Audit, not arbitrary aid rejection, needed—FDC

A comprehensive audit of public debt and related policies is needed and not an impulsive and selective rejection of development aid, such as those from the European Union (EU), which has been a tough critic of the conduct of Mr. Duterte’s war on drugs, debt watchdog Freedom from Debt Coalition (FDC) said. 

“The President’s recent decision to reject EU aid with conditionalities interfering with the Philippines’ internal affairs and the huge loans from China and other lenders for the administration’s ambitious infrastructure program should sound a sense of urgency for Congress to examine whether public debt, the government’s borrowing policies and institutional arrangements on debt management are serving the interest of the people,” FDC Secretary General Sammy Gamboa said.

He added that the Duterte government is already on the right track with the approval in the 2017 General Appropriations Act (GAA) of a provision for an audit of 20 national government foreign loans being challenged by FDC as fraudulent.

FDC’s initial research found that the 20 loans were marred by corruption, bloated budgets, violations of legal procedures, lack or insufficient public consultations and used as lender’s conditionality for privatization of essential services such as power and water.

“The findings of a comprehensive audit will provide the basis for the steps that the government can take to address loans that do not benefit the Filipino people, particularly those deemed to have facilitated the lenders’ agenda in the country’s affairs through debt conditionalities,” Gamboa said.

Section 95 of the 2017 GAA mandates the Joint Congressional Oversight Committee on the Official Development Assistance Law (Cocoda) to implement the audit on the 20 loans, many of which came from the Asian Development Bank, Japan International Cooperation Agency and the World Bank.

However, FDC laments that the Cocoda has not reconvened yet. Almost half of the year has passed, but the House panel, led by the chairman of the Committee on Ways and Means, has not even been reconstituted.

“The President’s rejection of EU aid and active solicitation of borrowed capital from other lenders affirm the immediate need for a comprehensive audit to determine the legitimacy of existing and new loans and whether these should be rejected, cancelled or even repudiated,” said Gamboa.

FDC also warned of the current burden forced on the people by the continued and automatic servicing for debts that were wasted on problematic projects.

The group cited its initial study on 13 questionable loans which will cost the government P755.86 million and P5.45 billion in interest payments and principal amortization, respectively, for 2017.

“These are just 13 out of 481 official development assistance (ODA)-funded projects, excluding government debt securities, which are religiously being repaid without anyone, borrower or lender or both, being held accountable for the unfair terms of the loans and misuse of the funds. We still receive reports of fraudulent projects, particularly in the agriculture sector and in post-disaster reconstruction, which are in this list and need to be investigated,” Gamboa said.