De Guzman to Chinese Creditors: Prepare for Repudiation

Press Release

30 March 2019

De Guzman to Chinese Creditors: Prepare for Repudiation

Manila, Philippines – Labor’s senatorial bet Leody de Guzman, said that "onerous and unfavorable loans by Chinese creditors may pendulum swing in favor of an exasperated people who will pursue debt repudiation in the near future".

“This administration may be accommodating to their demands, but no regime lasts forever, and so the debts contracted today might be subjected to an audit later,” De Guzman, the sole senate bet of Partido Lakas ng Masa said.

He recalled that the 14th Congress under former President Gloria Macapagal-Arroyo decided to suspend loan payments for debt worth P25.9 billion for “fraudulent, wasteful and or useless” loans.

The ratified Bicameral Conference Committee Report for House Bill 2454, the proposed 2008 General Appropriations Bill, included a special provision for the interest payment suspension for 14 loan-funded projects, plus all remaining unsecuritized loans incurred during the dictatorship of former President Marcos.

“May karapatan ang Kongreso na isuspinde ang mga utang dahil ang badyet taon ay makukunsiderang bahagi ng lehislatura. Kaya nitong bawiin ang otomatikong pagbabayad ng utang para sa ilang taon,” he explained.

The labor leader stressed the importance of due diligence not just on the part of the debtor governments like the Philippines but also for the creditor governments.

Beyond Amounts

De Guzman also reacted to the claims by Chinese Embassy Commerical Counsellor Jin Yuan that claims of debt trap is “meaningless and nonsense”, saying that "a big dam could collapse from a small crack”.

“We know how it starts – one or two unreasonable loan agreements would lead to another until we are submerged in debt. Then fast forward to their maturity periods when the government could only pay a portion of its past loans until the compounded interest becomes bigger than the original loan applied for. That was the debt trap worked under the Marcos regime.

Our Chinese creditors may be literally laughing all the way to the bank today but, in the future, we are certain the our local finance managers would display patriotism and intellectual honesty by not compromising the welfare and interest of the future generation of Filipinos,” he expounded.

De Guzman also told Yuan that he plans to push in Congress a “comprehensive audit” of Chinese loans made during the administration of Arroyo and President Rodrigo Duterte, so the embassy “might want to start assembling their legal team now”.

“The Philippines have already stood up against Spanish, American, and Japanese imperialists. We also stand up to China if it insists on being so,” he concluded.###