Budget Secretary Benjamin Diokno. EARVIN PERIAS
Budget Secretary Benjamin Diokno on Monday said the country would not fall into the alleged Chinese “debt trap” as the government is “very careful” in entering into deals with the Asian economic giant.
Diokno made the remark after United States Vice President Mike Pence recently warned the Indo-Pacific region not to fall into the trap of Chinese debt diplomacy, encouraging them to choose “the better option” of American development financing instead.
“Depende ‘yan sa nanghihiram. For example, a third world country, nakabaon ka na nga sa utang… tapos nanghihiram pa sila tapos ‘di pa worthwhile ‘yung project kasi gusto lang nung presidente na merong project sa kanila,” Diokno told reporters in a forum in Quezon City.
“In our case, we’re very careful… it’s a very rigorous process, it will go through the NEDA (National Economic and Development Authority)… and they will evaluate,” he added.
Speaking before the Asia-Pacific Economic Cooperation (APEC) meet, Pence alleged that the China’s Belt and Road Initiative come with strings attached and build up “staggering debt” for poorer countries. Xi, however, insisted the initiative was not a “trap” and there was no “hidden agenda.”
The Philippines is set to sign a memorandum of understanding with China on its Belt and Road Initiative when Xi visits the Philippines on Tuesday.
However, Diokno explained that the country was in good position to avail of loans from China, citing the country’s low debt-to-GDP (Gross Domestic Product) ratio.
“Ang basehan ng panghihiram ay tinatawag na debt-to-GDP ratio. Magkano ba ang utang natin kumpara sa laki ng utang natin?” he said.
“Ang ating debt-to-GDP ratio ay nasa 40 percent at pababa pa. Ang rule d’yan ay kung ang isang bansa ay may debt-to-GDP ratio na 60 percent ay okay siya, tayo naman mas mababa tayo sa 60 percent,” he explained.
Diokno further stressed that China’s loans come in without strings attached with regard to the disputed areas in the West Philippine Sea. China and the Philippines are two of the claimants of the disputed area of South China Sea, which has an estimated $5 trillion worth of global trade passing through annually.
“Hindi naman natin pinapangako na bibigyan namin kayo ng lupa in return of our loan, ito na lang ibabayad naming … Walang ganung kondisyon. Talagang straightforward loan lang,” Diokno said. /cbb