China loans no longer in U.S. dollar

China has arranged for the Philippines to tap concessional loans from Beijing at flexible interest rate and denomination.

This was learned from Finance Secretary Carlos G. Domiguez III who said the agreement will allow Manila to borrow sub-market or concessional financing, also known as official development assistance (ODA) loan, in renminbi denomination.

Prior to the agreement, loans from China were denominated in US dollar.

“President Xi Jinping is aware (of) our financing needs and one of the items we discussed was on interest rates, mainly on flexibility,” Dominguez said.

“Previously, our loans from China were in US dollars but now they opened up their renminbi facility to us,” he said.

According to Dominguez, they are carefully watching market conditions and determine whether a loan denominated in renminbi is to the country’s advantage.

Dominguez said with the agreement in place, government won’t have to worry about currency fluctuations in the foreign exchange market.

He also said a preferential buyer’s credit and management consultancy agreement for the Philippine National Railways South Long-Haul project was signed with the Export Import Bank of China. Both were signed during President Duterte’s visit to China last week.