Crab mentality is such a bad trait of Filipinos that no
matter who is doing great in his field, there will always be a bad thing
somebody can say to pull that person down.
President Rodrigo Roa Duterte has been very clear in his
administration’s independent foreign policy – “friend to everyone, enemy to no
one” and slowly it has been reaping the benefits.
Last week Asia’s “Dragon” China’s president xi Jinping came
here for a state visit, and with it between the two countries is a 29 signed
agreement. A clear indication of a friendly, warm and healthy bilateral
relationship between the Philippines and China.
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| China's President Xi Jinping waving to the airport upon arrival to the Philippines (photo credit to ABS-CBN) |
Political oppositions have made a media frenzy in
criticizing the President with his somewhat welcoming of Asia to the
Philippines most especially the asking of funds that will fund the
administrations much needed projects- most specially the BUILD BUILD BUILD infrastructure
projects of the country.
They have been raising all the doomsday scenario for the
country, most notably is that the country will fall to China’s “debt trap.”
New York Professor Panos Mourdoukoutas in his column in
Forbes believes that the Philippines is way to smart to fall into China’s debt
trap.
“the Philippines is
better in managing foreign loans than Sri Lanka.”
“ the size of the
Philippines economy. The Philippines GDP is roughly four times that of Sri
Lanka’s.”
“Most notably,
government debt stands at 42.10%
of GDP, well below the average of 56.25% for the period for the period
1990-2017, which makes it very unlikely that the country will run into any debt
crisis any time soon.
And if it does, it has plenty of
foreign reserves to deal with the situation. The Philippines’ Foreign Exchange
Reserves stand at $74722 Million, well above the average of 16341.45 USD
Million for the period 1960-2018.
These statistics stand in sharp
contrast to those of Sri Lanka’s, where the GDP grew at an annual rate of 3.70%
in 2018, well below the 5.88% average for the period 2003-2017.”
So to those naysayers, if you still doubt the capacity and
credibility of this sitting administration, listen to this New York professor
who echo’s the same as the economic team of President Duterte is saying.
The full quote of the article is provided below:
China cannot do to the
Philippines what it did to
Sri Lanka -- use the “debt trap” to acquire key sea outposts -- because the
Philippines economy doesn’t resemble Sri Lanka’s.
Sri Lanka’s debt trap saga began
with Beijing lending that country funds needed to have its ports upgraded by
Chinese construction companies. When Sri Lanka couldn’t pay back the loans,
Beijing turned them into equity. And that gave China ownership and control of
Sri Lanka’s two major ports.
Recently,
China and the Philippines signed agreements for several infrastructure projects
to be financed by Beijing. But there are a couple of things that make China's
Sri Lanka strategy very unlikely in the case of the Philippines.
One of them is that the Philippines is better in managing
foreign loans than Sri Lanka.
That’s according to Jay Batongbacal, director of
the University of the Philippines' Institute for Maritime Affairs and Law of
the Sea. “The Philippines is smarter and more experienced in managing loans,”
Batongbacal’s quoted saying in GMA NEWS OLINE.
Apparently, Mr. Batongbacal is
referring to the Philippines’ ability to avoid outright debt crises seen in
other emerging market economies.
Then, there’s the size of the
Philippines economy. The Philippines GDP is roughly four times that of Sri
Lanka’s—see table.
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| (photo credit to Forbes) |
..
And there’s the state of the Philippines’s economy, which
doesn’t run the risk of a debt crisis anytime soon, as Sri Lanka did early this
year.
To begin with, the Philippines
economy has been growing at a robust pace. As of the September quarter of 2018
the annual growth was standing at 6.1%—well above the 3.79% for the period
1982-2018.
Then there’s the country’s tamed
Current Account deficit. It stands at 0.80%, close to the average of -0.45% for
the period 1980-2017. That means that the country is living close to its means,
thanks to remittances by overseas Filipinos, of course.
Most notably, government debt stands
at 42.10% of GDP, well
below the average of 56.25% for the period for the period 1990-2017, which
makes it very unlikely that the country will run into any debt crisis any time
soon.
And if it does, it has plenty of
foreign reserves to deal with the situation. The Philippines’ Foreign Exchange
Reserves stand at $74722 Million, well above the average of 16341.45 USD
Million for the period 1960-2018.
These statistics stand in sharp
contrast to those of Sri Lanka’s, where the GDP grew at an annual rate of 3.70%
in 2018, well below the 5.88% average for the period 2003-2017.
Sri Lanka is running a Current Account deficit of 2.60% of GDP,
half of the -5.47% average for the period 1980-2017. That means that the
country is living beyond its means, relying on foreign money to sustain its
living standards.
That could explain the country’s
large government debt, which stands at 77.60% of GDP—well above the average of
69.69% for the period 1950-2017.
Meanwhile, foreign Exchange Reserves
stand at 1386166.90 LKR Million in July of 2018—well below the average of
250901.90 LKR Million for the period 1975-2018.
The bottom line: China cannot turn
the Philippines into another Sri Lanka, because its economy is large and
growing fast. Filipinos live within their means. And the country’s central bank
has the foreign currency reserves to deal with the prospect of a debt crisis.
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