By Jeffrey Damicog
Justice Secretary Menardo Guevarra allayed fears that the country could lose the gas-rich Reed Bank if it fails to pay off its P3.69-billion loan from China for the Chico River Pump Irrigation Project.
“I think we really don't have much to worry," said Guevarra who pointed out that it was too early to jump into conclusions.
Justice Secretary Menardo Guevarra (CZAR DANCEL / MANILA BULLETIN)
The Secretary gave the assurance amid concerns that the loan used as collateral Philippine properties.
However, Guevarra also pointed out that the loan was too small for the Philippines to be unable to pay for it.
"I don't think we even have to think about that problem in the future because the intention of the government is to honor all of its loan obligations," he said.
Citing the Department of Finance (DOF), Guevarra added there was "nothing unusual about this contract.”
“It's something like a template that has been used in so many other loan agreements. So, I guess we are just really worrying too much." the Secretary stated.
In the event the government does fail with its loan obligations, Guevarra said there were mechanisms in place to be followed, including loan restructuring and arbitration.
Supreme Court (SC) Justice Antonio Carpio has already warned that, in case of default, under the deal China can “seize, to satisfy any arbitral award in favor of China, ‘patrimonial assets and assets dedicated to commercial use’ of the Philippine government.”
Carpio said the Reed Bank falls under the category of “patrimonial assets and assets dedicated to commercial use.”