte, however, skipped the opening ceremony of the two-day summit after arriving past 11 p.m. on Saturday after a working visit in Hong Kong.