Press Release
October 23, 2009

RP SHOULD SEEK DEBT RELIEF TO FREE FUNDS FOR REHAB PROGRAM

Senate Minority Leader Aquilino Q. Pimentel, Jr. (PDP-Laban) today urged economic managers of the Arroyo government to seek a suspension of the payment of some, if not all, of public debts instead of resorting to new borrowings to finance the costly rehabilitation of communities and rebuilding of public infrastructures destroyed by typhoons Ondoy and Pepeng.

Pimentel said that although Congress has approved a P12 billion supplemental budget to replenish the Calamity Fund and get the relief and rehabilitation program going, this amount is insufficient for the purpose considering the magnitude of the devastation caused by the twin storms.

He bewailed that the government is forced once more to incur additional borrowings, starting with the flotation of $1.1 billion bonds to finance the reconstruction of public infrastructures, which will further bloat the public debt which will ultimately be shouldered by taxpayers.

"We should request foreign lending institutions for a debt moratorium so that we can realign and use a sizeable portion of the hefty debt service fund to the projects aimed at alleviating the plight of disaster victims and reconstructing roads, bridges, power and irrigation facilities that have been ruined and rendered unusable by heavy flooding and landslides," the senator from Mindanao.

He said it is disgusting that while the government is scrounging for funds and begging for international aid to pursue the relief and rehabilitation efforts, it is forbidden from touching and realigning the appropriations for debt service to this extremely urgent national undertaking.

Of the 1.541 trillion national budget for fiscal year 2010, a total of P253.459 billion is earmarked for servicing of foreign debt alone.

Pimentel said that the administration's economic managers should not be squeamish about seeking a postponement of loan repayments from foreign commercial banks and multilateral financing institutions because they have granted such debt relief scheme to countries which encountered financial crisis in the past.

"It would be unconscionable and insensitive on the part of the government to continuously allow a large fraction of the national budget to be gobbled up by debt payments when such money is badly needed by the nation to rebuild public infrastructures and to help the agriculture and industrial sectors recover from enormous losses inflicted by the natural calamities," he said.

Pimentel rejected the usual argument of economic managers that a debt moratorium will erode the country's international credit standing. He dismissed such reasoning as baseless since the Philippines has earned the reputation as a good debtor for religiously settling its payment obligations.

He lamented that the government went to the extent of fully paying more than $2 billion foreign loans spent on the Bataan nuclear power plant despite the fraudulent terms and circumstances under which the loans were incurred and the fact that the plant has never been put to use due to alleged defects.

Instead of merely seeking a debt payment suspension, the veteran parliamentarian said the government should pursue the proposal to negotiate for a condonation and repudiation of fraudulent and onerous foreign loans that have made the Philippines a hostage of the global bank cartel.

Likewise, he said Congress should muster the political will to repeal the so-called automatic debt payment embodied the infamous Marcos-era Presidential Decree 1177.

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