Author Topic: PH not falling into ‘debt trap’  (Read 8350 times)

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
PH not falling into ‘debt trap’
« on: May 18, 2017, 01:00:08 PM »
PH not falling into ‘debt trap’
By: Ben O. de Vera - Reporter / @bendeveraINQ
Philippine Daily Inquirer / 12:28 AM May 18, 2017

Finance Secretary Carlos G. Dominguez III yesterday reiterated that the Duterte administration’s planned infrastructure buildup would be funded mainly by revenue gains from the comprehensive tax reform plan and local borrowings so that the government would not fall into a “debt trap.”

“The government will take advantage of the excess liquidity in the domestic market by borrowing 80 percent from banks and other financial institutions here, while tapping only 20 percent of its loans from overseas lenders,” Dominguez said, referring to the borrowing program for the next six years to finance a budget deficit of 3 percent yearly arising from increased infrastructure spending.

< Edited >

Read more: https://business.inquirer.net/229761/ph-not-falling-debt-trap#ixzz4hP4aRoM9
Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook

12th BCT

  • Timawan
  • Jr. Member
  • *
  • Posts: 68
    • View Profile
Re: PH not falling into ‘debt trap’
« Reply #1 on: May 18, 2017, 09:48:03 PM »
And the list of these banks?

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Worries about Chinese loans to the Philippines
« Reply #2 on: July 11, 2018, 03:06:25 PM »
China's debt-trap diplomacy reaches the Philippines, which is likely to accept Chinese loans 1,100% more expensive than other options
Tara Francis Chan Mar. 6, 2018, 10:40 PM

http://www.businessinsider.com/chinas-debt-trap-diplomacy-hits-philippines-with-exorbitant-loans-2018-3

The Philippines is close to accepting loans from China that are 1,100% more expensive than ones from Japan.

The country's chief economist said it will accept the loan as it needs "more friends," as relations between the two countries warm after years of territorial disputes in the South China Sea.

The loan is part of a so-called debt-trap diplomacy in which China engages in infrastructure projects in poorer countries, a pattern it has followed to establish its global Belt and Road initiative.

The Philippines is close to accepting Chinese loans that are up to 1,100% more expensive than those from Japan, in another instance of China's debt-trap diplomacy.

The loans from China, which will be used to fast-track infrastructure projects including a dam, railway project, and irrigation system, come with an interest rate of 2% to 3%. But loans available from Japan have interests rates between 0.25 and 0.75%, up to 12 times cheaper than those from China.

"We cannot get all the loans from ... Japan. Between 2 and 3 % interest rate is still much better than commercial [loans]," Ernesto M. Pernia, the Philippines' chief economist, announced in February.

According to the government's official news agency, Pernia said Japan's slowness was part of the reason — "We don't want to be left behind" — but CNN and local outlet Rappler both reported the economist weighing up the need for diplomatic "friends."

< Edited >
« Last Edit: July 12, 2018, 05:18:49 AM by adroth »

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: Worries about Chinese loans
« Reply #3 on: July 11, 2018, 03:08:32 PM »
Ex-envoy fears PH headed to Chinese debt trap
ABS-CBN News
Posted at Apr 10 2018 10:06 AM

http://news.abs-cbn.com/news/04/10/18/ex-envoy-fears-ph-headed-to-chinese-debt-trap

MANILA - A former ambassador on Monday said he fears the Philippines is headed to a debt trap as the country seeks for more Chinese loans to boost the administration's P8-trillion infrastructure push in the next 4 years.


Jose Apolinario Lozada Jr, who held postings in Austria, the Vatican and the Republic of Palau, said there is no certainty yet if the "Build, Build, Build" infrastructure projects will be finished in the next 4 years and if China's support would continue beyond the term of President Rodrigo Duterte.

"What is really the President's take on this—he just wants to take off or he wants to finish it? Because if he's going to finish it in 4 years time, what kind of projects are we going to get? They may not really be durable enough for the country to benefit from," he told ANC.

< Edited >

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: Worries about Chinese loans
« Reply #4 on: July 11, 2018, 03:09:48 PM »
China calms ‘debt-trap’ fears: Natural resources won’t be used as collaterals
Ian Nicolas Cigaral (philstar.com) - March 10, 2018 - 5:25pm

MANILA, Philippines — China on Friday belied a report carrying a scholar’s comment saying the Philippines could use its natural resources as collateral for Chinese loans, as it seeks to douse growing fears that the Southeast Asian nation could fall into a debt-trap.

