Government pays P3.7B yearly for idle debts, says FDC

By Luis Leoncio 

The government continues to pay non-productive loans that did not benefit the economy. and of the total P214.5 billion scheduled debt servicing for this year, some P3.7 billion will go to the interest and principal payments of five questionable and illegitimate loans, the Freedom from Debt Coalition (FDC) said. 

“This huge amount, which could have been redirected to inadequately funded social-protection programs such as education, health and housing, covers only five loan-funded programs and projects that FDC finds fraudulent, wasteful and useless,” FDC President Ed Tadem said.

“Imagine how much more will be uncovered if we scrutinize all the loans contracted by the government?” FDC defined illegitimate debts as those arising from loan-funded programs or projects that violated principles of human rights and sustainable human development, justice and fairness, accountability and responsibility, sovereignty of peoples and nations, and democracy.

Tadem identified the five programs and projects funded by illegitimate loans as the Power Sector Development Program, Sixth Road (Tullahan), Pampanga Development Flood Control, Bohol Irrigation II, and Angat Water Supply Optimization. “These five projects were marred by corruption, bloated budgets, violation of legal procedures, lack or insufficient public consultations and used as lender’s conditionality for privatization of public utilities such as power and water services,” Tadem said.

He said that, despite the spurious character of the loans, the government still has to pay these.

“Of the five useless loans, the most glaring was the $750 million lent to the Power Sector Development Program (PSDP) by the Asian Development Bank and the Japan Eximbank,” Tadem said. “PSDP is a $9.2-billion program basically meant to facilitate the privatization of generation and transmission sectors of the power industry and to pay back the debts of the National Power Corp., including assumed liabilities due to anomalous contracts with independent power producers,” he added. FDC had previously successfully lobbied Congress in 2008 and 2011 for a moratorium on P25.9-billion interest payments for illegitimate debts and for an independent audit of all public debts but its efforts were blocked by former President Gloria Macapagal-Arroyo and the current Aquino administration.

The group also repeatedly called for the cancellation of illegitimate debts and the repeal of the law on automatic appropriations for debt servicing, which was promulgated by former President Ferdinand E. Marcos in 1977, through Presidential Decree 1177, and reiterated by the late President Corazon Aquino, through the 1987 Revised Administrative Code, or Executive Order 292.

Tadem said that, for 2015 alone, out of the P372.9-billion appropriation for interest payments, P187.21 million would be paid for loans spent for the Tullahan (6th) Road Project, the Power Sector Development Program, the Pampanga Development Flood Control, the Bohol Irrigation Phase II and the Angat Water Supply Optimization.

A total of $28.353 million will go to principal amortization of these same projects.

“And these are just five questionable projects; more could have been revealed had Aquino and his allies, like Budget Secretary Butch Abad, not block FDC’s moves for Congress to conduct an official audit of all Philippine debts,” Tadem said.

“What compounds the problem with payments for illegitimate debts is that they do not undergo the scrutiny of Congress because the law provision on automatic appropriations for debt service remains in place and continues to undermine the people’s power of the purse,” Tadem added.

As for fiscal incentives, data from the Department of Finance (DOF) showed that the government loses P37 billion annually in forgone revenues due to income-tax holidays to investors by the Board of Investments and the Philippine Economic Zone Authority.

A World Bank study showed perks for investors amount to one percent of the country’s gross domestic product (GDP), which translate to about P126 billion in lost revenues for 2014 alone. “Whether the entry of these investors resulted in improved access to efficient services for Filipinos is another contentious area, given the skyrocketing rates, forcible consumers’ absorption of corporate taxes and problematic operations in the power, water and transportation sectors,” Tadem said.

Mr. Aquino’s outright rejection of a tax measure that would benefit millions of ordinary Filipinos is another display of this administration’s shortsightedness and misplaced priorities, Tadem said.

He also said Mr. Aquino does not think twice about continuing to wring a substantial portion from hard-earned salaries of taxpayers who can hardly make ends meet, as long as money flows into public coffers.

“But come to think of it, such reasoning is reminiscent of how and why Aquino and Abad hatched the unconstitutional Disbursement Acceleration Program (DAP),” Tadem said.

“It does not matter whether DAP violates laws on the budget process and whether it undermines transparency and the people’s power of the purse, as long as the Aquino administration gets to do what it wants with public coffers,” he added. Tadem said the end justifies the means even at the expense of fiscal and tax justice for millions of hapless Filipinos under Mr. Aquino. LUIS LEONCIO