The Market Monitor Minding the Nation's Business
A Senate resolution was filed last week to seek an investigation, in aid of legislation, of the country’s foreign loans that now stands at $77 billion, as the Duterte administration indicated it may borrow more to finance its planned massive infrastructure buildup of about P200 billion a year.
Senate Resolution 253, filed by Senate President Aquilino “Koko” Pimentel Jr. and Sen. Risa Hontiveros said there was an urgent need to scrutinize the country’s debt.
The resolution said the comprehensive debt audit seeks to verify whether the loan agreements that the Philippines has entered into were “legitimate” and to enact measures to ensure the prudent and proper use of such loans.
Both senators said there was a need to verify whether the loan agreements entered into with different international financial institutions (IFIs) were in accordance with the principles on promoting responsible sovereign lending and borrowing by the United Nations Conference on Trade and Development (Unctad).
Under the P3.35-trillion national budget for next year, a total of P214.5 billion has been allotted for debt servicing of foreign liabilities.
Out of the P214.5 billion, P3.78 billion went to interest and principal payments in connection with a number of questionable loan-funded projects, according to the Freedom from Debt Coalition (FDC).
Hontiveros also there was a need to conduct a debt audit before the Philippines joins the China-led Asian Infrastructure and Investment Bank (AIIB).
She said the audit could be the first crucial step to free the nation’s coffers from illegitimate debts or loan agreements riddled with questionable process, contractual obligations, purposes and use.
“Carrying out a legislative audit of public debt could lead to the repudiation of the illegitimate part of the country’s debt and free funds to augment the government’s social spending and guide us in reformulating our policies based on Unctad principles,” Hontiveros said.
FDC has cited President Duterte’s $9-billion new loans from China and his intent to have the Philippines avail itself of more Official Development Assistance (ODA) for deficit financing.
“A debt audit is the public’s assurance of the prudent and proper use of loans and that there is a policy environment that guarantees this. This is long overdue, being a casualty of previous administrations that have been either involved in unscrupulous loan-funded projects or too obsessed with boosting the country’s creditworthiness,” FDC Secretary-General Sammy Gamboa said.
The FDC warned of the current burden forced on the people by the continued and automatic servicing for “debts wasted on projects littered with corruption, bloated budgets, violations of legal procedures, lack or insufficient public consultations and used as lender’s conditionality for privatization of public utilities such as power, water and transportation services.”
The group cited its initial study on 13 questionable loans that it said 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 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 on this list and need to be investigated,” Gamboa said.
Tagged by FDC as questionable programs and projects were the Philippine Rural Development Project, the Pampanga Development Flood Control, the Bohol Irrigation Phase II, the Angat Water Supply Optimization, the Sixth Road Project, the Power Sector Development Program, the Help for Catubig Agricultural Advancement, the Agrarian Reform Communities Project, the Global Maritime Safety, the Small Water Impounding Management, the Third Elementary Education Project, the Emergency Network Project and the Southern Philippines Irrigation Sector.
“We have to arrest the further bleeding of public coffers on these fraudulent, wasteful or useless debts and rechannel funds to finance much-needed programs to address poverty and inequality, the speedy recovery of disaster-stricken areas, and the creation of jobs. We need to take the first step of examining, comprehensively, all public debts, immediately,” Gamboa said.
The FDC said resolving the issue of these fraudulent loans would not only address the centuries-old oppressive practice in borrowing and lending, but also release funds that could be used to reduce the current administration’s need for deficit spending for its plan to ensure that economic growth is felt by people living in poverty. Luis Leoncio