By Chino S. Leyco

The Philippine government can now tap renminbi-denominated concessional loans with flexible interest rates from China to fund government projects, the Department of Finance (DOF) said.

Finance Secretary Carlos G. Dominguez III said that China and the Philippines signed an agreement allowing the latter to access official development assistance (ODA) in renminbi denomination during President Duterte’s visit to Beijing last week.

Dominguez said the agreement between the DOF and China International Development Cooperation Agency will allow them to shy away from dollar denominated loans when borrowing in Beijing with “flexibility” in interest rates.

The finance chief, however, assured that Manila will still consider market condition once they decide to tap the renminbi loan facility.

“President Xi Jinping is aware our financing needs and one of the items we discussed was the the interest rates, mainly on its flexibility,” Dominguez said in a phone interview. “Previously our loans from China were in dollars, but now they opened up their renminbi facility to us.”

Aside from this agreement, the Philippines also sealed the preferential buyer’s credit loan agreement for management consultancy of the Philippine National Railways (PNR) south long haul project with the Export-Import Bank of China.

The services management consultancy covers the detailed engineering and design, preparation of the terms of reference (TOR) and bidding documents for a design and build procurement.

Among the services that will be bid out are civil works, rolling stock, and electromechanical system, along with the construction supervision, the DOF said.

The agreement for PNR south long haul project, costing $219.78 million, is under the Duterte administration’s “Build, Build, Build” program, which aims to link Metro Manila to Legazpi, Albay; Legazpi to Matnog in Sorsogon; and Calamba, Laguna to Batangas City.

According to the DOF, the project management consultant will also provide tender assistance, which includes, among others, the market study, administration of the Limited Competitive Bidding, and Tender award to the contractors and suppliers.

President Duterte and Chinese President Xi Jinping witnessed the exchange of the signed loan agreement between Dominguez and Export-Import Bank of China Vice President Xie Ping at the Diaoyutai State Guest House.

The dollar-denominated loan has an interest rate of two percent per annum with a maturity period of 20 years, inclusive of a seven-year grace period, the DOF said.