The Freedom from Debt Coalition today denounced the recent statement of Budget Secretary Rolando Andaya Jr. that the debt service cuts made by lawmakers in the 2008 national government budget and realigned to various government agencies and services is contrary to law and to the government’s bid for a balanced budget this year.

FDC Secretary General Milo Tanchuling said that Secretary Andaya is deceiving the public that the entire P25.9-billion cut in the interest payment allocations is a violation of the automatic debt service provision in the Revised Administrative Code of 1987.

“Only P5 billion of this amount is covered by the automatic appropriations law on debt servicing. This P5 billion is embodied in the special provision in the ratified budget suspending interest payments on loans tainted with fraud and anomalies pending renegotiation and/or condonation,” Tanchuling said.

P15.9 billion of the total debt service cut is a result of the weakening US dollar, while the other P5 billion is for still to be borrowed loans and issued bonds.

According to reports, Secretary Andaya said that “[i]t’s our policy to have a balanced budget this year so we will have to reckon that alignment with the existing policy. At the very least, we would have to control that kind of an expenditure. We will not spend it, even if it is provided for, for it will affect our fiscal position. . . . It’s as good as vetoing it.”

“It is lamentable that Secretary Andaya uses a deceitful information strategy all in the name of a ‘balanced budget’ while hiding the policy of underspending on much needed services just to appease credit-rating agencies as well as lending institutions,” said Tanchuling.

FDC said even some of Mrs. Gloria Macapagal Arroyo’s key economic managers do not agree on this policy. Last year, both Finance Secretary Margarito Teves and National Economic and Development Authority chief Romulo Neri recognized that underspending is a serious problem.   

“We believe that debt service reduction in the 2008 budget is a strong political statement on the part of our lawmakers in reclaiming their constitutional right to the power of the purse. However, it is also a concrete victory for the social services sector as it tries to draw near the government’s backlog due to massive underspending and continuing prioritization of debt payments under the incumbency of Mrs. Arroyo,” Tanchuling said.

“If there is one thing the recent budget process has exposed, it is the automatic debt service provision in the Revised Administrative Code of 1987 that is anti-people and anti-development and therefore it must be repealed,” Tanchuling said. -30-

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