Duterte Defends China Loans as Critics Warn of Unfavorable Terms

Duterte Defends China Loans as Critics Warn of Unfavorable Terms

(Bloomberg) -- Philippine President Rodrigo Duterte is standing firm on his decision to borrow from China for infrastructure funding, despite warnings from his critics of unfavorable loan conditions.

Terms of the Chinese loans are not disadvantageous to the Philippines, Duterte’s spokesman Salvador Panelo said at a briefing Monday. It’s “not possible” for China to seize the Philippines’ natural resources because the southeast Asian nation is unlikely to default on its obligations, Panelo said.

“The onerous conditions that some say are incorporated in the contracts are standard between lender and borrower to ensure that the lender will get paid,” Panelo said. China has so far provided $273.3 million in loans to the Philippines for a dam and an irrigation project, according to the Finance Department.

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  • Supreme Court Justice Antonio Carpio warned on March 22 that China might seize gas fields within the Philippine economic zone in the South China Sea if the Philippines defaults on its $62 million loan for Chico dam. The nations have been locked in a dispute over parts of the maritime area which the U.S. Energy Information Administration estimated to have 4 trillion cubic feet of gas reserves worth billions of dollars.
  • The Chico loan deal is expected to be template for all other loans to the Philippines, Carpio also said. The 20-year Chico dam loan agreement was signed in April 2018, the DOF said.
  • Groups opposing the China-funded Kaliwa dam project north of the capital have asked the top court to order Duterte’s government to release loan documents. Their lawyer, opposition senatorial candidate Chel Diokno, said Monday that there’s concern over high interest rates and about the loan terms being concealed.
  • The Finance Department has posted the Kaliwa Dam loan deal on its website, and Executive Secretary Salvador Medialdea has assured that government is ready to release more documents.
  • Chinese loan, which carries a 2 percent interest, was tapped for the dam project because it’s cheaper and faster to acquire, Finance Assistant Secretary Antonio Lambino said last week.

To contact the reporter on this story: Andreo Calonzo in Manila at

To contact the editors responsible for this story: Cecilia Yap at, Ditas Lopez, Clarissa Batino

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