No friendly discount? Pernia admits China’s loans are 3 times more expensive than Japan’s ODA
President Rodrigo Duterte considers China a friend but it doesn’t mean President Xi Jinping will give the country a discount on its borrowings.
Socioeconomic Planning Secretary Ernie Pernia told Malacañang reporters that China would charge two to three percent for its official development assistance (ODA) loans granted to Duterte during his visit with Xi.
In contrast, Japan Prime Minister Shinzo Abe would only charge less than one percent for its ODA loans.
“Japanese ODA is less than one percent. So it’s really the cheapest you can get. Long grace period, long, you know, long repayment period. So, it’s going to be easier to incur,” said Pernia.
“China, I think it’s on the order of two — two to three percent. We are not sure yet. It’s still being, you know, it’s still being discussed with the DOF (Department of Finance) — between DOF and Ministry of Finance or MOFCOM in China,” he added.
After making a lot of hoopla over the $33 billion total loans obtained by the Philippines from China and Japan during Duterte’s state visits, Pernia admitted the actual amount that the Philippines would be getting would be smaller.
Pernia said that these loan projects would only materialize if Congress would increase government revenues to allow it to incur more debt.
“We’ll have to go slow on, you know, accepting or entering into ODA, you know, agreements with China because we need to balance, you know, spending, indebtedness on one hand and capacity to pay and service the debt on the other hand,” said Pernia.
“So instead of 10 projects, maybe just one or two. So it’s not going to be the golden age of infrastructure. It will be the bronze age maybe of infrastructure or maybe dark age — dark age of infrastructure,” he added.