The chairman of the Philippine Senate committee on finance has proposed the creation of a “council for debt relief” to tackle plans to lower the government’s outstanding debt of P3.36 trillion.

Sen. Manuel Villar on Thursday proposed the creation of a debt relief council that will tackle plans to lower the government’s outstanding debt of P3.36 trillion.

Villar, Senate finance committee chairman, said the council would review the government’s bilateral and multilateral loan agreements and propose ways to facilitate cancellation of odious debts or restructuring of debts to ease debt payments.

He said the government could ask foreign lenders to reduce the national debt, similar to what was done to tsunami-hit countries in South and Southeast Asia, or follow the Argentinian model in lessening Buenos Aires’ $103-billion debt.

Under the Argentinian model, Villar said, bondholders were offered 30 cents for every $1 dollar worth of Argentine bonds or get nothing at all. Latest estimates showed up to 80 percent of Argentina’s bondholders have accepted the country’s offer.

“I’m not saying we do an Argentina. What I’m saying is this country was able to redeem their debt from $103 billion to 28 percent of that, as a consequence of what they did,” he said in an ANC interview.

He added: “What I’m saying is we should become more creative in approaching our debt problem, which we cannot solve in one approach only. There has to be a cocktail of approaches and we have to look beyond the traditional approaches in solving this problem.”

Villar earlier filed Senate Bill 1928, which seeks the formation of the debt relief council. Its members would include an international finance expert, a development economist, a banker, a corporate lawyer and two government representatives from the Department of Finance and the Bangko Sentral ng Pilipinas.

He also filed Senate Bill 510 or the debt cap bill that seeks for the provision of a ceiling on the debt stock of the government or the so-called public sector debt, including contingent liabilities and for other purposes as well.

Former senator Ernesto Maceda also proposed that the government refer all future borrowings to the Legislative Executive Development Advisory Council (LEDAC) for review and approval.

“Before the government decides to borrow any amount, the executive must first explain, if not to the public at least to its representatives, the House and Senate leadership, why it is borrowing, how much and what are the terms and conditions,” he said in a separate interview.

Malacañan said on Wednesday that the government can manage the ballooning national debt through sheer political will to pursue a plan that would reduce the debt while maintaining the country’s credibility in the international community.

“Our national debt has ballooned over time, but it is manageable provided our institutions can get together in working out a strategy of debt reduction that maintains our international credibility and, at the same time, enables us to effectively implement our propoor programs,” Press Secretary Ignacio Bunye said.

ABS-CBN News, March 3, 2005