Stressing there is enough legroom for debt renegotiation.
The Freedom from Debt Coalition today welcomed the decision of Senate finance committee chair Sen. Juan Ponce Enrile to restore the Lower House's special provision in the 2008 national government budget suspending interest payments for questionable and fraudulent loans "pending renegotiation and/or condonation."
FDC president Ana Maria R. Nemenzo said the Senate move is a step in the right direction, but is not enough to provide more funds for essential services like education and health.
"These essential services deserve even greater attention and increases this time considering that they have been deprived of adequate support in the past years," said Nemenzo.
The special provision stipulated in the House approved budget bill stressed that "no amount shall be used for the payment of interest payments on debts which are challenged as fraudulent, wasteful and/or useless, like but not limited" to what FDC labeled as illegitimate debts. These loans include the Austria Medical Waste Project, Small Coconut Farms Development Project (SCFDP), Telepono sa Barangay Project, among others.
Earlier, FDC expressed its serious disappointment over the decision of Senator Enrile to restore P12.1-billion worth of repayments for questionable loans and slash P4.2 billion from the House approved budget for health services in the Senate version of the 2008 national government budget.
House Bill No. 2454 was praised for taking bold steps in addressing debt service payments and earmarking an additional P17.8 billion for important social services like education and health. This amount was sourced from more than P6 billion worth of savings as a consequence of a favorable US dollar exchange rate and about P11 billion worth of suspended interest payments for debts challenged by FDC as illegitimate.
The Senate, however, restored these cuts "to provide more legroom for the payment of interest on so-called tainted or fraudulent loans" and identified P5.7 billion worth of savings from favorable foreign exchange rate.
"Contrary to Senator Enrile's fear, there is enough legroom for renegotiation if both the Senate and House of Representatives peg the peso-dollar assumption at a more realistic rate and if they stop the arbitrary allocation of interest payments for proposed loans and projects. In fact, we are talking of P18.86-billion worth of legroom here, more than enough of the P17.8-billion House cut," stressed Nemenzo.
She explained that the executive branch allotted $2.27 billion as interest payments for foreign debts, pegging its assumption of the peso-dollar exchange rate at $1=P48, while the Lower House at $1=P45 resulting in P6.8 billion in reduction.
"If we peg the peso-dollar exchange rate at $1=P42, then we will have P13.8 billion in savings," Nemenzo said.
Further, the government earmarked $40.25 million as interest payments for proposed program loans and $75 million for proposed bonds next year. It also allocated $5.26 billion for proposed project loans with interest payments.
"All in all, we would be paying $120.5 million or P5.06 billion (at $1=P42) for interest payments for these proposed loans alone. These interest payments can possibly be stricken out together with interest payments for illegitimate debts because it is not covered by the automatic appropriations provision, which only mandates automatic appropriation for existing, not future or planned, obligations," said Nemenzo.
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