editorial.5.18.17

President Rodrigo Duterte (right) with China President Xi Jinping.


The biggest infrastructure spending in the Philippines since the debt-driven Marcos years in the 70s is soon to happen again under the Duterte Administration — by incurring huge debts, mostly from China.

Forbes Magazine reported last week that according to Philippine Secretary of Budget and Management Benjamin Diokno, some U.S.$167 billion would be spent on infrastructure during President Duterte’s term.

That could increase current Philippine national government debt of approximately $123 billion, to $290 billion.

But that does not include interest.

High rates of interest that China, the most likely lender, could impose on the new debt could balloon it to over a trillion U.S. dollars in 10 years.

Duterte and his influential friends and business associates could each benefit with hundreds of millions of dollars in finders fees, of 2-7%, for such deals, according to same report.

More likely according to Forbes, at 10% interest the new debt could go up to $452 billion, bringing Philippines’ debt: GDP ratio to 197%, second-to-worst in the world.

Debt-bondage might be the end-result of this type of economic plan.

If and when that happens, China could demand whatever it wants in the West Philippine Sea issue.

Venezuela, under its late President Hugo Chavez, who, like President Duterte was also friendly to communist countries, incurred $55 billion in debt from both China and Russia.

The arrangement was oil-for loan.

According to internal company documents reviewed by Reuters, Venezuela’s state-run oil company, PDVSA, has fallen months behind on shipments of crude and fuel under oil-for-loan deals with China and Russia.

The delayed shipments provide new insight into PDVSA’s operational failures and their crippling impact on the country’s socialist economy.

University of the Philippines Professor Randy David has suggested to the public servants at the National Economic and Development Authority who will review the China deals prior to approval, to read Deborah Brautigam, a close observer of China’s aid activities in Africa.

Her book, “The Dragon’s Gift,” according to David, is the most comprehensive account of the nature and consequences of Chinese aid.

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