The Philippine government expects to sign three loan agreements with China this year.

In a report by Chinese state-run newspaper Global Times dated March 4, Xiamen University's Southeast Asian Studies Center head Zhuang Guotu explained that Manila can easily repay the loans considering the country's "strong debt-paying ability."

Zhuang likewise insisted that Chinese soft loans have "very low" interest rates. Funding deals, he said, are usually accompanied by repayment agreements that will allow the Philippines to swap key assets like natural resources "as collateral."

In a press conference in Beijing, Foreign Ministry Spokesperson Geng Shuang distanced the Chinese government from Zhuang’s view.

The Chinese spokesman stressed that by convention, parts of China's concessional loans require the borrowers to use certain sovereign credit as collateral, which he said is an international practice.

“China has never asked and will never ask relevant countries to use natural resources as collateral in loan agreements,” Geng said.

< Edited >

Read more at https://www.philstar.com/headlines/2018/03/10/1795434/china-calms-debt-trap-fears-natural-resources-wont-be-used-collaterals#d6sOJVe45utoTGBH.99

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #5 on: October 03, 2018, 10:17:09 PM »
Gov’t debt hits new high of P7.1T
By: Ben O. de Vera - Reporter / @bendeveraINQ Philippine Daily Inquirer / 05:16 AM September 29, 2018

The sale of yen-denominated samurai bonds in August further raised the government’s outstanding debt to a new high of P7.104 trillion.

The latest Bureau of the Treasury data showed that the government’s outstanding liabilities as of August rose by 0.9 percent from P7.044 trillion as of end-July and by 10.5 percent from P6.432 trillion in the same eight-month period last year.

< Edited >

This ended the eight-year absence of the Philippines in the samurai bond market, as the last issuance was in 2010.

Finance Secretary Carlos G. Dominguez III had said they wanted to tap the samurai market at least every two years.

< Edited >

As of end-August, domestic liabilities grew 10.1 percent year-on-year.

During this week’s Philippine Economic Briefing in London, Budget Secretary Benjamin E. Diokno noted that “the rule of thumb is that a country with a debt-to-GDP [gross domestic product] ratio below 60 percent is fiscally sound.”

The Philippines is comfortably below that,” Diokno added, citing that the general government debt-to-GDP at end-2017 was 36.6 percent.

Those who say we are walking into a debt trap ought to look more closely at the actual terms of the loan contracts we sign. The economic buildup is supported by a sound financing strategy. Our financing mix continues to be inclined toward the domestic market to avoid vulnerability from external markets,” Dominguez, for his part, said.



Read more: https://business.inquirer.net/258117/govt-debt-hits-new-high-p7-1t#ixzz5SXE03SR9
Follow us: @inquirerdotnet on Twitter | inquirerdotnet on Facebook


adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #6 on: October 04, 2018, 12:09:24 PM »
PH not falling into a debt trap: Diokno
By Joann Villanueva October 3, 2018, 5:21 pm

http://www.pna.gov.ph/articles/1049923

MANILA – The Duterte administration may have tapped official development assistance (ODA) loans to help fund its massive infrastructure program but this does not mean that the government will be jumping into a bottomless pit.

“We’re not falling into a debt trap (because) number one, we’re very careful on the way we choose projects,” Department of Budget and Management (DBM) Secretary Benjamin Diokno said Wednesday.

In a briefing, the Budget and Management chief said the 75 priority infrastructure projects under the “Build, Build, Build” program have been rigorously screened by the National Economic and Development Authority (NEDA).

He added that if the project is for transportation "it has to go through a review.”

“Our rule of thumb is if the economic internal rate of return is 10 percent or higher, it's a go. We will consider it. But if it's below 10 percent, it's a no. Under no condition are we going to finance a project that is because it is in the hometown of the President. Because that happens in other countries. We're very careful with that,” he said.

To date, among the projects that the government has secured ODA is the Metro Manila Subway Project, which will be funded by a 40-year loan, with a 12-year grace period, from the Japan International Cooperation Agency (JICA).

The loan has an interest rate of 0.10 percent per annum for non-consulting services, and 0.01 percent per annum for consulting services.

The loan agreement, signed by officials of the Department of Finance (DOF) and JICA on March 16, 2018, involves the aid amounting to 104.53 billion yen, which is the first of three to four-tranche loan.

The first phase of the subway project has an estimated cost of about 788.89 billion yen and 73 percent of which, amounting to 573.73 billion yen, will be funded by JICA. The balance of the financing requirement will be shouldered by the Philippine government.

