By Ted Aldwin Ong
Saturday, September 08, 2007
I FIND some sense in the statements of Albay Representative Edcel Lagman, chairman of the House Appropriations Committee, when he said that “”If we want to sustain and enhance the economic gains we have achieved and ensure that our people will truly reap the benefits of economic growth, we have to first resolve the twin problems of a ballooning population and huge debt service.”
Debt servicing has been eating almost 50 percent of national budget through automatic appropriations. The Arroyo regime is considered the run away winner as far as debt accumulation is concerned in financing its government among post 1986 EDSA administrations The Arroyo is also the record holder in terms of debt payments. In such a short period of time Mrs. Arroyo has borrowed a total of P2.82 trillion in while paying a total of P2.83 trillion.
While Representative Lagman expressed a significant point on the impact of debt servicing to economic growth, it needs to take an important step by looking into the legitimacy or illegitimacy of government debts especially the contracts entered by the Arroyo regime.
It is undeniable that the national government has entered into numerous projects which proved to be disadvantageous to the Filipino people. At the end, it is the people – the taxpayers, who bare the responsibility of paying anomalous projects. Ultimately, it is also the people who suffer the lack of appropriations for social services because debt servicing automatically absorb a big chunk of the national budget.
Let us look into the concept of the illegitimacy of debt in order for us to fully understand why some projects are by nature illegitimate, thus it must not be paid by taxpayers.
Lidy Nacpil, coordinator of Jubilee South-Asia Pacific Movement on Debt and Development who is also the vice-president of the Freedom from Debt Coalition-Philippines, has thoroughly discussed the concept of illegitimate debts.
The concept of legitimacy is a broad concept that touches on the principles of human rights and sustainable human development, justice and fairness, accountability and responsibility, sovereignty of people’s and nations, democratic rights and processes.
Loans which violate these principles are deemed to be illegitimate – or unacceptable. This violation occurs in the elements necessary in the acquiring of the debt and its impact, which includes, illegitimate processes, illegitimate terms and contractual obligations, illegitimate purposes and illegitimate use of the funds, illegitimate origins, illegitimate impact of debt servicing and illegitimate practice of using debt, debt relief, and access to credit as leverage for imposing conditionalities.
So much of the word “illegitimate” but numerous projects fall under this concept and category like the Social Studies textbooks and teachers’ manuals for public elementary and high schools, the Austrian Medical waste Projects, the North Luzon Railways Project, the Small Coconut Farms Project and the Power Sector Restructuring Program. (To be continued)
(Comments to firstname.lastname@example.org)
MANILA, Philippines—The government has reported a 23.4-percent increase in its borrowings in the first four months of the year, as expenditures rose due to economic pump-priming efforts.
Data from the Bureau of the Treasury showed that from January to April, the government borrowed P246.4 billion from here and abroad, higher than the P199.74 billion incurred in the same months in 2008.
As of end-April, the government has availed itself of P100.73 billion in foreign loans or 55.4 percent higher than the P39.44 billion contracted a year ago.
The increase was mainly due to the sale of $1.5 billion or P71.386 billion worth of global bonds in January, as well as the tapping of project loans from the Asian Development Bank, International Bank for Reconstruction and Development and the Japan Bank for International Cooperation.
Also, the government borrowed from domestic lenders P145.65 billion, which was 9 percent lower than the P160.23 billion contracted in the first four months last year.
The decrease was partly because of a debt swap implemented in January, which involved a total of P136.6 billion.
Conducted through the government’s debt consolidation program, the swap involved maturing five- and seven-year benchmark bonds that were traded for issues of the same tenors.
Further, the government paid in the first four months of the year a total of P62.56 billion of foreign loans and P135.46 billion of domestic obligations.
This brought the country’s end-April net borrowings to P48.36 billion or 332 percent higher than the P11.2 billion a year ago.
In April alone, the government borrowed P5.8 billion from foreign lenders, a decrease of 72 percent from P17.08 billion in the same month last year.
Borrowings from local lenders amounted to P26.62 billion or 11.9 percent lower than the P30.22 billion a year ago. This resulted in a net borrowing of P18.87 billion in April, a reversal of a net payment of P1.3 billion in the same month last year.
