05 September 2011
Debt & Public Finance
– Members of the Freedom from Debt Coalition (FDC) staged a protest at the gates of the House of Representatives Monday, urging the current lawmakers to emulate the move of the past Congress suspending interest payments on “illegitimate debts” in the proposed P1.816-trillion national government budget for 2012.
The debt watchdog also urged Congress to re-channel some P8-billion interest payments to much-needed services.
It is recalled that in 2008, members of the 14th Congress suspended some P25 billion proposed expenditures, which included adjustments to foreign exchange rates and interest payments to 11 illegitimate debts or "debts which are challenged as fraudulent, wasteful and/or useless." Unfortunately, then President Gloria Macapagal-Arroyo vetoed on the said special provision allowing the full payment for two (2) of these illegitimate debts to be passed on to Filipinos – the Small Coconut Farms Development Project (SCFDP) and the Telepono sa Barangay (TSB) Project.
According to FDC, illegitimate debts are those debts that involve fraud and deception; purchasing overpriced, unnecessary goods or services; grossly disadvantageous terms and/or onerous and harmful conditions; lack of compliance with democratic processes or legal requirements; financing of failed projects, or projects with damaging effects on people, on the environment, or on the economy; support of policies that result in the violation of human rights; debt accumulation due to unjust economic relations; incidences of aggressive and unscrupulous loan – pushing to promote specific interests at the expense of the borrowers; or, transactions by illegitimate regimes.
Currently, nine (9) cases of illegitimate debts are up for payment this year in the amount of P8-billion. These are the Austrian Medical Waste Project, Social Expenditure Management Program 2 (SEMP 2), Secondary Education Development and Improvement Project (SEDIP), Philippine Merchant Marine Academy (PMMA) Modernization Project, Power Sector Restructuring Program (PSRP), Power Sector Development Program (PSDP), Angat Water Supply Optimization Project (AWSOP), Procurement of Search and Rescue Vessel from Tenix Defense Pty Ltd., and Pampanga Delta Development Project.
FDC also hopes that should Congress do its part, President Benigno S. Aquino III will not veto such special provision.“It can be done”
“Lagi na lang sinasabi ng gobyerno na wala o kulang ang budget, pero may iba pang paraan (The government always says that there is no or not enough budget, but there are other ways),” said FDC vice president Lidy Nacpil.
In his recent trip to China, President Aquino has demonstrated that, indeed, tainted loans or projects could be renegotiated or “reconfigured.” He was successful in renegotiating the controversial North Luzon Railways Project, which cost ballooned from $421 million to $621 million from cost-overruns and had been the subject of numerous Senate investigations by Senator Frank Drilon.
Aquino also cancelled and/or suspended, subject to review and renegotiation, three questionable debt-financed projects: P18.7 billion ($430 million) Belgian-funded Laguna Lake dredging; P12 billion ($276 million) French modular RoRo ports; and, a China-financed rail project linking Manila to the Clark airport complex in the north.
“We urge Congress under the Aquino administration to suspend debt payments for these illegitimate debts and re-channel said amount to much-needed social and economic services. It can be done,” stressed Nacpil.
“The earmarked P8 billion could be used instead to build 12,307 more classrooms, or to procure 129 million additional text books, or augment the initial P3 billion for the People’s Survival Fund (PSF),” she added.
The PSF is a special trust fund for the financing of climate adaptation programs and projects of local communities, which are at the forefront of the climate crisis. Once established, it will support local governments to undertake measures to make communities resilient to climate change.P723 billion hidden in the budget
FDC further urged the members of the House of Representatives to exercise their “power of the purse” by demanding from the executive department to reflect in the proposed 2012 budget the amount and details of debt service payments. Some P723 billion in automatically appropriated funds were purposely erased from the National Expenditure Plan (NEP), the basis of the General Appropriations Bill (GAB) to be signed by Congress.
“This move by the Department of Budget and Management is unthinkable and unacceptable, especially for a government that claims to promote accountability and transparency,” FDC said. (30)