Diokno said that since interest of the loan is low “that's clearly to our advantage.”

He said some projects in the priority list have economic internal rates of return of more than 20 percent “so we're very, very careful.”

Another factor why the country cannot be considered to be falling into a debt trap is because of the low ratio of debt to gross domestic product (GDP), which, he said, is currently around 40 percent.

“And our foreign debt is only one third of our total debt so that's the other thing. So we're okay. We're not going to fall into a debt trap as feared by some people,” he added.

Data from the Bureau of the Treasury (BTr) showed that the national government’s outstanding debt as of end-July 2018 amounted to PHP7.043 trillion.

Of the total, debt from on-shore creditors is about 65.3 percent amounting to PHP4.6 trillion while foreign debt accounts for 34.68 percent or PHP2.443 trillion. (PNA)

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #7 on: February 19, 2019, 02:30:39 AM »
The Philippines is not afraid of Chinese ‘debt trap’ — Teddy Locsin Jr.
Janvic Mateo (The Philippine Star) - February 17, 2019 - 12:00am

https://www.philstar.com/headlines/2019/02/17/1894367/philippines-not-afraid-chinese-debt-trap-teddy-locsin-jr?fbclid=IwAR2TTJhFt0IR2iTaejZ0HUGhBfGqOHoO4gSTJq6WEOefVs2SPKCyLhp2jO8

MANILA, Philippines — The Philippines is not afraid of the so-called debt trap strategy of the Chinese government, according to Foreign Affairs Secretary Teodoro Locsin Jr.

Speaking at the Hungarian Institute of Foreign Affairs and Trade during his official visit to Hungary on Thursday, Locsin said the Philippines has experienced worse in the past under the Western financial system.

“The West went into paroxysms of ecstasy over our people power revolution, which was a rebuke to communism as a way forward,” he said, referring to the 1986 People Power Revolt that toppled the Marcos dictatorship.

“Still the West threatened our new democracy with financial destruction if it did not pay back every dollar lent by Western banks to the dictatorship which stole every cent of it. Democratic victory was good for a pat on the back, but not good enough for debt forgiveness,” he added.

< Edited >

In his lecture, Locsin also said the Philippines under the Duterte administration was able to manage its disagreements with China over territories in the South China Sea.

He said the government was able to do so “without retreating an inch from our rightful and inalienable ownership of everything within the widest extent of our sovereign reach in history and international law.”

Locsin did not discuss recent activities of China in the disputed region, including the construction of various facilities in features within the Philippines’ exclusive economic zone.

< Edited >

Locsin, however, reiterated the so-called “independent foreign policy” pursued by President Duterte since assuming office in 2016.

“When I first addressed our foreign ministry on my assumption of office, I told them how a truly independent foreign policy should be pursued,” recalled the foreign affairs secretary, the third to serve under the present administration.

“It is not independent foreign policy if you simply switch the master before whom you are kneeling. You are still on your knees before another master. An independent foreign policy means getting off your knees and on your feet – and standing up for your country. That is true independence,” he noted.

And while the Philippine Constitution renounces war as an instrument of national policy, Locsin said it only refers to offensive war and never to national defense.


Read more at https://www.philstar.com/headlines/2019/02/17/1894367/philippines-not-afraid-chinese-debt-trap-teddy-locsin-jr?fbclid=IwAR2TTJhFt0IR2iTaejZ0HUGhBfGqOHoO4gSTJq6WEOefVs2SPKCyLhp2jO8#Q2BhIc48sYjthGWK.99

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #8 on: March 09, 2019, 06:17:34 PM »
https://news.mb.com.ph/2018/12/15/a-counter-narrative-of-philippines/

< Edited >

On loans

Debunking the myth propagated by uninformed critics, Department of Finance Secretary Sonny Dominguez noted that the country’s external debt is in fact low and declining — plunging from 66.6% of GDP in 2005 to 22.5% as of end of June, 2018. Moreover, in comparison to our neighbours in Asia, Philippines is still below the average of 30.9% of GDP. For instance,  the external debt ratio of Indonesia and Malaysia is at 41.4% (2017), and 68.7% (2017) respectively. The fiscal deficit of the country is also within the 3% deficit target — at 2.2% of GDP in 2017.

In its Economic Bulletin, DOF also noted that borrowing is used to finance productive capital expenditures, which ensure that future servicing streams can be financed by revenues collected from a growing economy. In formulating the Public Investment Program (PIP), the Economic Internal Rate of Return (EIRR) of each project should at least be equal to 15%. Most of the projects approved have EIRRs exceeding 20%.

