MANILA - The loan agreement with China for funding the Chico River irrigation is not the standard in inter-government deals, a former lawmaker who first rang the alarm on the issue said Tuesday.
"The government is lying, the Department of Finance is lying. There are other loans without those provisions," said former Bayan Muna Rep. and now senatorial candidate Neri Colmenares.
The agreement, signed on April 10 last year, was "onerous and highly favors China," Colmenares previously said.
Speaking with ANC's Early Edition, he said that a loan from South Korea that funded a Cebu terminal port had only 0.14 percent interest, with a 40-year term. The Chinese agreement for the Chico River project had a 2 percent interest and a 20-year term.
The deal with South Korea made no mention of patrimonial assets and of arbitration in Seoul should it fall through, unlike the agreement with China, said Colmenares.
"What do they mean when they say this is the best we can get? I challenge government, I challenge the DOF. I can show the other agreements that have different terms that do not include these agreements to disprove the fact that this is standard," he said.
Government officials have said the loan agreement for the Chico River project is not a debt trap and was properly screened by the Investment Coordination Committee composed of key Cabinet members.
Supreme Court Senior Associate Justice Antonio Carpio, however, warned China could seize natural gas deposits in Reed Bank (Recto Bank) if the Philippines is unable to pay the US$62-million Chinese loan.
Under the agreement, the Philippines waived its "immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding…or with the enforcement of any arbitral award," he noted.
“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,” he said.
Presidential Spokesman Salvador Panelo said it was only "natural" that this portion was stated in the deal for China to make sure that they won't lose from the loan.
He added, Manila has never defaulted on any loan agreement so the possibility of Beijing taking its assets "will never happen."
But Colmenares said loans agreed from the time of President Ferdinand Marcos remains unpaid for, so Malacañang "has no basis" in its assurance that the Philippines can pay not just the Chico River loan, "but the hundreds of billions that they have loaned from China."
"How can Secretary Panelo assure that the Philippines will still pay this in 20 years? They won’t be around by then, there will be a new government by 2022? How can he even know that the Philippines will pay this 20 years later?" he said.