Ernesto Pernia, Prevaricator Par Excellence

TO STATE for the nth time, China never withdrew any loan offer to the Philippines with regards to some major infrastructure/transport projects. It was the Philippine side that withdrew its application for the loan and for the reason that the previous government’s finance secretary, Carlos “Sonny” Dominguez, wanted to give the new administration of President Bongbong Marcos (PBBM), the leeway to renegotiate the terms of the loans.

This Philippine withdrawal of its loan request was made in May 2022, a month before the the new president, PBBM, was sworn into office.

The following are the words of Sec. Dominguez as quoted to the Philippine News Agency by DOTr undersecretary for rails, Cesar Chavez, in his interview which was published on July 15, 2022:

“In his text message to me this morning, former Finance Secretary Sonny Dominguez said that he ‘cancelled the application instead of keeping it in suspended animation, Chavez said.

‘DOTr understands that this is in light of the upcoming transition of government, and in deference to the incoming administration.’”

With that clear statement from Chavez that it was Sec. Dominguez admitting “he cancelled the application instead of keeping it in suspending animation,” the mainstream media (MSM) still headlined the news such as the PNA’s interview with Chavez himself “China withdraws funding for 3 railway projects: DOTR” and the Inquirer spins it to “Debt trap avoided, China loans withdrawn” (a headline Inquirer quickly deleted hours later), and the MSM continued to spin it in their radio broadcasts.

The pariah ABS-CBN’s network swung into action with its ANC on July 25, 2022 interviewing former NEDA chief, Ernesto Del Mar Pernia, entitled “China ‘dribbling ball in infra funding, wants something in return.” Pernia quit the Duterte administration as NEDA chief in April 2020, at the height of the COVID-19 pandemic, allegedly due to “personal reasons” and “policy differences” with other Cabinet members. He is among the ‘Americanistas’ in government

Pernia claims China wants the Philippines to keep quiet on its South China Sea territorial claims which China has never done, in fact China has always sought to talk and discuss what it calls these “small differences” as there are bigger issues such as cooperation for mutual benefit which is already happening.

Pernia is full of perfidy. Lately, he’s been saying that the Philippines should avoid China and source funds from other countries like Japan. In a February 2017 PNA report he made some statements that are both ignorant and revealing when seen from today:

“’During the joint membership meeting of the Makati Business Club and Philippine Chamber of Commerce and Industry on Wednesday, Socioeconomic Planning Secretary Ernesto M. Pernia said China charges the loans with an interest rate of 2 to 3 percent, while that of Japan is only at 0.25 to 0.75 percent. …

“We cannot get all the loans from the ODA (official development assistance) of Japan. They have to give to other countries as well… Between 2 and 3-percent interest rate is still much better than commercial (loans),” he told reporters.’”

First of all, Pernia makes a grievous mistake in comparing China’s 2 to 3 percent interest rate for its ODA to Japan’s 0.25 to 0.75 percent.

How an economist would make such a basic error is beyond me or should be beyond any serious and educated student of these loans. Pernia is actually comparing apples to oranges because the Japanese loans are quoted in Yen and when converted could be even higher than the Chinese loans which are quoted in US dollars! (Please refer to the official government table in this article).

China’s ODA revolving around the Belt and Road Initiative (BRI) is to help the developing world progress towards prosperity of the whole world. While Japan, as the magazine ‘The Diplomat’ reports in Daisuke Akimoto’s “Japan’s Changing ODA Diplomacy” states:

“In essence, Japan’s ODA strategy has been embedded in its diplomatic vision, namely the Free and Open Indo-Pacific (FOIP) concept as pointed out by Japan Business Federation (Keidanren)…” which is the code phrase for the restoration of U.S. hegemony in the Asia-Pacific.

The fact is that the Philippines is turning to China because since the mid-2010s and at this point in time and especially in the 2022 financial crisis of the U.S. and its allies, and particularly Japan’s ODA funds are almost tapped out.

Why did Pernia know it then and not now? Duterte’s economic mistake is like PBBM’s now, relying on the Amboy economists. It is no surprise that Pernia was kicked out of the NEDA by Pres. Duterte in 2020 and replaced by Karl Kendrick Chua.

In a Philippine Star interview, Pernia is quoted asc saying that China has been niggardly in its funding that it hasn’t even breached $600-million of its $9-billion commitment.

The 2021 Inquirer reports quoting his own colleague at that time, finance undersecretary Mark Dennis Joven, states “Joven said that last year, $620-million worth of official development assistance (ODA) loans and grants from China were disbursed out of the $4.6 billion in existing projects, which were in the procurement process.”

So, please don’t be fooled by Pernia and the mainstream media when you see anti-China headlines and TV interviews.