Loren: RP deeper in debt but who benefits?

January 7, 2010

Senator Loren Legarda posed this question as the Bangko Sentral ng Pilipinas (BSP) reported that the country’s outstanding external debt amounted to $53.1 billion as of the end of the third quarter, up 2.5 percent from $51.8 billion recorded as of end-June.
“The country’s economic managers should be forthright and tell us exactly where the foreign borrowings are spent on, because the number of poor Filipinos has not decreased at all, but even increased,” Loren said.
“Recent surveys indicate that more Filipinos rated themselves poor and hungry than ever before, indicating that government claims of success in fighting poverty are grossly exaggerated,” Loren said.
“While the BSP is saying that despite the increase in the country’s external debt, the liabilities remain within manageable levels, and that the country has sufficient foreign-currency liquidity to service those obligations maturing within the short term, the real issue is whether our heavy foreign borrowings is good for Juan de la Cruz, who must cough up more in taxes so that we can service our huge foreign debt,” Loren said.
Loren pointed out the Arroyo administration has been relying heavily on foreign borrowings to finance its infrastructure development and social services delivery. “With annual tax collection always falling far short of required expenditures, the government resorts to borrowings from abroad to make ends meet. But who really benefits from the borrowing spree? It’s not the poor, definitely.”
The budget deficit for last year is estimated to be around P300 billion.
Loren lamented that the next administration will inherit a gargantuan foreign debt incurred by the incumbent well as past administrations. Servicing these debts, she said, would take away already scarce resources that should otherwise go to vital social services, such as education, and health, especially for the millions of poor Filipinos.