Author Topic: PH debt opinion piece posted on Forbes  (Read 206 times)

adroth

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PH debt opinion piece posted on Forbes
« on: May 16, 2018, 09:01:45 PM »
New Philippine Debt of $167 Billion Could Balloon To $452 Billion: China Will Benefit
Anders Corr , CONTRIBUTOR
 
Opinions expressed by Forbes Contributors are their own.

https://www.forbes.com/sites/anderscorr/2017/05/13/new-philippine-debt-of-167-billion-could-balloon-to-452-billion-china-will-benefit/#d0315712fb68

The Philippine people must be forewarned about the dangerous China deal. Buyer beware. Caveat emptor.

According to the South China Morning Post on May 12, “Philippine Secretary of Budget and Management Benjamin Diokno estimated some US$167 billion would be spent on infrastructure during Duterte’s six-year term, under the slogan ‘Build! Build! Build!’.” That could increase current Philippine national government debt of approximately $123 billion, to $290 billion. But that does not include interest. High rates of interest that China, the most likely lender, could impose on the new debt could balloon it to over a trillion U.S. dollars in 10 years. 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. 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. Dutertenomics, fueled by expensive loans from China, will put the Philippines into virtual debt bondage if allowed to proceed.

Duterte and his influential friends and business associates could each benefit with hundreds of millions of dollars in finders fees, of 2-7%, for such deals.

< Edited >

The interest rate that China will offer the Philippines on such a large sum relative to GDP is likely higher than the World Bank rate, but likely lower than say 15%. Without much needed transparency from the Duterte government and China on the rate, conditionality, and repayment terms of $167 billion of new debt for the Philippines, the public should assume, to forestall a worst-case scenario, that the rate would be somewhere between 10% and 15%. Over 10 years, that could ballon Philippines’ debt:GDP ratio as high as 296%, the highest in the world.

< Edited >

This should be considered odious debt if the terms are not transparent to the public in advance, if public cost-benefit analyses are not done for each deal, and if each deal is not approved by Congress.

adroth

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Re: PH debt opinion piece posted on Forbes
« Reply #1 on: May 19, 2018, 02:52:58 AM »
New Philippine Debt of $167 Billion Could Balloon To $452 Billion: China Will Benefit
Anders Corr , CONTRIBUTOR
 
Opinions expressed by Forbes Contributors are their own.



This should be considered odious debt if the terms are not transparent to the public in advance, if public cost-benefit analyses are not done for each deal, and if each deal is not approved by Congress.

In short . . . the author doesn’t actually know what the terms are, and is assuming that because he doesn’t know, the results can only be bad.