The Freedom from Debt Coalition defines Illegitimate Debt as loans, debts and/or “obligations” that involve any or a combination of the following:

• Fraud and deception;
• Lack of compliance with democratic processes or legal requirements;
• Grossly disadvantageous terms and/or onerous and harmful conditions;
• Financing of failed projects, or projects with damaging effects on people, on the environment, or on the economy;
• Purchasing overpriced, unnecessary goods or services;
• Support of policies that result in the violation of human rights;
• Debt accumulation due to unjust economic relations;
• Aggressive and unscrupulous pushing by lenders to promote their vested;
• interests at the expense of the borrowers or the people who will pay the debts; and,
• Transactions by illegitimate regimes.

One of FDC’s prime calls since its inception is the repeal of the Marcosian Automatic Appropriations Law on Debt Servicing, now contained in Section 26 (b) Book 6 of the Revised Administrative Code of 1987 or the automatic appropriations law on debt servicing (formerly PD 1177). It is one of the main reasons why are our country is in such a debt debacle due to the fact that the said law provides the institutional and legal mechanisms that dictate and aggravate our reliance to more borrowings to pay our debts.

Because of the automatic debt service provision, payments for both principal and interest on public debt are automatically appropriated. This is done without the benefit of a comprehensive review, popular consultations or at least public scrutiny which resulted in the paying of dubious if not illegitimate debts while sacrificing social spending on important social services like health and education.