Philippines: Duterte Defends China Loans as Critics Warn of Unfavourable Terms

  • Malacañang downplayed on 25 Mar 19 the warning of Supreme Court Senior Associate Justice Antonio Carpio that the PHP3.69bn loan for the Chico River pump irrigation project in Kalinga would put the Philippines at risk of losing the oil-rich Recto (Reed) Bank should it default on the loan.
  • Presidential spokesman Salvador Panelo said the contract – deemed onerous by some legal luminaries – should not be a cause for alarm because “we never defaulted from any obligations to any international organization with respect to loans of our country.”
  • Panelo also justified the terms of the loan, saying Beijing always has the last say as creditor.
  • According to Carpio, the loan agreement for the Chico River pump irrigation project has a provision that reads: “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.”
  • Carpio said under paragraph 8.1 of the loan agreement, the Philippines waived any sovereign immunity over all its assets except properties of Philippine embassies and missions, assets of a military character under the control of the local military and assets located for public or government use as distinguished from patrimonial ones and those dedicated for commercial use.
  • Carpio said in case of dispute, arbitration shall be held in Beijing with Chinese as majority members of the panel.
  • 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 Apr 18, 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 25 Mar 19 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.

External Link: https://www.philstar.com/headlines/2019/03/26/1904576/salvador-panelo-phl-wont-renege-chico-loan

External Link: https://www.bworldonline.com/palace-normal-to-pledge-resources-in-china-loan-default-unlikely/

External Link: https://www.bloomberg.com/news/articles/2019-03-25/duterte-defends-china-loans-as-critics-warn-of-unfavorable-terms

26-Mar-2019


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