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MANILA – No property in the Philippines has been used as a mortgage in any of the country's loans to China, Budget Secretary Benjamin Diokno said Friday.
The "golden rule" is to borrow only if the returns are greater than the cost of borrowing and if the projects have an internal economic rate of return of at least 10%, a Mr. Diokno told ANC in Headstart.
"We do not mortgage our property, it's a simple transaction, the internal rate of return must be higher than the cost of money," he said.
The projects were also chosen "rigorously" on the basis of economic benefits such as the Mega Manila metro project, intended to reduce congestion in Manila, which result in daily losses of 3.5 billion euros. .
"Today, interest rates are very low … Our debt-to-GDP ratio is currently only 40% and is falling, so we are able to do that and our process of selecting projects is very rigorous, "said Diokno.
"Donors did not choose these projects. We identified that and told them that you wanted to finance them and they agreed, "he said.
US Secretary of Finance Carlos Dominguez said on Wednesday that the Philippines would not fall into a debt trap because the country is "borrowing cautiously".
By the end of Duterte's "Build, Build, Build" program, China would have accounted for P50.50 for every P100 of the Philippines' total debt, compared to P9.50 of Japan, he said.
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