Debt servicing, since the time of the dictator Ferdinand Marcos, has been siphoning valuable public resources from the country, with the current Arroyo administration paying out the biggest amount of public funds for debt servicing. Debt servicing (interest payments and principal amortization) under Mrs. Arroyo has been, on the average, more than 10% of the country’s gross domestic product (GDP) – higher than Aquino’s 8.1%, Ramos’s 6.8% and Estrada’s 6.6 percent.
Under its proposed national budget for 2010, the Arroyo administration will shell out a huge P746.18 billion for debt servicing covering interest payments and principal amortization. In 2009 and 2008, government spent P702.6 billion and P612.68 billion for debt servicing, respectively. These are huge amounts of money, with interest payments in 2010, for instance, eating up 22.1% of the national budget compared with housing’s 0.4%, health’s 2.5%, and education’s 15.3% — all of which will surely require more funds now because of Ondoy and other stronger typhoons expected to hit the country.
Debt Cancellation as Top Option
Is debt cancellation possible? Ecuador just did it earlier this year, with its president calling the country’s foreign debt “immoral”.
Considering the still unfolding humanitarian crisis that Ondoy has caused and threats of more super typhoons, the Philippines can justify its move to cancel debt servicing and attend to the more immediate needs of its people. On top of this is the long-standing issue that many of the country’s debts are considered odious and thus the people should not be burdened to pay for them.
Current debt-funded projects such as the multi-million dollar road projects being bankrolled by Asian Development Bank (ADB) and the Japan Bank for International Cooperation (JBIC), $100-million text book project of the World Bank, China’s $885.4-million South Luzon railways project, ADB’s $750-million power sector reform programs and projects, among others are tainted with irregularities and corruption and should be considered for debt cancellation.
While emergency grant assistance for disaster relief from foreign donors are welcome, debt cancellation should be a top option for the Philippines in terms of raising sufficient resources in a sustainable manner to deal with disasters and other immediate and basic needs of its people. The relationship between calamities and social services is directly proportional and has been clearly illustrated by the country’s experience with Ondoy and Pepeng — the graver the disasters, the higher the need for housing, health, education and other basic services.
As an initial and immediate move, Congress must repeal the Marcosian automatic debt servicing rule as provided under the revised Administrative Code of 1987 and rechannel funds allocated to debt servicing in the 2010 national budget to social services and disaster relief and rehabilitation. With more resources at its disposal to attend to the needs of its people, victims of Ondoy, Pepeng, and future natural calamities will not be forced to survive through alms and emergency employment. (Bulatlat.com)