NEDAchief:Govern­ment­may bor­row more from China, Ja­pan

Cebu Daily News - - ISLANDS - /INQUIRER.NET

As the Duterte ad­min­is­tra­tion piv­ots to neigh­bor­ing eco­nomic gi­ants such as China and Ja­pan that of­fer fi­nanc­ing for in­fra­struc­ture projects, the share of for­eign bor­row­ings may ex­ceed the gov­ern­ment’s medium-term pro­gram and reach 30 per­cent of the to­tal, the coun­try’s chief econ­o­mist said.

So­cioe­co­nomic Plan­ning Sec­re­tary Ernesto M. Per­nia told re­porters that the yearly bor­row­ing pro­gram of 80-per­cent do­mes­tic, 20-per­cent ex­ter­nal un­til 2022 was a “very safe mix of debt.”

“We ex­pect our debt-toGDP (gross do­mes­tic prod­uct) ra­tio, which is cur­rently on the bor­der of 40 per­cent of GDP, to even godown­to35per­centinthe com­ing years,” said Per­nia, who heads state plan­ning agency Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity (Neda).

“Of course, we have to be care­ful about how to han­dle debt or loans, and how to ef­fi­ciently spend these loans,” Per­nia added.

Given the huge pledges of as­sis­tance as well as po­ten­tial fi­nanc­ing to be pro­vided by the Chi­nese and Ja­panese gov­ern­ments, Per­nia said the bor­row­ing mix would likely “change a bit” such that for­eign bor­row­ings could hit up to 30 per­cent of the to­tal, which the Neda chief claimed was still in a “quite healthy” level.

“But we’re not go­ing to make ex­ter­nal loans big­ger than the share that is in­ter­nally or do­mes­ti­cally funded,” Per­nia said.

In Jan­uary, Fi­nance Sec­re­tary Car­los G. Dominguez III said the gov­ern­ment was eye­ing hy­brid fi­nanc­ing ar­range­ments to bring down bor­row­ing costs as well as “prof­itably man­age the lever­ag­ing of close to P1 tril­lion in of­fi­cial de­vel­op­ment as­sis­tance (ODA) and loans that it has se­cured from Ja­pan and China alone in just six months of the Duterte pres­i­dency.”

“Hy­brid fi­nanc­ing would i nvolve, for in­stance, a mix of ODA, which pro­vides con­ces­sional in­ter­est rates of 0.2-0.5 per­cent, with de­vel­op­ment funds from the Asian De­vel­op­ment Bank and the World Bank to ex­e­cutean in­fra­struc­ture pro­ject. Com­bin­ing both types of fi­nanc­ing sources would, thus, en­able the gov­ern­ment to build more big-ticket in­fra­struc­ture projects. That’s like putting a jig­saw puz­zle to­gether us­ing ODA from China and match­ing that with Asian In­fra­struc­ture In­vest­ment Bank and ADB funds,” Dominguez ex­plained.

As do­mes­tic in­ter­est rates re­main rel­a­tively low, theDu ter te ad­min­is­tra­tion wanted to fi­nance its pro­grammed wider bud­get deficit equiv­a­lent to three per­cent of the gross do­mes­tic prod­uct in the next six years through a bor­row­ing mix of 80-per­cent lo­cal and 20-per­cent for­eign.

The pro­grammed deficit was widened to ramp up gov­ern­ment spend in­gon in­fra­struc­ture un­der Pres­i­dent Duterte’s 10point so­cioe­co­nomic agenda aimed at slash­ing the poverty in­ci­dence to 14 per­cent by 2022 from 21.6 per­cent in 2015.


Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity (Neda) Sec­re­tary-Gen­eral Ernesto Per­nia leads the wreath-lay­ing and flag-rais­ing cer­e­monies on Fri­day in cel­e­bra­tion of the 120th death an­niver­sary of Dr. Jose P.Rizal in Tag­bi­la­ran City, Bo­hol.


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