China-led Asian Infrastructure Investment Bank (AIIB) has agreed to co-finance the first phase of the Metro Manila Flood Management Project.
This was disclosed by Finance Secretary Carlos Dominguez III, who represented the Philippines in the AIIB meeting in Jeju Island, South Korea early this month.
Dominguez said he attended the meeting, which is the first for the Philippines, primarily not to ask for financing but as part of Bank’s stakeholder.
Members of the AIIB are required to put in capital and the Philippines, for one, is allowed to take out about USD200-USD500 million worth of loans annually.
Dominguez dubbed as a “good progress” the operations of the AIIB, which was established in October 2014.
“It is is learning process for us and quite frankly we are very happy with what we hear about the AIIB. They run a very lean organization,” he told reporters recently.
“With regards to our own negotiations with them we have concluded one negotiation wherein they will co-fund the Metro Manila Flood Management Project Phase 1,” he said.
Dominguez said AIIB and the World Bank (WB) would put in about USD207.63 billion each for the project while the Philippine government shares around USD84 million.
He is confident that the government will have the necessary funds to construct the flood management project, especially since it targets to finance all its infrastructure projects and just bid out the projects’ final construction phase and the operations and maintenance.
“You have to remember that the Philippines is not where it was 10 or 25 years ago. We have a variety of sources of funds and we have the luxury of choosing the sources with the best conditions for us,” said.
Among the government’s financing options are commercial borrowing, both onshore and off-shore, and loans from multilateral agencies.
“Our economy is very liquid,” he said, citing that this bodes well for government’s funding requirements, which has been set at 80-20 ratio in favor of domestic borrowing.
“Now, we can pick and choose and we can blend so that we come out with the best terms, which are basically the lowest cost, the longest payback periods and the longest periods where we don’t have to pay anything,” he added.