We won't fall into a debt trap: Dominguez

Sun.Star Pampanga - - BUSINESS! - (DOF PR)

F(ODA) from coun­tries like Ja­pan and China al­low for the ap­pro­pri­a­tion or takeover of do­mes­tic as­sets in the event of a fail­ure to pay, will never hap­pen.

The gov­ern­ment’s bor­row­ing pro­gram, Dominguez noted, re­mains “very con­ser­va­tive in the sense that we only bor­row to in­vest in projects that will gen­er­ate eco­nomic gains which are greater than the bor­row­ing cost.”

Ac­cord­ing to Dominguez, no in­fra­struc­ture project is funded through ODA with­out first go­ing through a rig­or­ous sys­tem of re­views and ap­provals by the Cab­i­net and the Pres­i­dent, and un­less it is cer­tain that the project is eco­nom­i­cally vi­able and highly ben­e­fi­cial to the Filipino peo­ple.

“We have been warned about the so-called debt trap ow­ing to the mas­sive in­fra­struc­ture spend­ing and loans from China un­der this ad­min­is­tra­tion. Let me

as­sure you that the Philip­pines will not fall into a debt trap to any coun­try as we ex­pand our in­fra­struc­ture spend­ing with ODAs,” Dominguez said be­fore mem­bers of the Ro­tary In­ter­na­tional District 3800 dur­ing their district con­fer­ence held last week at the Edsa Shangrila Ho­tel in Man­daluy­ong City.

“We draw les­sons from our own his­tory as well as that of other coun­tries and are en­sur­ing that we man­age our debts pru­dently,” he added.

Dominguez said the highly con­ces­sional loans and grants re­ceived by the gov­ern­ment to help fund the Duterte ad­min­is­tra­tion’s “Build, Build, Build” pro­gram will help make the econ­omy fully com­pet­i­tive, cre­ate jobs, open more busi­ness op­por­tu­ni­ties, bring down lo­gis­tics costs and realize bet­ter-dis­trib­uted growth.

“We ask the few who un­der­stand com­plex ODA terms to help us bat­tle ma­li­cious ef­forts to con­fuse and mis­in­form the pub­lic,” he said.

Dominguez said the gov­ern­ment’s debt is care­fully struc­tured to en­sure that it does not bor­row with­out rais­ing its own cap­i­tal for in­fra­struc­ture projects, while at the same time sourc­ing a sig­nif­i­cant por­tion of fi­nanc­ing from the lo­cal debt mar­ket to min­i­mize exposure to ad­verse ex­ter­nal fac­tors.

He said that as of 2018, the gov­ern­ment’s project debt exposure was only 0.66 per­cent to China and 9 per­cent to Ja­pan in re­la­tion to the to­tal debt.

By 2022, when most of the fi­nanc­ing for the “Build, Build, Build” pro­gram will have been ac­cessed, the coun­try’s project debt to China will ac­count for 4.5 per­cent, while that of Ja­pan’s will be twice as large at 9.5 per­cent of the to­tal debt, he added.

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