By Des Ferriols Updated April 24, 2009 12:00 AM
MANILA, Philippines – Government borrowings soared 130 percent in the first quarter of this year as the budget deficit of the Arroyo administration more than doubled during the review period.
Data from the Bureau of the Treasury (BTr) showed that the government borrowed a total of P351.29 billion from January to March this year – about P198.86 billion more than the P152.43 billion it borrowed in the same period last year.
The Department of Finance (DOF) said the increase in government borrowing was made necessary as the deficit also increased to P119.7 billion, overshooting its quarterly ceiling and surpassed its P51.6-billion deficit over the same period last year.
The government’s foreign borrowings increased by more than four-fold to P95.68 billion in the first quarter of the year from P22.36 billion.
The increase resulted from the doubling of the government’s foreign commercial borrowing from $750 million last year to $1.5 billion.
The government also availed of more official development assistance loans from multilateral lending institutions such as the World Bank, Asian Development Bank, Japan Bank for International Cooperation, and others.
Official development assistance or ODA loans in the first three months included P9.622 billion from the World Bank’s International Bank for Reconstruction and Development for “Food Crisis Response,” another P7.056 billion from ADB for the “Government Justice Reform,” and P4.63 billion from JBIC for the Development Policy Loan.
These were quick-disbursing program loans that went directly into the budget.
The government also used up P2.99 billion worth of project loans from international lenders in the first quarter of the year—these were funds that would be spent specifically on projects lined up for the purpose.
On the other hand, the government’s borrowings from domestic creditors almost doubled P255.61 billion in the first quarter from P103.1 billion in the same quarter last year.
Data showed that the BTr issued P144.5 billion worth of five- and seven-year benchmark bonds as it retired P136.6 billion worth of existing bonds in January as part of measures to boost the liquidity of the domestic bond market.
On the other hand, the BTr said the country also paid P321.8 billion worth of foreign-denominated debt as well as Treasury bills (T-bills) and Treasury bonds (T-bonds) from January to March, or P182.68 billion more than the P139.12 billion it paid in the same period last year.
In all, the BTr said the government borrowed P29.49 billion in the first quarter to finance the budget deficit.
The Arroyo administration has increased its borrowing for 2009 to P613.9 billion after it revised its deficit ceiling from P172 billion to P199 billion in anticipation of a bigger slowdown in the economy.
The bulk of this year’s government borrowing will remain domestic, but the proportion would decline slightly to 72 percent from the previous level of 75 percent.
Finance Undersecretary Roberto Tan announced that the revisions in the borrowing requirement for this year stemmed from the increase in the deficit ceiling.
The government was also forced to increase the amount it had to borrow because revenues were declining this year, indicating that there would be no other way to finance the increase in its spending.
By Iris C. Gonzales Updated March 13, 2009 12:00 AM
MANILA, Philippines – The National Government’s debt swelled to P4.221 trillion in 2008 from the P3.712 trillion incurred in 2007, the Bureau of the Treasury reported yesterday.
The 2008 debt stock ballooned by P508.4 billion or 13.7 percent more than the previous year’s level, data showed.
Of the P4.221 trillion, the government owed P2.414 trillion to domestic creditors and P1.806 trillion to foreign lenders, data also showed.
The government’s domestic loans in 2008 rose by P213.2 billion compared to the P2.201 billion incurred in 2007 or an increase of 9.7 percent.
Similarly, the government’s foreign loans jumped to P1.806 trillion or P295 billion more than the P1.511 trillion recorded in 2007.
At P4.221 trillion, theoretically, each of the 90.4 million Filipinos is indebted by P46,692.50.
Compared to the government’s debt stock level as of end-November 2008 of P4.236 trillion, the National Government’s debt as of end-December 2008 is lower by 0.4 percent or P15 billion, data from the Treasury also showed.
“The decrease in the National Government’s foreign debt of P25 billion or 1.4 percent from the level as of end-November 2008 was due to the P5 billion net repayment and P52 billion appreciation of the peso against the US dollar,” the Treasury said.
