Repeal Debt Service provision of the Revised Administrative Code of 1987

On the 2008 National Government Budget

The recent ruckus on the 2008 National Government Budget involving the Executive Department, lawmakers and other stakeholders must go beyond deceptive rhetoric and deadbeat legalism. The Freedom from Debt Coalition (FDC) believes former Senator Franklin Drilon is raising an important issue regarding pork barrel insertions in the Appropriations Bill. However, the Executive Department is using the issue to derail progressive reforms in the budget concerning debt and development.

We strongly condemn Malacanang's hypocritical attempt to use the legitimate ire of the people against the pork barrel allocations as a pretext to reject important progressive revisions on debt payments so as not to incur the fury of the global lending community.

We must not forget that Arroyo herself enjoys a far bigger pork barrel in the form of un-auditable unprogrammed funds in the budget as well as the off-budget presidential discretionary funds.

The Freedom from Debt Coalition would be one for the first to say that the Appropriations Bill is imperfect, indeed far from being responsive to the urgent needs of the people and the requirements of equitable, sovereign and sustainable development. Not only is it riddled with pork barrel insertions, the allocations for essential services such as health, education and housing are woefully inadequate while allocations for interest payments on the debt capture a much bigger chunk of the funds.

But this particular Bill is historical because for the first time, special provisions were included that call for the suspension of interest payments on an initial set of loans identified as illegitimate as well as payments to unsecuritized Marcos debts. Though we expect that the Executive will invoke the archaic automatic appropriations law on debt payments to over-ride these provisions, the passage of these provisions by the House of Representatives constitutes a major political victory in our fight against illegitimate debts.

The Freedom from Debt Coalition urges the Bicameral Conference Committee on the 2008 Budget to exercise political will and uphold the special provisions on debt payment reductions and the re-allocation of the consequent savings to social services. We also demand the all-out scraping of built-in fat in the budget for patronage expenditures.

Lastly, we call on the Congress to pass HB 329 repealing the automatic Debt Service provision of the Revised Administrative Code of 1987 (formerly PD 1177).

Independent Citizen’s Debt Audit Commission pushed

Expressing alarm over the extent of public debt that this administration and its predecessors have contracted through the years, around 1,000 campaigners from more than a hundred local and national organizations have gathered here Saturday and launched a people's petition calling for the immediate constitution of an Independent Citizens' Debt Audit Commission.

Citing the "stampede of white elephants" that rocked the administration last year, members of People Against Illegitimate Debt (PAID!) stressed it is high time the people themselves initiated a bold move to address the perennial debt problem.

Lidy Nacpil, PAID! convener and Freedom from Debt Coalition vice president, said that while their group has been campaigning for an official Congressional Audit of Public Debt and Contingent Liabilities in the House of Representatives, they believe that an independent citizen's audit is also crucial. Albay Rep. Edcel Lagman has re-filed a joint resolution pushing for the official debt audit.

Debt burden

In a manifesto, the group explained that as of November 2007, the national government has a debt of PhP3.8 trillion, or $81.6 billion, with the Filipino people shelling out PhP1.1 million every minute for debt service.

"More than just the burden of payments, there is the fundamental injustice that while citizens are forced to pay, much of these debts was contracted without full public transparency and accountability, and without full compliance with democratic processes, and did not benefit the people. Many loans were accompanied by unfair terms and harmful conditionalities. A significant number have been tainted with deception and fraud, or used for questionable purposes such as financing of priced, ill-designed, unnecessary, and even inoperable programs and projects, or repayment of earlier loans for onerous projects such as the Bataan Nuclear Power Plant," the manifesto said.

Objectives

Nacpil explained that the Citizen's Debt Audit Commission aims to conduct a critical, comprehensive, participatory and transparent examination of the Philippine public debt and contingent liabilities based on data and existing studies by resource persons and organizations, on studies prepared by working groups and technical teams, and on testimonies and inputs from affected communities, sectors and people's organizations.

It also aims to formulate policy proposals and advocacy platforms.

'White elephants'

"Last year, we witnessed, through the media, a lot of controversial loan agreements entered into by the current administration as well as its predecessors. The ZTE-National Broadband Network (NBN) project, the World Bank textbook scam, the Cyber Education Project (CEP) and the Austrian Medical Waste Loan are just some examples of these illegitimate debts," said Nacpil.

EcoWaste Coalition's Manny Calonzo said the mothballed Austrian incinerator project is a "toxic debt" which will not only hurt our already empty pockets but will be the yoke of the succeeding generation because of its environmental impact. Ecowaste Coalition is calling not only for the cancellation and/or repudiation of the project but also reparation for the ecological damage it caused during the dirty technology's two-year operation.

For her part, Bianca Lapuz of Youth Against Debt (YAD) said the World Bank textbook loan project is the height of insult. "The loan is truly wounding in the sense that it demands our poor parents, already incarcerated to a life of indebtedness to pay more for 'debts' that have only managed to produced erroneous schoolbooks," Lapuz said.

