Debt Watchdog accuses Gloria of “statistical shamanism”, data twisting describes “exorcism of foreign debts” as “plain concealment of evil” MANILA, Philippines
29 July 2009
Debt & Public Finance
– “What were exorcised?” This is the question the Freedom from Debt Coalition (FDC) asked Mrs. Gloria Macapagal Arroyo today regarding her claim of “exorcising” the country’s foreign debts in her State of the Nation Address (SONA) last Monday.
In a statement, Father Ben Moraleda, FDC vice president, wondered how Mrs. Arroyo could possibly have exorcised the country’s foreign debts when her government is notorious both for incurring foreign loans and for preserving evil Marcosian legislative measures such as the automatic servicing of debts which he said is still in full effect. What exorcism?
“Exorcism is the act of repudiating and expelling evil spirits from a person or a place which they have supposedly possessed. However, in the case of our foreign debts, there has been no instance where debts were outrightly repudiated nor has there been any serious attempt to negate debt-creating legislative measures. The truth is, debts are still very much a Philippine reality," Moraleda said.
Citing government data, FDC said nominal external debt rose from P2.55 trillion in 2000 to P2.65 trillion in 2008. During Arroyo’s term, the country’s external debt was highest at P3.59 trillion in 2004, during the height of a fiscal crisis.
The debt watchdog asserted that the only reason why the ratio of public sector debt to Gross Domestic Product (GDP) seemed to be down even if the country’s total public sector debt nominal value rose from P3.62 in 2000 to P5.13 in 2008 trillion was because GDP grew faster than the debt. Statistical ‘shamanism’
However, FDC said accusations of data twisting abound in the government’s GDP computation with Former National Economic and Development Authority (NEDA) Secretaries Cielito Habito and Felipe Medalla at the lead of such allegations.
Habito said the government understated its imports data while Medalla claimed that the government’s GDP computation is inconsistent with that of the National Statistical Coordination Board (NSCB) data on GDP and that of the Family Income and Expenditure Survey (FIES).
FDC also added that there was a continuous revision of the GDP. It was reported that the 4.5% GDP growth in the fourth quarter of 2008 which was announced with much fanfare in end-January 2009 was revised downward to 2.8% later in May 2009.
Fr. Moraleda further described this not as the exorcism of evil, but rather “plain concealment of evil” through “statistical shamanism and data twisting.”
“The debt-to-GDP alone cannot give us an accurate picture of the state of the Philippine debt. Statement of this, without the credibility- challenged GDP growth of Gloria, her so-called exorcism of foreign debts is all but hot air, a fantastic spin at claim-making,” the priest said. Changed borrowing mix
FDC said the government’s claim of debt reduction would have been more credible if the reduction in foreign debt also resulted in the reduction of the country’s overall debt. However, the group said the Arroyo administration’s foreign debt ratio dropped by more than half in 2009 due to its changed borrowing mix, in favor of domestic debt rather than a decrease in the overall debt stock.
In 2008 alone, government borrowings amounted to P501 billion wherein 86% percent or P429.77 billion was sourced from domestic creditors while the remaining 14% or P71.31 billion was supplied by foreign sources. Total borrowings for 2008 were up 12.5% from the year before.Debt protector
FDC also that asserted Mrs. Arroyo could never be a debt exorcist as she has been a consistent “debt protector.” FDC said in the 2009 budget, Congress suspended debt interest payments to 24 identified illegitimate loan agreements amounting to P4.29 billion. Mrs. Arroyo reportedly vetoed the said initiative citing the non-violation of the automatic debt servicing provision and protection of the country’s credit rating as bases.
“If Gloria is really sincere in exorcizing the country’s burdensome debts, then she should have repudiated obvious cases of odious and illegitimate debts especially under a grueling economic crisis, and have led Congress to repeal the Marcosian automatic debt service law,” Moraleda said.
“However, her almost ten-year rule was the opposite of such. Instead of exorcising the yoke of debts, Mrs. Arroyo summoned more and more of it which in the final analysis will inevitably haunt the next generation,” the priest said.
“Hence, Mrs. Arroyo is not and cannot be an authentic exorcist of the evil of debts; she is a part of the very evil she pretends to exorcise!” Father Moraleda stressed. -30-