Palace: PH to pay $62-M loan so China won't seize Reed Bank
THE Philippines would fulfill its obligation to pay the $62-million Chinese loan for the Chico River Irrigation Loan Agreement to ensure that China will not be able to seize gas-rich Reed (Recto) Bank in the disputed South China Sea, Malacañang said on Monday, March 25.
The Palace made the assurance after Supreme Court Association Justice Antonio Carpio floated the possibility that China could seize natural gas deposits in Reed Bank, in case the Philippines defaults on payment.
"Sa akin, it is not a possibility kasi we will never naman renege. Hindi nga. Never nangyari sa atin ‘yun. We are known to pay our obligations," Presidential Spokesperson Salvador Panelo said in a Palace briefing.
(For me, it is not a possibility that China can seize Reed bank because we will never renege on our obligation. It will not happen. It never happened to us. We are known to pay our obligat i ons.)
"We never defaulted from any obligation to any international organization with respect to loans for countries. Palagi naman tayo nagbabayad e (We always pay our loans)," he added.
The 20-year loan deal between the Philippines and China for the Chic River Pump Irrigation Project was signed on April 10, 2018.
The loan agreement was the first flagship infrastructure project to be financed by China under the Duterte government's ambitious "Build, Build, Build" program, but critics have warned of the allegedly onerous deal.
On March 22, Carpio warned that China could take Reed Bank away from the Philippines, if Manila is unable to pay the multi-million peso worth of loan with Bei j i ng.
"In case of default by the Philippines in repayment of the loan, China can seize, to satisfy any arbitral award in favor of China, 'patrimonial assets and assets dedicated to commercial use' of the Philippine government," the senior magistrate cautioned.
Patrimonial assets are properties owned by the Philippines in its private capacity and not for public use, public service, or intended for development of national wealth.
Carpio noted that "patrimonial assets and assets dedicated to commercial use" include the oil and gas reserves within the Philippine exclusive economic zone (EEZ), including the West Philippine Sea.
"That includes the rich gas fields in Reed Bank," he said.
Reed Bank, according to the 2019 Permanent Court of Arbitration ruling, is within the Philippine EEZ, thus, the Duterte government can explore and exploit resources t her e.
Panelo said there was nothing wrong with China benefitting more from the loan deal, noting that Beijing, as lender, can impose terms to ensure its borrowers like the Philippines will finish the payment.
"They have been saying that bakit daw ‘yong kontrata pabor sa China. Eh bakit? Hindi ba pag nag-uutang tayo, mayroon ba tayong say? When we loan from the bank, it’s always the terms from the bank. Natural lang ‘yun na they will make sure na hindi sila malulugi sa kanilang pinautang sa atin," he said.
(They have been saying that why is the contract in favor of China. Why? Do we have a say when we take out a loan? When we loan from the bank, it’s always the terms from the bank. It's natural that they will make sure they will not suffer financial loss from the loan deal.)
"To my mind, just like bank institutions when they lend, they impose terms to make sure na mababayaran sila (that they will get paid)," he added.
Panelo nevertheless guaranteed that the current administration would make sure that Reed Bank would not allow China to take Reed Bank.
"Kaya sila pumasok diyan kasi alam nila di mangyayari ‘yon. It will never happen kasi we nga pay e. Tsaka ang liit lang naman (We entered into such deal because it was not possible for China to seize our properties. It will never happen because we pay. And we also have to pay just a small amount)," he said. (Ruth Abbey Gita/ SunStar Philippines)