In recent years, the Philippine government has been actively seeking various funding sources to finance its infrastructure projects. This move comes amid calls to reduce reliance on a single country and to assert the nation’s sovereignty in the face of territorial disputes. Finance Secretary Benjamin Diokno has emphasized the importance of diversifying funding and exploring partnerships with multiple countries to achieve the best terms and ensure the progress of these crucial projects.
The Philippines’ decision to diversify its funding sources for infrastructure projects is driven by several factors. One of the key considerations is the ongoing tension in the West Philippine Sea, where China’s maritime intrusions have raised concerns among lawmakers. In response, the government has sought to reduce dependence on Chinese funding and explore alternative options to safeguard its national interests.
Another factor contributing to the need for diversification is the limited funding sources during the previous administration. Finance Secretary Diokno highlighted the challenges faced by the government due to the previous president’s strained relationship with the European Union. This strained relationship resulted in limited funding opportunities, hampering the progress of infrastructure projects.
To address these challenges, the Philippine government has engaged in discussions with various countries to secure funding for future infrastructure projects. Finance Secretary Diokno mentioned that they are in talks with several euro countries like Sweden, France, Italy, and England to diversify their funding sources. These discussions aim to explore the best terms and secure financing for the nation’s infrastructure needs.
The most recent report on official development assistance (ODA) shows that the Philippines’ active loan and grant portfolio in 2021 amounted to $32.24 billion, representing a five percent increase from the height of the pandemic. While China provided $943.49 million in ODA, which accounts for only 2.93 percent of the total, Japan remains the top source with 32 percent.
Notable projects funded by China include the Chico River Irrigation Pump project, the Binondo-Intramuros and Estrella-Pantaleon Bridges project, and the Philippine National Railway – South Long-Haul project. However, Finance Secretary Diokno warned that banning Chinese firms could have repercussions on ODA implementation and could potentially lead to delays in projects with multiple country participation.
The potential ban on Chinese firms could affect the progress of infrastructure projects and financing arrangements. Finance Secretary Diokno stressed that procurement of locally funded projects with Chinese suppliers or contractors may face delays due to the need to shift financing from China to other sources. Furthermore, ODA implementation from bilateral and multilateral partners, including China, could also be impacted.
One of the projects that may be affected is the South Long Haul project, also known as the PNR Bicol project. The Marcos government has refilled its loan application with the Export-Import Bank of China for this $2.4-billion project. Any disruption in the financing arrangement could jeopardize the timely completion of the project.
The Philippine government’s efforts to diversify funding sources for infrastructure projects reflect its commitment to assert its sovereignty and reduce reliance on a single country. Finance Secretary Benjamin Diokno’s emphasis on exploring partnerships with various countries ensures the best terms and guarantees the progress of these crucial projects. By actively seeking alternative funding sources, the government aims to safeguard national interests and achieve sustainable development in the face of geopolitical challenges.
