If Russia can lower its interest rates for loans that will be channeled to infrastructure projects, then it can be another source of funding for the Duterte government’s planned infrastructure program, according to the National Economic and Development Authority (Neda).
Neda Secretary Ernesto M. Pernia said Russia does not extend official development assistance (ODA) loans, which carry concessional terms, and that it lends commercially. “If they lower their interest rates to levels on a par with those offered by China, which is between 2 percent and 3 percent, then that will make Russia a viable source of loans,” Pernia added.
Pernia said if it were not for the cost, the country could explore Russian funding, especially for steel bridges and railways, where they have a competitive advantage.
However, this does not prevent Russia from participating in projects by bidding for supply contracts and partnering with Filipino firms for projects that will be undertaken via the public-private partnership scheme. Apart from warming up to Beijing, Manila is also reaching out to Moscow not only for trade-related concerns but also to explore the possibility of partnerships for infrastructure projects.
“They say they have the bragging rights on steel bridges and also the building of railways. The only problem is [it’s] all [in] commercial terms, they do not have ODA. [They do not have] sovereign arrangements,” Pernia said.
On the trade side, China will buy more than $1 billion worth of farm products from the Philippines.
Russia, for its part, has indicated that it can ramp up the value of its agricultural imports from the Philippines to $2.3 billion.
On the infrastructure side, China is set to finance P172.42 billion-worth of infrastructure projects in the country this year.
This is part of a list of 15 projects identified for Chinese financing during the Duterte administration. The Neda estiates these will cost $6.96 billion. The Neda said no infrastructure projects have been lined up for Russian funding.
The national government intends to boost infrastructure to GDP ratio well beyond its target by 2022. Pernia said the government aims to boost infrastructure to GDP ratio to 7.4 percent by 2022.
Pernia said this is based on the projection of the spending needed for the government’s 55 flagship projects, which could exceed P1.2 trillion.