(Philippine Daily Inquirer/ANN): In order to finance its ambitious “Build, build, build” program, the Philippines would need the infusion of massive foreign loans. In the past, the country depended on the World Bank, the International Monetary Fund and other Western financial institutions. Now the main source of loans is China.
In his first visit to China in 2016, President Rodrigo Duterte signed a cooperation agreement with Chinese President Xi Jinping, with Beijing pledging to provide funding for 30 projects in the Philippines worth billions of dollars.
As part of the agreement, China has earmarked $82.4 million for the Chico River Dam Project. Beijing has also pledged to fund two Philippine railway projects with a combined cost of $8.3 billion, and 30 smaller projects valued at $3.7 billion.
While Chinese loans appear to be attractive, they are not, in reality, that benevolent, and could be harmful to the country in the long term.
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According to the Washington-based Center for Global Development (CGD), a nonprofit research organisation, nations participating in the current Belt and Road investment plan that will default in their loan repayments will eventually find themselves at the mercy of Beijing. It said eight nations are now vulnerable to above-average debt: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan and Tajikistan.
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