Meanwhile, Benjo Basas, President of the Teacher's Dignity Coalition (TDC) scored the controversial Cyber Education Project (CEP) as the result of the government's lack of common sense in dealing with priorities. "The government should give paramount attention to the basic ills of Philippine education like its decaying curriculum, shortage of classrooms and school buildings, instead of flirting with an expensive backbone project that has all the signs of becoming a white elephant project," Basas said.

"These debts are illegitimate and continued payment of these loans violate basic human rights, democratic principles and people's sovereignty, and hold the Filipino people captive to the chains of poverty and underdevelopment," according to the manifesto.

Citizen's Commission

The Independent Citizens' Debt Audit Commission, consisting of not more than 30 individuals of proven probity, credibility and expertise, shall be conducting a comprehensive audit of all public debt and contingent liabilities aiming for an accurate historical, contextual and comprehensive examination of the Philippine debt problem.

Further, the Commission shall, on the basis of the Audit, identify immediate steps as well as far-reaching solutions towards eradicating the debt burden and correcting structural and systemic flaws and deficiencies that contributed to debt accumulation and domination. The examination of structural issues shall not be confined to the Philippine system but address the international financial architecture. The audit should examine not only the responsibility and culpability of the Philippine government and other institutions involved, public and private, but also address the responsibility and culpability of international financial institutions and other lenders, government and commercial.

International campaign

Also present during the public launch of the People's Petition were debt and development activists from Latin America, Africa and Asia. They took turns in sharing their experiences and plans in building a strong international campaign against global debts.

Pledge of commitment

Lighting a thousand candles, members of the Peoples Against Illegitimate Debt (PAID), together with kindred organizations pledged their commitment to undertake the necessary preparations in liberating the country from illegitimate debt in the soonest time possible.

**********

The People Against Illegitimate Debt (PAID!) is a broad network of different social movements, civil society leaders, people's organizations, communities and personalities that are committed in developing and strengthening a popular movement against illegitimate debt.

It aims to broaden the debt discourse by raising critical questions about the issue by not reducing the problem to mere queries concerning affordability, management and sustainability but rather by posing the question of the illegitimacy of the debt based on historical, political and social roots.

In the immediate, it aims to introduce and popularize the concept of illegitimate debt by campaigning against debts and/or "obligations" that were incurred to finance flawed and anti-people development projects, loans that were conceived by illegitimate governments or debts that undermine genuine human development and ecological balance, while calling for its immediate cancellation and repudiation.

PAID! also intends to build a strong public clamor for the creation of an Independent Citizens' Debt Audit Commission. This citizens' initiative will complement the highly awaited Congressional auditing of public debt by filling gaps in the inquiry, raising questions beyond the limits of the parliamentary initiatives, and by putting forward bolder recommendations sourced from the people's genuine standpoint on the problem.

RP debt campaigners to launch petition for the creation of Citizen’s Debt Audit Commission

Campaigners from more than a hundred local and national organizations here will gather on Saturday, January 12, at the St. Joseph College Mater Dei Auditorium, E. Rodriguez St. in Quezon City for the public launch of People’s Petition calling for the creation of an Independent Citizens’ Debt Audit Commission whose members will include civil society leaders, political analysts and respected economists.

In a press briefing, leaders of People Against Illegitimate Debt (PAID!) movement said the event marks the first General Assembly of its member and affiliate organizations and individuals. The event will also feature speakers from the debt campaigns of other countries who will share their experiences and recent major developments in the international debt movement.

Lidy Nacpil, vice president of the Freedom from Debt Coalition (FDC), said that it has been more than five years since they sounded the alarm of a full-blown fiscal and debt crisis and still the government failed to what is right for the country. She said that among the indicators of the debt and fiscal crisis include: the government’s huge deficit since 1999; interest payments on the National Government (NG) debt has skyrocketed; and, government borrowings have reached unprecedented levels.

“FDC has been campaigning for an official Congressional Audit of Public Debt and Contingent Liabilities and we have been working with lawmakers in the House of Representatives, especially Rep. Edcel Lagman who re-filed a legislative resolution calling for an official audit of all public debts and contingent liabilities. We believe that an Independent Citizens Debt Audit is also crucial. Hence, together with the People Against Illegitimate Debt Movement the process, we are starting the process with then opening of the this new year” said Nacpil, also the international coordinator of Jubilee South.

“The citizen’s initiative will raise questions beyond the limits of the parliamentary initiatives, and by put forward bolder recommendations based on people’s perspective on the problem,” said Nacpil.

PAID! leaders explained that citizen’s debt audit aims to conduct a critical, comprehensive, participatory and transparent examination of the Philippine public debt and contingent liabilities based on: data and existing studies by resource persons and organizations; studies prepared by working groups and technical teams; and, testimonies and inputs from affected communities, sectors and people’s organizations.

The audit also aims to formulate policy proposals and advocacy platforms.

