13 May 2009
Debt & Public Finance
– The Philippine government may save some US$10 million in the next five years should the government of Austria fully accept the proposal of Freedom from Debt Coalition calling for the cancellation of a P500-million loan incurred after acquiring 26 medical waste incinerators in 1997.
FDC president Walden Bello, who visited Vienna to negotiate with Austria’s Federal Ministry of Finance, said that Finance Ministry State Secretary Reinhold Lopatka seems “serious about cancelling future debt payments” of the controversial loan.
Bello, a newly-sworn in Akbayan party-list representative in Congress, together with representatives of Austrian partner organizations, made the appeal in a meeting with Lopatka last week. Bello also gave the State Secretary a copy of a parliamentarians’ petition signed by 81 Philippine lawmakers.
During the meeting, Bello cited two major reasons for the cancellation: that the incinerators Austrian supplier Vamed Engineering brought to the Philippines in 1997 were substandard, not even meeting the emission levels the supplier guaranteed; and, that the Philippines is heavily hit by the present global crisis, making non-payment of illegitimate debts an urgent measure for the country to use its own financial resources to stir up the economy. He also requested for possible refund of payments already carried out.
Lopatka expressed his openness to the request and pointed out that several debt cancellations were granted by the Federal Finance Ministry in the past through multilateral initiatives, according to Herbert Wasserbauer, advocacy and lobby officer of the development NGO DKAAustria
“A refund seems impossible, but the case will be re-examined in depth regarding a possible cancellation, though there is little precedence for bilateral debt cancellation as the incinerator case would be,” Wasserbauer quoted Lopatka. Lopatka likewise promised to coordinate with the project lead Michael Spindelegger, Austrian Minister of Foreign and European Affairs (BMeiA) regarding the appeal.
The call to cancel said illegitimate debt was initiated in October 2007 by Stop Toxic Debt! Campaign members that include FDC, EcoWaste Coalition, Healthcare without Harm, and Greenpeace. The groups reached out to members of the Philippine Congress and to Austrian-based groups for support.
Contracted by the Department of Finance in 1997 with Bank Austria, the loan financed a project to establish waste disposal facilities for hospitals run by the Department of Health. A main component of the project was the purchase of 26 incinerators called Multizon manufactured by Liechtenstein-based Hoval. These were supplied to the DOH by Austrian firm VAMED.
At the time of the sale, the incinerators would not have passed Austrian clean air regulations anymore. The Clean Air Act, a similar regulation passed in 1999 in the Philippines, imposed a ban on incinerators effective 2003. If the incinerators were still in use, their pollution levels would exceed current air standards 800-fold and pose a serious health threat. Despite this, the Philippine government continues to pay US$2 million a year to the Austrian government until 2014.
“We are optimistic that the Austrian government will cancel the loan, so that payments appropriated by the Philippine government can be diverted to add more funds to country’s dwindling budget for healthcare,” said Bello. -30-