16 December 2008
Debt & Public Finance
– The debt advocacy group Freedom from Debt Coalition (FDC) today called the Senate-approved House Bill 5116, or the 2009 national government budget without a pronouncement of a moratorium on external debt payments a “sand castle,” saying that while aspects of the budget were “laudable,” it is still “not enough to respond to the global financial and economic tsunami that will hit us next year.”
“We commend the Senate for reducing the interest payments for government debts by P10 billion on top of the P14 billion interest payments reduction by the House of Representatives and transferring the said funds to a ’P10 billion Economic Stimulus’ fund,” FDC said.
FDC however said that anything less short of a debt moratorium will fail to adequately address the “simmering economic contraction.”
“The government should be bold and proceed with the debt cuts and follow the example of Argentina and the more recent example of Ecuador, which made a political decision not to pay for some of their debts,” FDC said.
The group earlier called for a P200 billion external debt moratorium in order to “protect the Filipino from the impending global economic contraction in 2009”.Anti-debt, Anti-‘fiscal dictatorship’ Champion
FDC found an ally with Senator Pia Cayetano, who recently called for the repeal of the automatic appropriations law on debt service, and who voted against the budget, citing the presence of illegitimate debts and lump-sum appropriations which gave undue fiscal powers to the president.
“We laud Senator Cayetano for her steadfast championing of the debt issue. It is time that the Senate had another Romulo who will ardently advocate for the reduction of debt servicing and for budget reforms,” FDC said.
FDC referred to former Senator now Foreign Affairs Secretary Alberto Romulo, who during his term, campaigned against the continued implementation and adoption of the new budget law of provisions from Presidential Decree 1177, the budget law during the Marcos dictatorship. The group said that the automatic appropriations law was copied en toto from Section 31 (B) of PD 1177.
“Thus, the next step would be the sponsorship of a Senate Bill amending Executive Order 292 or the Administrative Code of 1987, specifically repealing Section 26(B) which pertains to automatic appropriation for the interest payments and principal amortization of government obligations, and a Senate Bill calling for an audit of all public obligations,” FDC said.
The group said that two debt-related bills were already filed in the Lower House by former House Appropriations Committee Chair Cong. Edcel Lagman. House Bill 329 calls for the repeal of automatic appropriations on debt service while House Joint Resolution 4 calls for a Congressional Debt Audit.
Cayetano was also cited by the group for her “courageous no vote” on the HB 5116.
“Her ‘no’ vote for the 2009 national government budget is a statement against debt-friendly budgets and the ongoing ‘fiscal dictatorship’ by a very fiscally powerful president,” FDC said.
FDC added that the problems mentioned by Cayetano, including “provisions in the proposed budget which run counter to Congress constitutional mandate to hold the power of the purse” like lump sum items which lacks details on how the amount will be allocated and for whom is “merely the tip of a much larger iceberg.”
“Beyond the power to propose lump-sum appropriations, the executive can impound funds, realign savings, line-veto a budget passed by the legislative, delay the passing of the budget towards its reenactment, set the budget ceiling, and unilaterally contract loans. This makes the president a virtual ‘fiscal dictator’ effectively accountable to no one,” FDC said.Undisclosed
Meanwhile, members of FDC storm the Philippine Coconut Authority (PCA) office to call on the members of the Bicameral Conference Committee on the 2009 national government budget to enact a “special provision” against payment of illegitimate debts and proposed loans.
“While we laud both chambers of the 14th Congress in reducing debt service by as much as P25 billion despite a foreseeable threat of a veto by the executive, we still find that many details remain undisclosed,” FDC said, referring both to the details of the loans which debt payments earmarked for were cut and how the debt payments were realigned.
FDC then said that a listing of illegitimate debts which will not be paid should be explicitly included in a ‘special provision’ in order to prevent payments for “debts which underwent anomalous process and did not benefit the Filipino people.”
“It is ironic that the bicameral conference is being done in the PCA office, the home of an illegitimate debt, the Small Coconut Farms Development Project (SCFDP),” FDC said, adding that the US$121 billion project is the “original fertilizer scam” allegedly used to fund the Charter Change effort during the Ramos administration.
FDC also mentioned that the both chambers did better last year on illegitimate debts. “But for next year’s budget, it seems that it is so easy for Congress to cut debt payments, knowing that it will be paid anyway because of the automatic appropriation provision. Thus, whatever cuts they make to debts can only result to more deficit unless fundamental issues will be resolved.”
“The battle goes beyond the 2009 budget. But for now, we enjoin the bicameral conference committee to enact a budget which is transparent, pro-people, and free from illegitimate debts,” FDC said. -30-