< Edited >

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #9 on: March 10, 2019, 01:09:35 AM »
China debt trap? PH an 'expert in bad loans,' Locsin says
ABS-CBN News
Posted at Mar 09 2019 06:03 PM | Updated as of Mar 09 2019 07:27 PM

https://news.abs-cbn.com/news/03/09/19/china-debt-trap-ph-an-expert-in-bad-loans-locsin-says?fbclid=IwAR1-_rASCm247YHSbRlKcx2EmD36zfVnOGuz7Pbh34j2OuageB5CXUTxJgg

MANILA - The Philippines will not fall into a China debt trap because Manila is an "expert in bad loans," Foreign Affairs Secretary Teodoro Locsin Jr. said Saturday.

"Pagdating sa loans, they always ask me to be careful. My answer to that is we are the experts in the bad loans," Locsin told radio DZMM.

"Kasi during the time of Marcos, the World Bank, the IMF (International Monetary Fund), and the New York Banking System lent billions of dollars to Marcos and his cronies, ninakaw nila. So the economy started to collapse."

This, after the government was urged to read the "fine print" of its loan deals with China and other foreign governments to avoid falling into a debt trap.

< Edited >

Finance Assistant Secretary Tony Lambino said that no public assets will be used as "any sort of payment" in case of failure to comply with the borrowing terms.

Locsin also defended the Duterte administration's decision to sign a loan agreement with China instead of Japan, which offers a lower interest rate.

"Japan is better because their interest rate is near zero. But there are projects which Japan will say no we’re not interested. So then you go to China," he said.

"The Japanese interest rates are really low and that is part of their problems in their economy so there’s not that much demand for credit."

< Edited >

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: Worries about Chinese loans to the Philippines
« Reply #10 on: March 10, 2019, 01:16:51 AM »
No property mortgage in China deals: Diokno
Jessica Fenol, ABS-CBN News
Posted at Nov 30 2018 10:35 AM | Updated as of Nov 30 2018 10:48 AM

https://news.abs-cbn.com/business/11/30/18/no-property-mortgage-in-china-deals-diokno

MANILA – No Philippine properties were used as mortgage in any of the country's loans to China, Budget Secretary Benjamin Diokno on Friday said.

The "golden rule" is to borrow only if returns are higher than the cost of borrowing and if projects have at least 10 percent economic internal rate of return, Diokno told ANC's Headstart.

"We do not mortgage our piece of property. It’s a straightforward deal. The internal rate return has to be higher than the cost of money," he said.

< Edited >

"Now interest rates are very low …Our debt to GDP ratio right now is only 40 percent and declining and so we are now able to do this plus we have a very rigorous process of selecting projects," Diokno said.

< Edited >

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #11 on: March 31, 2019, 04:15:07 PM »
PH never defaults on its foreign loans: Dominguez
By Joann Villanueva March 29, 2019, 7:42 pm

http://www.pna.gov.ph/articles/1066033?fbclid=IwAR1sVSpMZGZQ0dSmE2MfcpTrmrJQioi7BL3btulLEKoFdvPvdebn8Kz41lk

MANILA -- The Philippines has never defaulted on its loan payments so there is nothing to worry about even if the government continues to borrow to finance its infrastructure program, Finance Secretary Carlos Dominguez III said Friday.

“First of all, the Philippines has never defaulted in any of its loans. (The) Philippines has not done it. Even in the worst time. And the worst time is right after Marcos when the Philippines had no money. We never defaulted on our loans,” he told journalists in an interview.

Dominguez said the government even paid USD2.2 billion for a loan extended to a power plant project of the Marcos government that was never used.

He was referring to the mothballed Bataan Nuclear Power Plant, which was programmed to be the country’s source of nuclear energy.

Dominguez also countered allegations that the Philippines will fall into a debt trap due to the amount it needs to fund projects under the government’s “Build, Build, Build” program.

The Duterte administration has identified 75 priority projects under its infrastructure program and it targets to spend at least PHP1 trillion annually for its infrastructure investments.

Dominguez also decried claims by some government critics that the country is using its assets as collaterals to these loans.

“There is no collateral in any of our loans to any country or bank. We don’t provide collateral,” he said.

