The Philippines does not consider itself vulnerable to falling into an alleged “debt trap” with China but is willing to hear a pitch from Washington that the US represents the “better option” for economic partnership, Budget Secretary Benjamin E. Diokno said.

Reacting to US Vice-President Mike Pence’s allegation that China engages in “debt trap” diplomacy, Mr. Diokno said that the Philippines is not exposed to borrowing risks that will force a surrender of sovereignty.

“The Vice-President is referring to (other) countries, not us. Definitely not us,” he said in a forum in Quezon City on Monday.

“If they can come up with a package why not. We have adopted an independent foreign policy. I have not seen an offer from the US. If they can make an offer like that, we’ll take it,” he said.

“When you evaluate their statement, they don’t want the whole world to be indebted to China. They also have to put up a fund if they want to compete. You have to take that statement with a grain of salt,” Mr. Diokno added.

During the Asia-Pacific Economic Cooperation summit in Papua New Guinea over the weekend, Mr. Pence took aim at China’s Belt and Road Initiative, saying that the loan terms are “opaque’ and are skewed in favor of Beijing, forcing borrowers to compromise their sovereignty as did Sri Lanka.

Earlier this month, the US development finance institution Overseas Private Investment Corp. said that there is “heightened interest” in investment in the Philippines following the enactment of the US BUILD (Better Utilization of Investments Leading to Development) Act in October, which strengthens Washington’s development finance capabilities.

Finance Secretary Carlos G. Dominguez III also said over the weekend that Chinese infrastructure loans are actually a win-win for both countries as they constantly review the terms, and that the Philippines will not agree to unfavorable arrangements.

Mr. Diokno added: “We’re very careful. We have a very rigorous process. The list of projects came from us, not from them. We have a cut-off, the project has to have an economic internal rate of return of at least 10%. If the economic rate of return exceeds the cost of borrowing, it’s a go, it makes sense. The rate of return (points to the) social worthiness of the projects.”

The first loan pact between Manila and Beijing under the current government funded the Chico River irrigation project. The deal was signed in April for P3.14 billion in funding at an interest rate of 2% over 20 years, inclusive of a seven-year grace period.

“Where else can you get that? It’s a no-brainer. The best time to do this activity was during the previous administration where the interest rate was practically zero, but it did not embark on this kind of program. So this is our chance now to make up for past neglect,” Mr. Diokno said.

Beijing has offered the Philippines $9 billion worth of official development assistance (ODA), on top of other investment pledges, following President Rodrigo R. Duterte’s state visit to China in October 2016.

Mr. Duterte announced a pivot from the US and towards China shortly after he was elected that year. Two years later, his counterpart Xi Jinping, is visiting Manila for the first time this week to sign more loan agreements as part of China’s Belt and Road push.

Among those lined up for Chinese loans include: The New Centennial Water Source-Kaliwa Dam Project, the Philippine National Railways’ South Long Haul Project, the Davao-Samal Bridge Construction Project, the Ambal-Simuay River and Rio Grande de Mindanao River Flood Control Projects, the Pasig-Marikina River and Manggahan Floodway Bridges Construction Project, the Subic-Clark Railway Project, the Safe Philippines Project Phase 1, and the Rehabilitation of the Agus-Pulangi Hydroelectric Power Plants Project. It is also funding other projects with grants.

Mr. Diokno said that China-funded projects account for about a third of the government’s 75 flagship infrastructure projects under the “Build, Build, Build” program.

He also said that the Philippines is well-positioned to absorb more foreign loans with a “very low” debt-to-GDP (gross domestic product) ratio, and official development assistance loans considered more competitive compared with commercial and domestic sources of financing. The country’s overall debt is at 42.1% of GDP, which is targeted to fall to 37.9% by 2022.

Despite the surge in infrastructure spending, Mr. Diokno said that he is “optimistic” that the government will not breach the 3%-of-GDP fiscal deficit ceiling, after hitting that level in the first nine months of the year.

“We’re collecting more. Since revenue will be much higher due to the Christmas season, we usually collect more. We front-loaded our expenditures so we’re not going spend so much in the fourth quarter. So there’s no danger that we will breach our 3% deficit to GDP ratio,” he said.

Separately, the Department of Finance (DoF) said in a separate statement that Philippine and Japanese officials will hold their sixth meeting on infrastructure and economic cooperation on Wednesday “to discuss the processing of new concessional loan agreements that would provide the Duterte administration’s ‘Build, Build, Build’ program with additional financing support from Japan.”

The Philippines and Japan have so far signed loan agreements for the Metro Manila Subway, the Metro Rail Transit-3 rehabilitation project, the third phase of the Arterial Road Bypass Project, and the second phase of the New Bohol Airport project.

Japan has also committed to fund the Cavite Industrial Area Flood Risk Management Project, the Arterial Road Bypass Project Phase 3, the Malolos-Clark Railway Project, the Philippine National Railways South Commuter and South Longhaul Project, and the Maritime Safety Capability Project 2.

Japan also offered $9-billion worth of ODA, matching China, during Prime Minister Shinzo Abe’s state visit to the Philippines in January last year. — Elijah Joseph C. Tubayan