On the other hand, the Treasury attributed the increase in domestic debt of P10 billion or 0.4 percent from the recorded end-November 2008 level to more issuances of Treasury bills and bonds.
The government relies heavily on foreign and domestic loans to pay maturing debts and finance its budgetary needs.
Through the years, fiscal authorities have been stepping up efforts to fix the country’s fiscal position.
In 2008, the National Government incurred a budget deficit of P68.1 billion which was below the P75 billion ceiling for the year but higher than the P12.4 billion deficit incurred in 2007, latest data from the Finance department showed.
For this year, the government hopes to contain the deficit at P177.2 billion, higher than the previous program of P102 billion.
Government economic managers revised the deficit ceiling for 2009 given the impact of the global financial turmoil on the Philippines.
View previous articles from this author.
By Iris C. Gonzales Updated September 03, 2008 12:00 AM
The government has programmed to spend P681.516 billion for debt service payments in 2009, 7.1 percent higher than this year’s allotment of P636.075 billion, the Bureau of the Treasury (BTr) reported yesterday.
Of the amount, the government plans to spend P482.138 billion for domestic debts and P200.378 billion for foreign loans.
The P482.138-billion debt service allocation for domestic obligations covers payments for principal amortization, amounting to P290.031 billion and interest payments, amounting to P191.107 billion.
On the other hand, the P200.378-billion debt service allocation for foreign loans covers payments for principal amortization amounting to P88.835 billion and interest payments of P111.543 billion.
Next year’s debt service allocation is P45.441 billion higher than this year’s payments amounting to P636.075 billion.
This amount comprises of payments for domestic obligations (P448.357 billion) and payments for foreign loans (P187.718 billion), data further showed.
The P448.357-billion debt service allocation for domestic obligations covers principal amortization amounting to P264.667 billion and interest payments of P81.305 billion.
On the other hand, the P187.718-billion debt service allocation for foreign loans covers principal amortization (P81.305 billion) and interest payments (P106.413 billion).
The government has been trying to reduce its debt service payments to have more funds for the more necessary expenditures such as infrastructure and social services spending.
However, fiscal authorities have decided to postpone the government’s fiscal consolidation program due to the difficult global economic tide this year. As such, the government expects to incur a deficit of P75 billion this year as it has already postponed its balanced budget goal to 2010.
For 2009, the government is looking at incurring a deficit of P40 billion. The government is seeking a budget of the P1.415 trillion for 2009, which is premised on revenues of P1.393 trillion.
View previous articles from this author.
By Ma. Elisa P. Osorio Updated December 30, 2008 12:00 AM
The Free Trade Alliance (FTA) is urging the government to revise its policy on the payment of foreign debt and instead use the money for projects that would create jobs for Filipinos especially the overseas Filipino workers who are expected to be displaced because of the global recession.
“We also demand that the government immediately put a halt to the senseless automatic appropriation of two-thirds of the national budget for debt servicing,” the FTA.
“We should instead adopt the Argentinian budgeting system, which makes allocation for debt servicing only after urgent adequate allocations have been made for urgent and priority social spending,” the group said.
In a resolution signed during the recently concluded national forum on “Bailing out the Philippine Economy” the FTA said the country, like other nations, need a stimulus package in order to help pump prime the economy.
The government must increase its spending especially on infrastructure and job creation projects in order to spur the economy.
“The Philippines need a large stimulus package directed at the domestic market to preserve and create millions of jobs,” the group said.
“The government should be able to spend as much as it can on productivity-raising infrastructures such as school buildings, renewable energy, communal irrigation projects, farm-to-market roads, harvest silos, barangay health clinics, public transport systems and so on,” FTA said.
Likewise, the FTA said the government must re-think its policy of opening up the local market to imported products.
Earlier the government removed the duty for the importation of certain products like cement.
FTA said this is not the time to allow cheaper products to enter the country. Instead, the government must help protect local industries in order to keep local jobs.
“We urge our government and policy makers to immediately put in place the much-needed safety nets for our working people, including our industrialists and entrepreneurs. One effective safety net, to preserve jobs and industry, is to adjust our industrial and agricultural tariffs toward our maximum bound tariff commitments to the WTO (World Trade Organization),” the group said.