“There (is) no collateral provided and all the loan terms are available on our website. Anybody can read it. Just read it on our website. The loan documents are there,” he added. (PNA)

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #12 on: April 01, 2019, 11:34:21 AM »
Review PH credit history before ranting, China loan critics told
By Joann Villanueva March 26, 2019, 5:09 pm

http://www.pna.gov.ph/articles/1065679

MANILA -- Government critics must first look at the Philippines’ credit history and fiscal position before ranting about the perils of securing infrastructure loans from China.

Department of Finance (DOF) Assistant Secretary Antonio Joselito Lambino II on Monday insisted that worst-case scenarios such as China seizing gas which may be found in Reed Bank if the Philippine government defaults on its loan payment is far from happening.

He said there is nothing questionable on the clause of the USD62-million loan extended by the Chinese government for the Chico River Pump Irrigation Project, which Senior Associate Justice Antonio Carpio said is an onerous deal.

Citing news reports quoting Carpio as saying that the Philippine government will not have a chance of winning an arbitration case against China, Lambino said “arbitral rulings are still subject to the Philippine Constitution and the Philippine Court system.”

Carpio said that if the Philippine government failed to make good on its payments, China can seize gas deposits in Reed Bank since the area is part of Philippines patrimonial assets dedicated to commercial use.

Reports said that Article 8 of the loan agreement states that the Philippines “irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding.”

Lambino, however, said that “the waiver of sovereign immunity is standard for agreements which involve a state as one of its parties and include an agreement to resolve disputes through arbitration.”

He explained that “states generally benefit from sovereign immunity” since this will allow the creditors to take the borrowers to arbitration in the case of default.

He cited a Supreme Court ruling dated February 7, 2012 wherein “Senior Associate Justice Carpio himself was present, states that “an agreement to submit any dispute to arbitration may be construed as an implicit waiver to immunity from suit.”

“This means that we allow our sovereign immunity every time we agree to arbitration, whether or not the waiver is explicitly stated in the agreement,” he said.

The DOF official also stressed that “arbitral rulings are still subject to the Philippine Constitution and to the Philippine court system”, noting that the Philippines has strict prohibitions on foreign ownerships of lands.

Citing an SC decision penned by Carpio on July 9, 2002 for the Chavez vs. PEA and Amari case, he said “the gas which may possibly be found in Reed Bank is a public asset and cannot be seized by a foreign entity unless explicitly declared otherwise.”

Thus, Lambino called on government critics to first look at the government’s credit history and the current fiscal situation before painting a negative situation.

“The Department of Finance challenges critics to take a look at the Philippines’ credit history and the data on the government’s fiscal situation (which have been regularly discussed by the DOF in the annual budget hearings and which have all been available to the public through the website of the Bureau of the Treasury) and consult with its experts on fiscal matters before coming up with a conclusion on whether or not the Philippines is indeed at risk of falling into a so-called ‘debt trap’,” he added. (PNA)

adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #13 on: July 25, 2019, 07:10:50 AM »
The Department of Finance responds to the controversy. See here























adroth

  • Administrator
  • Boffin
  • *****
  • Posts: 13968
    • View Profile
    • The ADROTH Project
Re: PH not falling into ‘debt trap’
« Reply #14 on: January 13, 2020, 02:56:59 PM »
The Department of Finance first responded to allegations about the Chico River Dam. Now the Kaliwa Dam

GOV’T UPHOLDING STRICT STANDARDS IN FOREIGN LOAN DEALS—DOF

https://www.facebook.com/DOFPH/photos/a.280593182101972/1327867144041232/?type=3&theater

Finance Undersecretary Mark Dennis Joven has reiterated that the Philippine government continues to uphold strict standards in dealing with foreign lenders for the government’s ‘Build, Build, Build’ infrastructure program.

Joven made this assurance in response to a statement made by Deputy Minority Leader and Bayan Muna Rep. Carlos Isagani Zarate in which the latter erroneously claimed that the loan agreements for the Kaliwa Dam and Chico River Pump Irrigation Projects contain “onerous” provisions and, hence–like the Metropolitan Waterworks and Sewerage System (MWSS) concession agreements—should be reviewed by Malacañang.

Debunking the opposition solon’s charge, Joven explained that the basic structure of the water concession agreements, which are essentially public-private partnership (PPP) contracts, is very different from the official development assistance (ODA) financing agreements entered into by the Government with countries such as China, Japan, France and Korea, which are covered by international law.

“There is also a difference when it comes to the parties to these agreements,” he said. “The water concession agreements refer to the Philippine Government vis-à-vis Filipino corporations, while ODA financing agreements are between the Philippines and other sovereign entities such as countries and multilateral lenders like the World Bank (WB) and Asian Development Bank (ADB).

