Press Release
November 28, 2007

As best deterrent to behest loans Pia bats for repeal of Automatic Appropriations Law

Saying it is the best way to curb the morally improper behest loans, Senator Pia S. Cayetano today pushed for the repeal of the Automatic Appropriations Law (Presidential Decree 1177).

According to Cayetano, repealing PD 1177 would give lawmakers more power to scrutinize payments for debts incurred by the executive branch, particularly those tainted with irregular deals.

"Beyond conducting inquiries on questionable foreign-assisted projects, Congress should have more say on how public funds are being spent for debt servicing which is automatically appropriated in the national budget every year, and therefore cannot be touched by lawmakers," said Cayetano.

"Right now there seems to be no other deterrent for the government, creditors and private groups to connive and come up with such horrible deals, the consequence of which is that the cost of these are just added on to our national debt with the automatic appropriations law in place," she added.

The lady legislator stressed that the conditions at the height of the debt crisis in the 1980s which led to enactment of the 'Automatic Appropriations Law' may no longer be valid today.

"What may be the conditions then may no longer be valid anymore. Industrialized countries and multilateral financial institutions have in fact moved to write off the illegitimate debts of least developed countries in recent years," she pointed out.

Cayetano likewise expressed concern over the dwindling budget allocation for social services amid reports of corruption in foreign assisted projects persist.

She cited the $223-million loan for the national road project that was recently suspended by the World Bank, the cancelled NBN-ZTE deal, the Telepono sa Barangay Project, and the North Luzon Railway project, among others.

Aside from empowering Congress to initiate a check and balance system over behest loans, she said, there should also be a parallel move by the executive branch to file cases in any of these overpriced projects that have been accumulating in the last few decades," she said.

"This will send the clear message to our creditors that this practice will not be tolerated, and it will also make it easier to distinguish between an illegitimate and legitimate debt," she said.

Cayetano said identifying these so-called 'illegitimate' debt would allow Congress to free up public funds for social services and help the country meet its commitments to reduce poverty and improve education and health programs under the millennium development goals.

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