MANILA - A former ambassador on Monday said he fears the Philippines is headed to a debt trap as the country seeks for more Chinese loans to boost the administration's P8-trillion infrastructure push in the next 4 years.
Jose Apolinario Lozada Jr, who held postings in Austria, the Vatican and the Republic of Palau, said there is no certainty yet if the "Build, Build, Build" infrastructure projects will be finished in the next 4 years and if China's support would continue beyond the term of President Rodrigo Duterte.
"What is really the President's take on this—he just wants to take off or he wants to finish it? Because if he's going to finish it in 4 years time, what kind of projects are we going to get? They may not really be durable enough for the country to benefit from," he told ANC.
Duterte, who had sought closer economic and diplomatic ties with Beijing, is currently in the southern Chinese province of Hainan to attend the Boao Forum. He will be meeting Chinese President Xi Jinping at the sidelines of the event.
The former envoy stressed that it is very important for the President to make sure that the Philippines is getting its money's worth in dealing with the Asian superpower.
"What really comes out after all of these words? The value of what you are going to offer and the value that you [will] be getting back. The scale of the balance there should be tipping towards us because we are the one in need," he said.
"I am scared [that we are headed to a debt trap] unless we are going to sink in together and put our heads together and give the President the proper advise on how to negotiate the loans later," he added.
Prof. Jaime Florcruz of the Peking University in Beijing earlier voiced similar concerns, saying the government has to "exercise due diligence" to ensure that the Philippines will not be the next victim of the Chinese debt trap.
In a Forbes opinion piece, Corr Analytics founder Anders Corr has warned that the Philippines might fall into "debt bondage" if the Southeast Asian’s infrastructure push will be fueled by high-interest rate loans from China, the most likely lender.
Corr said, given China’s prevailing interest rates, the current Philippine national government debt of approximately $123 billion could rise to over a trillion US dollars in 10 years.
Budget Secretary Benjamin Diokno has debunked these debt trap fears, saying the loans will not fund stale projects that cannot generate income.
"Kung 'yung pera (na inutang) ay gagamitin mo lang pampataas ng suweldo, hindi talaga tama yun. Pero if you are going to use the money to invest in a project that would pay for itself, malaking bagay yun," he said.
Diokno said he is confident that the country can pay off its loans as the government would only borrow under favorable interest rates to "make sure that our debt will be manageable and sustainable."
"Utang 'yan pero hindi yan ganun kamahalan. Siguro between to 3-5 percent (interest) lang," the budget secretary said.
The budget chief said the Philippine debt is still in the safe zone as the country's economy is projected to "outgrow" its financial liabilities in the coming years.