Philippines VP warns of China debt trap after Sri Lanka experience
Oct 22, 2017 07:10 AM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Vice President Leni Robredo had warned Philippines from taking billions of dollars in loans from China as the country may enter a debt trap like Sri Lanka by taking large loans.
Phillippines had been offered a massive loan by China to build a rail link from the capital Manila to Bicol.
“First of all, it’s debt. Very huge, P171 billion (about 3.3 billion US dollars). That’s very huge," Robredo, was quoted as saying in the online edition of Philippines Inquirer newspaper.
"Our fear is we might get stuck in a debt trap like the one experienced by Sri Lanka."
Robredo was quoted as saying that while she was not opposed to China's involvement in an infrastructure drive "concerns had been raised about the profitability of some of the projects."
Unlike agencies like the Asian Development Bank, World Bank and Western nations which conduct feasibility studies and has prudential conditions China has been offereing loans where the only substantial condition was that no open competive bidding was required and that contruction contracts go to Chinese firms only.
Sri Lanka built a coal power plant with Chinese loans which had brought huge benefits to the country in terms of cheaper power and helping avoid widespread power cuts for at least six years, but other projects had been costly.
A port and an airport in South of Sri Lanka has left the country with unserviceable debt. A telecom tower has also built in the capital Colombo with Chinese loans.
The port has been partially sold to China.
Sri Lanka took loans and built infrastructure but the last administration stifled private sector growth re-nationalising some businesses. (Colombo/Oct22/2017)