“Last year, we witnessed, through the media, a lot of controversial loan agreements entered into by the current administration as well as its predecessors. The ZTE-National Broadband Network (NBN) project, the World Bank textbook scam, the Cyber Education Project (CEP) and the Austrian Medical Waste Loan are just some examples of these illegitimate debts,” said Nacpil.

FDC described this as the ‘great white elephant stampede’, referring to loan agreements and ‘development projects’ that are on the pipeline or have overwhelming potentials of becoming ‘white elephant’ or useless yet expensive projects.

“This gives further credence to our assertion that a big chunk of debts claimed from the Philippines were spent on unnecessary and over-priced infrastructure programs and projects. These are hidden in our national government budget and expenditure books,” said Nacpil.

During the 13th Congress, the debt watchdog was successful in getting the joint resolution on debt audit passed unanimously by the House of Representatives. However, it was stalled in the Senate due to the inaction of some legislators, coupled with the political crisis involving no less than Mrs. Gloria Macapagal-Arroyo herself.

**********

The People Against Illegitimate Debt (PAID!) is a broad network of different social movements, civil society leaders, people’s organizations, communities and personalities that are committed in developing and strengthening a popular movement against illegitimate debt.

It aims to broaden the debt discourse by raising critical questions about the issue by not reducing the problem to mere queries concerning affordability, management and sustainability but rather by posing the question of the illegitimacy of the debt based on historical, political and social roots.

In the immediate, it aims to introduce and popularize the concept of illegitimate debt by campaigning against debts and/or “obligations” that were incurred to finance flawed and anti-people development projects, loans that were conceived by illegitimate governments or debts that undermine genuine human development and ecological balance, while calling for its immediate cancellation and repudiation.

PAID! also intends to build a strong public clamor for the creation of an Independent Citizens’ Debt Audit Commission. This citizens’ initiative will complement the highly awaited Congressional auditing of public debt by filling gaps in the inquiry, raising questions beyond the limits of the parliamentary initiatives, and by putting forward bolder recommendations sourced from the people’s genuine standpoint on the problem.

Andaya insists budget without debt-service slash

The Freedom from Debt Coalition today criticized Budget Secretary Rolando Andaya Jr. for floating the idea of imposing the presidential veto power over the decision of the House of Representatives to slash by P17.8 billion the foreign debt service appropriation in the 2008 national government budget.

FDC president Ana Maria R. Nemenzo said the “signal about what action [Malacañang] might take” sent by Secretary Andaya last Thursday is not only a threat to the independence and integrity of the Congress, but also a violation of the rights of the people to enjoy the taxes they pay through better and quality social and economic services.

“The statement of Secretary Andaya is an insult to the Congress and the beneficiaries of these debt service cuts—the taxpayers,” stressed Nemenzo, adding that the budget secretary is “either playing dumb or fooling the public.”

FDC criticized Secretary Andaya for saying that the reallocation of any cuts from interest payment would translate into additional spending and calling it “unconstitutional.”

“What is he talking about? Both the Senate and the House of Representatives maintained the total 2008 national government budget of P1.227 trillion. There is no additional spending, only re-channeling of funds from bloated foreign debt service pegged at a very high exchange rate to essential services,” said Nemenzo.

The debt watchdog explained that if the government considers pegging the peso-dollar exchange rate at a more realistic level of P42 to a dollar, striking-out interest payments for proposed loans not covered by automatic appropriations law on debt servicing worth P5.1 billion, and suspending interest payments for illegitimate debts ranging from P4 to P6 billion, then there will be enough funds for basic and higher education, health care, environment and agriculture.

“We have identified more than P21-billion foreign debt service-related budget as a feasible and additional source of financing for social and economic services,” stressed Nemenzo.

Malacañang’s proposed foreign debt service budget is pegged at P46 - P48 to a dollar.

For his part, Senate Minority Leader Aquilino "Nene" Q. Pimentel, Jr. issued a challenge to Congress Friday “to muster its political will to repeal the moribund martial law decree on automatic appropriation for debt payments to remove legal doubts whenever the legislature decides to reduce the debt service allocation in the annual budget.”

He debunked the Palace's argument that the country's credit-worthiness will be shattered if the automatic appropriation law for debt payments, as embodied in Presidential Decree 1177 issued by the late President Ferdinand Marcos, will be rescinded. PD 117 is now part of Section 26 (b) Book 6 of the Revised Administrative Code of 1987.

"Mr. Marcos is long gone. And yet, we continue to adhere to this kind of an imposition on the theory that we cannot borrow anymore if we do away with the law on automatic repayment of our debt," he said.

"That is not necessarily correct. The capacity of the country to pay is the primary consideration why lenders would extend to us loans that we need, and we have to justify the loans from time to time," Pimentel said.

FDC’s Nemenzo agreed with Pimentel, saying that Congress should fight to reclaim its “power of the purse” from the executive branch.

“The warning issued by Secretary Andaya is an indication that the executive department does not respect the independence of both Houses of Congress. The need to reclaim that power from a perceived ‘most corrupt’ president is very urgent,” said Nemenzo.