MANILA, Philippines — The Duterte administration will heed Malaysian Prime Minister Mahathir Mohamad’s advice on securing loans from China, Malacañang said yesterday.
Mahathir, who was in the country last week for a two-day official visit, had advised the Philippines to be “very careful” with Chinese loans, noting that a borrower would be under the control of the lender if he fails to settle his obligations.
The Malaysian leader has scrapped China-funded projects worth $22 billion that were approved during the time of his predecessor Najib Razak. Mahathir said Malaysia was still grappling with a fiscal deficit and may not be able to repay the debt.
Presidential spokesman Salvador Panelo said the President’s economic managers are studying the Chinese loans.
“Of course, we will take his (Mahathir) advice. And the economic managers are evaluating all kinds of loans that we are having with the Chinese government,” Panelo told a press briefing.
China agreed to provide $9 billion in soft loans to the Philippines during Duterte’s first visit to Beijing in 2016.
Finance officials have given assurances that the Philippines is not heading toward a “China debt trap.”
They claimed that the country’s projected debt to China would only constitute about 4.5 percent of the total debt by 2022, when most of the financing for infrastructure projects will have been accessed.