Planning chief says: Get more China ODA
By Michelle Remo
Philippine Daily Inquirer
First Posted 05:26:00 11/01/2008
Filed Under: Foreign Aid, State Budget & Taxes, world financial crisis, Debt Markets
Economic Planning Secretary Ralph Recto said the government would do well to tap more official development assistance (ODA) from China and other bilateral lenders rather than take commercial debt amid rising interest rates brought on by the global financial turmoil.
China, with an estimated trillion dollars in reserves, offers relatively cheap loans, Recto said.
ODA loans normally carry an annual interest rate of 2.0 or 3.0 percent. Commercial loans cost twice or thrice as much.
“We have to improve our relations with China, which is the biggest lender to the United States. If we can get concessional loans from China, why not do so?” Recto said, when asked about his policy stance on loan agreements with China.
He said that although some China-funded projects in the past were tainted with corruption issues, these should not stop the Philippines from seeking loans from the Chinese government.
One such project was a $329-million national broadband network for the government that was to be funded by a loan from the Chinese government and done by Chinese firm ZTE Corp. The project was canceled amid allegations of corruption.
Recto agreed that government agencies should be made to comply with the prescribed procurement process to prevent controversies like that involving ZTE from happening again. But he said such controversies should not prevent the government from getting loans from China.
The National Economic and Development Authority, which Recto heads, is tasked with studying the economic and social gains of proposed ODA-funded projects, but the concerned government agencies are in charge of project implementation. Monitoring the implementing agencies should also be intensified, Recto said.
The government’s 2009 borrowing program amounts to $2.5 billion, with commercial loans at $1.0 billion and ODA of $1.5 billion.
Recto said the government should rethink its borrowing program, given rising interest rates on commercial loans a result of the current global financial crisis. Edited by INQUIRER.net
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