The Finance Department plans to tap more renminbi-denominated concessional loans with flexible interest rates from China to fund infrastructure projects.
Finance Secretary Carlos Dominguez III said over the weekend China and the Philippines signed an agreement allowing the latter to access official development assistance in renminbi denomination.
Dominguez said the agreement between the DOF and China International Development Cooperation Agency would allow the Philippines to shy away from dollar-denominated loans.
The finance chief, however, assured that Manila would still consider the market conditions once they decided to tap the renminbi loan facility.
“President Xi Jinping is aware of our financing needs and one of the items we discussed was the interest rates, mainly on its flexibility,” Dominguez said in a phone interview.
“Previously our loans from China were in dollars, but now they opened up their renminbi facility to us,” he said.
Aside from the agreement, the Philippines also sealed the preferential buyer’s credit loan agreement of management consultancy of the Philippine National Railways South Long Haul Project with the Export-Import Bank of China.
The services management consultancy covers the detailed engineering and design, preparation of the terms of reference and bidding documents for a design-and-build procurement.
Among the services that will be bid out are civil works, rolling stocks and electromechanical system, along with the construction supervision, the DOF said.
The agreement for the rail project, costing $219.78 million, aims to link Metro Manila to Legazpi, Albay; Legaspi to Matnog in Sorsogon; and Calamba, Laguna to Batangas City.
The project management consultant will also provide tender assistance, which includes, among others, the market study, administration of the limited competitive bidding and tender award to the contractors and suppliers.
President Duterte and Chinese President Xi Jinping witnessed the exchange of the signed loan agreement between Dominguez and Export-Import Bank of China Vice President Xie Ping at the Diaoyutai State Guest House in Beijing last week.
The dollar-denominated loan has an interest rate of 2-percent per annum with a maturity period of 20 years, inclusive of a seven-year grace period, the DOF said.
