MANILA, Philippines — The government has raised the alarm over a possible fallout from a Chinese property developer’s swelling debt as contractors in the Build Build Build program may be financially tied to the firm.
Finance Secretary Carlos Dominguez yesterday told reporters the government is now looking at its contractors if any of them will be affected by the looming default of embattled Evergrande.
“We are currently checking if any of the Chinese contractors involved in our Build Build Build program will be negatively affected by the reported problems of Evergrande,” Dominguez said.
The Evergrande Group has caused the Chinese financial market to stumble, as it announced it may miss loan repayments to the detriment of its creditors. Likewise, the firm is expected to ask the government for a restructuring of its debts given its financial condition.
London-based Oxford Economics yesterday said Chinese regulators may step in the soonest to arrange the rehabilitation of the developer that has now lost 86 percent of its share value this year.
“While we think the (Chinese) government doesn’t want to be seen as engineering a bail out, we expect it to step in to conduct a managed restructuring of the firm’s debt to prevent disorderly debt recovery efforts, reduce systemic risk and contain economic disruption,” Oxford said.
As for the Philippines, authorities will assess how its Chinese contractors will take the impact from the impending restructuring of Evergrande, especially on how such financial changes may affect the delivery of ongoing infrastructure buildups.
In August, Finance Undersecretary Mark Dennis Joven said Beijing plans to extend a package of $1.9 billion in loans for four public works projects in Metro Manila, Central Luzon and Mindanao.
The financing program forms part of China’s growing economic partnership with the Philippines, which has expanded further under the Duterte administration.
China contributed about six percent or $1.18 billion of the $19.65 billion foreign loans and grants received by the Philippines from 2001 to 2020. Likewise, Beijing is reviewing another $4.6 billion worth of projects, now in the procurement stage, for Manila.