“We have had long public discussions on this matter already. We published all the loan agreements we have signed for the ‘Build, Build, Build’ flagship infrastructure projects on our website last year. We once again encourage the critics to closely scrutinize the documents for themselves in order for us to have an accurate conversation about the matter,” he stated.

Joven pointed out that there are six main considerations regarding the loan agreements and the financing of flagship infrastructure projects:

“First, these projects are Filipino projects. The Philippine government chose these projects because they are crucial in achieving more comfortable lives for Filipinos. Before they were approved for implementation, these projects went through a rigorous vetting process and were found to have high economic rates of return. This means that the project’s benefits far outweigh the costs. They are worth pursuing, even if we have to borrow money now because the Filipino people will benefit greatly from them,” he said.

“Second, the country borrows from other countries to take advantage of concessional, or cheaper, financing,” he said. “The interest rates offered by foreign countries are way lower than anything the private sector can offer. Borrowing at lower interest rates means having to pay less for the loans and thereby freeing up more government resources for other productive investments.”

“Third, although we will find that the loan agreements for the Kaliwa Dam and Chico River Pump Irrigation Projects do contain confidentiality clauses, they are accompanied by specific provisions stating that the agreements may be released ‘in accordance with any Philippine law.’ The Philippine Constitution mandates disclosure of information relating to foreign loans,” Joven said.

He said this point is further supported by Executive Order (EO) No. 2, series of 2016, issued by President Duterte to operationalize full public disclosure and transparency enshrined in our Constitution. “That is why the DOF unilaterally released copies of the loan agreements online.”

“Fourth, anyone who closely reviews the loan agreements with China will find that the provisions are standard across our loan agreements with other lenders,” he said. “For example, the choice of governing law in the interpretation of the loan agreement is often the law of the lender, as seen in our loan agreements with China, Japan, Korea and France, even during past administrations. There is nothing unusual with this provision, as it is found in loan agreements with several countries.”

Please see attachment for Table 1. Choice of governing law among loan agreements

Source: www.dof.gov.ph/index.php/data/loan-agreements/

Joven said, “To further explain, these choice of law provisions are essential to international agreements with a commercial nature because of the presence of a foreign element. On the other hand, this is not necessary in the case of a water concession contract, which is governed by domestic law.”

“Fifth, the choice of arbitration venue and arbitration rules are negotiated on a per-loan agreement basis. Should a country default on its loan–which is near impossible for the Philippines, given its strong macroeconomic fundamentals– then the lender may choose to bring the borrower to arbitration,” he said. “Sometimes, the arbitration venue is in the country of the lender, which was the case in some loan agreements signed in the past.”

Examples, he said, would be the loan agreements signed by the Arroyo administration with China in 2010 for the Angat aqueduct, the Aquino administration with France in 2015 for the Cebu Bus Rapid Transit, and the Duterte administration with China in 2018 for the Chico River Pump Irrigation Project.”

“Sometimes, the arbitration venue is in a third country, as in the case of the most recently signed loan agreement with China for the Project Management Consultancy for the PNR South Long Haul Project. The arbitration venue stated in that loan agreement is Singapore,” he said.

Please see attachment for Table 2. Choice of arbitration venue and rules among loan agreements

Source: www.dof.gov.ph/index.php/data/loan-agreements/

“However, regardless of the venue of arbitration, the usual international arbitration rules apply, such as the nomination of three impartial arbitrators from among hundreds of arbitrators from Europe, US, Latin America, and other countries like Singapore and the Philippines,” Joven said. “Should the arbitration process commence, the Philippines will select one person from the list of arbitrators; the lending country will select another, and the third member of the tribunal will be jointly selected.”

“In the worst case, for any arbitral award to be enforced, it needs to be brought before a Philippine court, which would measure the validity of the award against our own internal laws and Philippine public policy,” he said.

“My sixth and final point is that the Philippines is managing its debt–both local and foreign–responsibly. The Philippine government negotiates very hard for favorable terms. The country’s debt-to-GDP (gross domestic product) ratio, which is a measure of how much debt we have against the size of our economy and our ability to pay, has declined on the back of a healthy growing economy,” he said.

“As of the second quarter of 2019, it stands at 37.6 percent, from as high as 74.4 percent in the early 2000s. Moreover, our country’s credit rating was upgraded to ‘BBB+’ last year by Standard & Poor’s. This rating is the highest in our history and signals international confidence in our economy and the country’s ability to pay its debts,” he added.