FDC calls debt cut a “sham” with automatic debt service law still intactMANILA, Philippines
24 January 2009
Debt & Public Finance
– Coinciding with the Chinese New Year, women activists today trooped to the House of Representatives urging solons to “ward off the evil” in the budget law – the automatic appropriations on debt service.
Carrying Chinese lanterns and wearing red shirts, the group, led by the Women’s Committee of the Freedom from Debt Coalition (FDC), demanded for the repeal of Section 26(B) of the Revised Administrative Code, which stipulates automatic allocation for interest and principal payment of government obligations.
The group stressed that the repeal of this “anti-development law” is a testament of resolve on the part of the Legislature if they are sincere in resolving the debt problem beyond the cuts in debt servicing in the P1.415-trillion National Government budget.
“It is the logical next move legislators must take to resolve the unlawful and unconstitutional practice of increasing the budget as a consequence of funding Congressional insertions through debt cuts,” said Mercy Fabros of the FDC Women’s Committee.
“While we support the debt cuts, we assert that this move should be coupled with special provisions outlining which specific debt service items Congress will reduce, and stipulating the repeal of the automatic debt service law. The approved debt cut, in effect, will just be a sham for it will just be vetoed by the executive who can always cite this law,” added Fabros.
Because of this, what the Congress legislated in the 2009 budget is, in effect, a ‘debt-for-pork’ swap, the group said.
“Unlike in the 2008 budget, wherein they explicitly stated which illegitimate debts they are going to refuse payment to, such as the Austrian Medical Waste Incinerator project, the 2009 debt reduction is shrouded with ambiguity and dirty tricks,” FDC said.
The “evil” in the budget law serves as a convenient justification both for Malacañang to continue paying for illegitimate debts and for the Congress to increase their pork allocation in exchange for more debts,” according to FDC.
“We can expect the government to borrow more to fund these Congressional insertions – a substantial part of which is pork. The reason why deficit increases as we reduce our debt service to increase spending on other budgetary items is that, in the end, debt service cannot and will not be reduced under the present budget law. Thus, we are challenging our lawmakers to repeal this ‘evil’ law,” FDC said. -30-