PNR Bicol Project is a Chinese Debt-Trap?!

A teacher asked for my assistance if this is a Chinese Debt-Trap. So, I read the comments. (https://bit.ly/3GQeNGL) Sabi ba naman, this is a Chinese Debt-Trap daw and if we are unable to pay for the utang, the Republic of…

PNR Bicol Project is a Chinese Debt-Trap?!

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A teacher asked for my assistance if this is a Chinese Debt-Trap. So, I read the comments. (https://bit.ly/3GQeNGL) Sabi ba naman, this is a Chinese Debt-Trap daw and if we are unable to pay for the utang, the Republic of Bicol will be turned over to China! The Facebook post is in this link: https://bit.ly/3FJKJLF

We have to look at our economic fundamentals:

1.) Debt-to-GDP. Currently, it’s anywhere between 60-63%, which is nearing the threshold of 64% for emerging markets. Based on this percentage, it appears that we can still manage to pay the debt. Take note, this is P142 billion PESOS, not in US Dollars. (Link: https://bit.ly/3tEPhAF)
Besides, trust me on this. I don’t think the P142 billion will have to be paid in a lump sum, which will have to be staggered, making for easy payment. Kerek?

2.) What’s important to remember is that, 71% of our total debt is domestic, and only 29% is external debt. Which means, only 29% of P11 trillion is our exposure to currency fluctuations which is a good thing. Even better, the actual Debt-To-GDP on External Debt (because we are talking about Chinese Loan) is actually even lower!!! (The ratio is in the story. Link: https://bit.ly/3FEdxVO)

3.) You have to look at our GDP growth. What’s the forecast? The latest from Nikkei is 7.1% for 2022. Some economists put the number at 5%, and for the length of President Duterte’s term, except for the pandemic, our average GDP growth is approximately 6-6.5%. (Link: https://www.youtube.com/watch?v=1O9Jk4-ARXU)

4.) What about our Gross International Reserves? It’s a record of $106 billion US dollars. Gusto nyo, bayaran natin ng Cash yang P142 billion pesos, eh! (Link: See Page 6 https://bit.ly/3tJwILI)

5.) Our Balance of Payments (Net of money flowing to our country and money flowing out) for the 3rd Quarter of 2021 is a surplus of $1.3 Billion, making the Balance of Payments for the nine months ending September 30, 2021, a Deficit of only $665 Million. That’s a small amount if you compare that to our GDP of approximately $373 Billion. (Link: https://bit.ly/3tJwILI)

6.) Finally, the interest rate is so low at 2% payable in 20 years. This project will reduce travel time from 14 hours to 4 hours, create 20,000 jobs while being constructed then 10,000 jobs while operational with projected 14.6 million ridership when fully operational. The loss in congestion of roads has been estimated at 1.3 trillion pesos so this project will alleviate that. The economic growth along the path of this line will also be accelerated. Freight and cargo train will added at night so this will move products as well. It seems to me this project will pay for itself. You don’t even mention domestic tourism. Add to that the evident fact that Philippines can pay its debts courtesy of OFW dollars. Only naysayers who does not weigh the benefits and want to attack Duterte administration will sing the chorus of debt trap.

What am I saying here? The numbers do not make for a country that will fail in paying its debts, making it difficult to believe that there is a Chinese-Debt Trap in this project!

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