The Department of Finance (DoF) said China has agreed to study hybrid-financing arrangements proposed by the Philippines to fund big-ticket infrastructure projects at lower costs.
In a statement on Thursday, Finance Secretary Carlos Dominguez 3rd said China Commerce Minister Gao Hucheng welcomed his proposal to consider co-financing the projects with other multilateral lending institutions such as the Asian Development Bank (ADB), the World Bank and the China-led Asian Infrastructure Investment Bank (AIIB).
Dominguez led a top-level Philippine government delegation to Beijing last week.
He said Gao told the Philippine delegation during the January 23 to 24 mission that Beijing would want “to clarify the operating procedures” regarding such arrangements and determine if this would lead to a more efficient and smooth implementation of the project.
Chinese officials have agreed with the delegation on the urgency of implementing projects that Manila has proposed to China for possible financing.
Hybrid financing would enable the government “to profitably manage the leveraging” of close to P1 trillion in official development assistance (ODA) and loans the Philippines has secured from Japan and China, the DOF earlier said.
“Our major plan here is to leverage that. [That is], to take projects and then use part-ODA and part-multilateral agency loans so that we can actually increase the number of projects that we can do,” Dominguez has said.
Hybrid financing will involve a mix of ODA, which provides concessional interest rates of 0.2 to 0.5 percent, with development funds from the Asian Development Bank (ADB) and the World Bank to execute an infrastructure project.
Combining both types of financing sources will enable the government to build more big-ticket infrastructure projects, the finance secretary said.
The Philippine delegation submitted 40 “large and small” infrastructure projects to China for possible loan financing and assistance in conducting feasibility studies.
Of the 40 projects, 15 are being proposed for loan financing while 25 were submitted for feasibility study support.