Dominguez allays fears of falling into debt trap

MANILA, Philippines — Finance Secretary Carlos Dominguez assured investors the country will not fall into a debt trap due to heavy financing needs for the government’s big-ticket infrastructure projects, saying these projects are projected to generate huge returns on investments.

During a meeting with officials from the US Department of the Treasury, Dominguez said public demand was a key consideration of the government in designing its massive infrastructure program.

He said this would ensure the government would generate adequate returns on investments and pay off loans obtained to finance the projects.

“We’re not going to make a mistake of going into projects that we don’t have a demand for. We are not going to fall into this trap of ‘build it and they will come.’  We’re going to start the project where we are already behind, like our airports, our Manila transportation system, our railways. We’re already far behind the rest,” Dominguez told Geoffrey Okamoto and Robert Kaproth, deputy assistant secretaries of the US Department of the Treasury.

The finance chief cited, as an example, the New Clark City which is envisioned as the country’s next metropolis.

According to Dominguez, there is a demand for the establishment of a new metropolis, such as the New Clark City, as there is a need to spread development outside of Metro Manila.

He said this would decongest the National Capital Region, where daily road traffic volume has led to massive productivity and revenue losses.

Earlier, Dominguez said projects under the Build Build Build are long overdue.

“If you borrow money for projects that don’t already have a demand, there’s a chance that your estimates are going to be wrong and your revenues are not going to be enough,” Dominguez said.

“However, what are we borrowing for? We are borrowing for things that already have the demand… people are willing to pay for that and people need that,” he said.