MALACAÑANG said the fact that the $62-million loan for Chico River Pump Irrigation Project is just “low” does not merit the “circuitous” and “pointless” arguments made by critics.
Presidential Spokesman and Chief Presidential Legal Counsel Salvador S. Panelo also lamented that the speculations about the terms of the agreements “overshadowed” the economic benefits of the projects that the loans fund.
The government has since said that the country is highly unlikely to fall into the Chinese debt trap as appropriate safeguards are in place and that the economic managers are prudent in managing the country’s debt. “We need to underscore that the amount of loan, which stands at $62 million, is low — not to mention an inflexible annual interest rate of 2-percent interest rate—plus the Philippines will never default on its loan with China as the payment for the country’s debt is automatically included in the government’s national budget,” Panelo said. “We find the criticism and the discussions on the loan agreement trivial, circuitous and pointless.”
Stagnating growth
He also argued that the Philippines may refrain from entering into any loans but such strategy “courts the risk of stagnating the growth of the country.
“The development of the country depends on the implementation of infrastructure projects geared towards the development of new ones or the increase of capability or capacity of those that already exist. The determination of the source of funding for said projects is the responsibility of our economic managers. We assure the public that the appropriate cost and benefit analysis of all sources of funds, whether through external or domestic loans, or via internal budgeting, has been duly considered.”
He hoped that politics would be set aside to pave the way for Northern Luzon farmers to benefit from the overdue Chico River Pump Irrigation Project.
“The Chico River Pump Irrigation Project has been stalled for over 10 years. The expected 4,350 families of farmers tilling 7,530 hectares of agricultural land in Tuao and Piat in Cagayan and 1,170 hectares of agricultural land in Pinukpuk, Kalinga, who would benefit from this flagship infrastructure project cannot wait till kingdom come. Let us set aside politics and give our farmers in Northern Luzon a better life which they truly deserve. Perhaps our critics should have instead done their part to contribute when they had every opportunity to do so, specially when they were holding the reins of the government,” he said.
Supreme Court Senior Associate Justice Antonio Carpio earlier warned that China may seize oil and gas in the Reed Bank in case of default from the repayment of the loan. The government, however, said it is improbable, if not impossible that the country will default on its loan payment, citing the country’s good credit standing.
And in the case of default, Panelo explained that while China may seize oil and gas, but only up to the equivalent of the unpaid loan and it cannot go beyond the outstanding balance.
“What that means is that there will be an extraction of gas and oil, a sale of the same; and then, a portion of the profit therefrom, which will be in the form of money, will be used to pay and satisfy the balance,” he said.
“Our economic managers have ensured that there are safeguards in case an arbitral award is made in favor of China. This includes but is not limited to enforcement through our local courts which will scrutinize if there was manifest partiality in the arbitration proceedings or if there was fraud or collusion, or if enforcing the award would be contrary to public policy,” he added.