Two lawmakers called on the Philippine government to ease borrowing from other countries and mortgage banks to address the country’s P3.81-trillion debt.

Two lawmakers called on the administration yesterday to ease borrowing from other countries and mortgage banks to address the country’s P3.81-trillion debt.

Sen. Manuel Villar, chairman of the Senate committee on finance, said one-third of the national budget goes to debt service payments, making it difficult for the government to focus its resources on public services.

“The government’s borrowing spree should be curbed, or at least limited,” Villar said in a statement.

Sen. Panfilo Lacson, on the other hand, sought an audit of the consolidated public sector debt in order “to find a long-term solution” to the problem once and for all.

Lacson warned that the outstanding public sector debt will reach P7.1 trillion by 2010 unless serious efforts to arrest the ballooning liabilities are undertaken by the government.

Auditing the consolidated public sector debt, he said, should result in the government finding ways to reduce appropriations for debt servicing and re-channel resources to meeting the Millennium Development Goals of the United Nations Development Program.

As of the end of 2004, he said the national debt stood at P3.81 trillion, which is 13.6 percent higher than the 2003 level. Of this, foreign debts went up by 9.7 percent to P1.8 trillion in 2004.

“These figures mean that every Filipino regardless of age, gender or economic status is currently indebted to the tune of P64,000 each to our creditors,” Lacson said.

He also called for a probe on government-owned and controlled corporations (GOCCs), 14 of which have incurred debts totaling P1.426 trillion.

The figure could even be “understated” as only 14 GOCCs have so far been monitored, he said.

Lacson cited he has aired similar warnings as early as August last year when he filed Senate Resolution No. 47, calling for urgency in addressing the country’s debt woes.

Quoting figures from the Department of Finance (DOF), Lacson said the consolidated public sector debt had in fact stood at P5.391 trillion as of September 2003, or a 182 percent increase from the P1.913 trillion debt in 1993, and includes the P2.719 trillion in domestic debt and P2.671 trillion in foreign dues.

The consolidated public debt includes the liabilities of GOCCs and that of government financial institutions.

Finance Secretary Cesar Purisima earlier admitted the country’s debt burden “continues to be one of the biggest challenges” that the national government faces.

Purisima blamed the increase in foreign debts last year to the net depreciation of third world currencies against the dollar, the depreciation of the peso and the increase in net repayments of maturing obligations.

Villar, who filed Senate Resolution 1928 on the Debt Relief Act and Senate Bill 510 on the debt cap measure, said interest payments alone in the national government’s debts are equivalent to the amounts that should have been pooled and used for social services, including health and education.

Last year’s debt of P3.8 trillion is equivalent to P78.7 percent of the country’s gross domestic product (GDP), Villar pointed out.

The debt cap bill seeks a provision of a ceiling debt stock of the government including contingent liabilities.

Under this measure, Villar proposes that the total debt stock that the national government could be allowed to maintain should not exceed 75 percent of the GDP of the previous year.

According to Villar, his two sponsored bills would address the concerns arising from the ballooning government debt.

On the Debt Relief Act, he said he saw the need to create a council for debt relief to review bilateral and multilateral loan agreements and treaties entered into by the government.

He also suggested that the government “invoke the relevant privileges that would facilitate the cancellation of odious debts and/or restructuring of debts to ease debt payments.”

“Odious debts,” Villar said, are those incurred without the consent of the people, those which cannot have benefited the public, and whereby the lender must have been aware of the two preceding conditions.

Under his proposed measure, the Council for Debt Relief shall be composed of debt negotiators from the public and private sectors headed by the secretary-general of the National Economic and Development Authority.

Its members would include an international finance expert, a development economist, a banker, a corporate lawyer and two government representatives from the DOF and the Bangko Sentral ng Pilipinas.

Christina Mendez, The Philippine Star, March 4, 2005