China commits $7.34-B soft loans for PHL infra

THE Chinese government has committed a combined $7.34 billion (P376.09 billion) in soft loans and grants to the Philippines, in a bid to accelerate the country’s infrastructure build-up and aid in the reconstruction efforts for war-torn Marawi City, the Department of Finance (DOF) said.

The DOF’s International Finance Group (IFG) said China’s committed financial aid will be for 10 big-ticket projects and assistance in the rehabilitation of war-torn Marawi City in Mindanao.

Based on DOF data, the loans committed by Beijing to Manila now total $7.19 billion (P368.4 billion) for projects in the infrastructure, energy and public-safety sectors, while grants amounted to $148.22 million.

Of the $7.19 billion, an estimated $3.98 billion ​represents the estimated loan amount for the second basket of infrastructure projects, which are still under various stages of preparation.

The DOF said the amounts are estimates only and that final figures will be arrived at, once these reach the loan-processing stage.

The projects falling under the second basket of infrastructure that will be undertaken by China and the Philippines ​is still being further discussed and processed by both sides.

The IFG reported to Secretary Carlos G. Dominguez III last weekend that the assumed loan amount pledged by China account for 85 percent of the total cost for 10 infrastructure projects.

These also cover soft loans under the first basket of infrastructure projects, which include $234.92 million for the Kaliwa-New Centennial Water Source in Quezon province; $72.49 million for the Chico River Pump Irrigation Project in North Luzon; and the $2.91 billion Philippine National Railways South Long Haul Railway for a total estimated loan amount of $3.21 billion.

For the second set of projects, the Philippines and China agreed to line up an estimated total of $3.98 billion in loans that may include $947.64 million for the Subic-Clark Railway; and $424.81 million for the Davao City Expressway.

The DOF said most of the projects are still in the feasibility-study stage and would require the Investment Coordination Committee processing​ to determine final project cost, adding the list of projects may still be changed or updated​.

Agreements for several projects are set to be signed between officials of the two governments during the Philippines-China bilateral meetings to be held on the sidelines of the Association of Southeast Asian Nations + 3 (China, Japan, Korea) summit, the DOF said. Chinese Premier Li Keqiang will represent Chinese President Xi Jinping during the Asean summit and related meetings.

China has also provided a total of $148.22 million in grants, of which $99.27 million will be used for the construction of the Binondo-Intramuros bridge and the Estrella-Pantaleon bridge across the Pasig River to help ease traffic congestion in Metro Manila.

The grant amount, which covers 100 percent of the total cost for the projects, include: $22.95 million for the construction of two drug rehabilitation facilities; $23 million to aid in Marawi’s rehabilitation program; and donation of heavy equipment worth $3 million for the government’s reconstruction efforts in Marawi as well.

Grants are nonrepayable funds gifted by one party to a recipient, while soft loans are loans usually offered to a developing country, made on terms very favorable to the borrower.

Earlier, the Asean said it is keen on taking advantage of financing opportunities presented by the Asian Infrastructure Investment Bank (AIIB) to address infrastructure gaps in the region.

In a draft common statement obtained by the BusinessMirror, the Asean said China’s initiatives could help accelerate infrastructure development in the region.

The AIIB is a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region.