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Consolidating Consensus, Advancing People’s Struggles and Building Alternatives
22 February 2016
MANILA--The Freedom from Debt Coalition (FDC) accused Finance Secretary Cesar Purisima of obfuscating the national debt issue and reinforced its call to repeal the automatic appropriations law (AAL).
Dr. Ed Tadem, FDC president argued that “the real issue here is that the government’s dependence on new borrowings for the principal amortization of existing loans and to plug annual budget deficits is what drives up the debt stock. From 2011-2015, amortization has eaten up an average of 48.2 percent of the aquino government’s yearly borrowings.”
“For 2015 alone, P414 billion or 58.2 percent of the P710.8 billion that the government planned to borrow would go to amortization. Only the remaining P296.8 would be used to finance the budget deficit,” Tadem added.
Outstanding debt of the national government under the Aquino administration has been growing at an average annual rate of 4.8 percent. FDC reiterates that Aquino will leave office with P6.4 trillion in debts, P4.16-trillion of which were borrowed during his term.
“In essence, much of the present government’s borrowings only go to debt repayment because of the AAL that guarantees creditors for repayments. The question now is where the rest of the money go vis-a-vis the recent data from government that P510-billion of government funds is unspent, from 2011-2014,” Tadem said.
FDC expressed skepticism if the government has really used the money to benefit the Filipino people, especially the poor, given the scenario that the Aquino government failed to meet its obligation of social debt by providing essential public services such as education and health which urgently need P7.26 trillion and P9.14 trillion respectively.
“We challenge Purisima to prove what he means by sound borrowing, Given this social debt obligation that the government has not been able to substantially provide,” Tadem said.
FDC said that the AAL has been a key concern as the Philippines remains the only country in the world with such law and rider in its government budget. This provision was enacted through Presidential Decree 1177 issued by the former dictator Ferdinand Marcos way back in 1977, when the country was still under martial law.
"Purisima should understand that because of this AAL, creditors are guaranteed that debt payment will be secured but this is not an indication of sound financial management," Tadem said.
"If it is true that we have managed our debt well, how come AAL still has not been repealed?" Tadem asked.
Dismayed over their callous debt dependency at the expense of the people, Tadem said that the Philippine presidents since Marcos have heavily resorted to debt and borrowings including those tainted with fraud and corruption, to shore up their economic programs and their respective regimes. But the onerous prescriptions and terms by the lenders, and the people's money taken away from their needs and welfare through the AAL, inevitably turn these successive administrations against the people and their rights and interests. -30-