By the Philippine News Agency
Official Development Assistance (ODA) loans entered into by the government to finance the massive “Build, Build, Build” infrastructure program are favorable to the Philippines, a finance official assured on Wednesday.
In a press briefing in Malacañang, Department of Finance (DOF) Assistant Secretary Tony Lambino said the government has “successfully negotiated” ODA loan finance for big-ticket projects under the “Build, Build, Build” program of the Duterte administration.
“The economic team adopted the fast and sure approach in successfully negotiating concessional financing for the ‘Build, Build, Build’ program,” Lambino said.
He said the deals entered into by the government are the best options available.
“The terms of the ODA are negotiated very much with the Philippine side’s interest in mind,” Lambino said.
He cited several Japanese ODA-financed projects that are payable in 40 years with a 12-year grace period.
“The Metro Manila Subway Project is one of the softest loans we have ever negotiated – the 104.53 billion yen or USD935 million loan agreement for the first tranche carries an interest rate of 10 bases points or 0.1 percent per annum for non-consulting services, and one bases point per annum or .01 percent for consulting services,” Lambino said.
“Those are the kind of terms that we are negotiating. Please be assured that these are better terms than we would have gotten in the private markets. These are deep concessional terms,” he added.
Lambino noted that the administration’s economic team is fully aware that loans should bring more social benefit than the cost of the financing.
The DOF’s Investment Coordinating Committee, he said, estimated that minimum economic internal rate of return should be at 10 percent and the cost of financing at 2 percent or less.
“We have to make sure that the social benefit, the economic internal rate of return of any project is far better than the interest rates that we negotiate,” Lambino said.
He emphasized the need to finish all big-ticket infrastructure projects, as well as the long list of projects of the public works and highways department to attract more investors.
“Ang kakulangan sa imprastraktura ang isa sa pinakamahalagang pangangailangan natin upang makahikayat ng mga investors sa bansa (The lack of infrastructure is one of the things we need focus on to attract investors to the country),” he said.
The Duterte administration’s “Build, Build, Build” program has 75 big-ticket flagship projects designed to boost economic activities throughout the country.