Anti-debt watchdog claims P 14.7 billion worth of interest payments was slashed without clear reallocationMANILA, Philippines
17 November 2008
Debt & Public Finance
- The Freedom from Debt Coalition (FDC) today asked the 14th House of Representatives to explain the P14 billion debt payment reductions it made in the proposed P1.415 trillion 2009 National Government Budget which was passed by Congress on third and final reading last November 11.
In a statement, FDC President and University of the Philippines Sociology Professor Walden Bello expressed the group’s strong apprehension concerning the manner the debt cuts were made.
“In principle, we are in favor of reducing the country’s debts as we believe the continuing burden of paying these ‘obligations’, many of which are challenged as illegitimate, is one of the biggest obstacle in realizing genuine economic development,” Bello said.
Bello said FDC has been pushing for the non-payment of illegitimate, fraudulent, wasteful and/or useless debts by rescinding debt-creating laws as well as by pushing for meaningful reforms in the budget.
“However, the way it was slashed by Congress is troubling. It lacks transparency regarding where the slashed debt payments will be reallocated, a clear operational stipulation that would guarantee its successful execution is absent and Congress was silent about this,” Bello said.
FDC said from the original P302,650,000 billion allotted budget for debt interest payments as proposed by the Executive Department, Congress reduced it to P287,874,003 billion leaving a total debt reduction of P14,775,997 billion.
Interestingly, the anti-debt watchdog in the 2009 Budget proposed a suspension of P14.9 billion worth of interest payments from seventeen (17) questionable loan agreements and proposed loans and its transformation as an augmentation budget to important social services as proposed by the Alternative Budget Initiative (ABI) group and the Task Force Food Sovereignty (TFFS).
Bello said suspicion that the social movements’ demands and alternative budget proposals might be used to push for the vested interests of some such as transforming the appropriations bill into an election budget.
“With the national elections just around the corner, the temptation to use the people’s resources as the personal campaign kitty of some is very likely,” Bello said.
Bello also highlighted the reallocations made by Congress on the 2009 budget and stressed the need for strict scrutiny.
FDC specifically drew attention to the augmented budget of the Department of Public Works and Highways (DPWH) which got a whopping P8.16-billion increase. From the original DPWH budget of P112,364,674 billion as proposed by the executive department, its budget turned into P120,530,374 billion.
"The DPWH is well known as a cesspool of corruption, with infrastructure contracts being a well known mechanism for dispensing political favors especially during election time. While government spending at a time of economic slowdown is justified to counter recession, there are other forms of social spending that would be more effective," Bello asserted. He added: "Moreover, whatever channel public spending takes, its allocation, appropriation, and implementation must be transparent. This is not the case here."
FDC will ask Rep. Junie Cua, Chairperson of the powerful Committee on Appropriations of the House of Representatives to explain and give ample details to Congress’ amendments of the 2009 budget particularly on debt cuts and increased social spending. The group will also seek the assistance of the Senate concerning the following issues as it takes its turn in deliberating the proposed 2009 budget.
“To be fair to our legislators, we are giving them the benefit of the doubt and the chance to explain their side on this issue,” Bello said.
“Their decision to surreptitiously cut debt payments might be due to their sincerity to reduce the country’s debt burden or their way to skirt the veto powers of the President concerning debt cuts. Yet, we maintain any decision concerning the people’s resources without their knowledge, participation and judgment are themselves breeding grounds for more corruption, plunder, disempowerment and the perpetuation of fiscal dictatorship,” Bello asserted.
In the 2008 National Government Budget, FDC was successful in convincing both chambers of Congress to provide a special provision in the budget to suspend interest payments to loan agreements challenged as fraudulent, wasteful and/or useless.
It was also successful in further reducing debt payments by persuading Congress to peg the foreign exchange rate at a more realistic level as well as the suspending payments to dubious proposed loans.
However, President Gloria Macapagal-Arroyo vetoed the said provision using the protection of the country’s credit-rating, the non-violation of contract laws and the automatic debt servicing provision as pretexts. -30-