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By Efren Danao, Senior Reporter and
Maricel V. Cruz, Reporter
The Senate continues to look with alarm at its
helplessness in curbing the seemingly insatiable craving for foreign
debt by executive departments and government-owned and controlled
corporations (GOCCs) and the dilution the Congress’ power of the
purse by the automatic appropriation of debt service.
In the Thirteenth Congress, Senate President
Manuel Villar led the move to set a ceiling on foreign indebtedness
and to give Congress the final say on the appropriation funds for
debt servicing. In the current Fourteenth Congress, Senators
Aquilino Pimentel, Edgardo Angara and Jinggoy Estrada are taking up
the cudgels for the restoration to Congress of its power of the
purse.
Pimentel filed Senate Bill No. 1145 seeking to
reduce government debt service each year so that what is to be paid
would be “commensurate to what the economy can afford to pay
without sacrificing the raising the people’s standard of living,
the alleviation of poverty, the generation of more productive
employment, the promotion of equity and social justice and the
attainment of sustainable economic growth.”
He lamented that debt service has greatly
drained the national coffers, while the country needed all resources
to accelerate development and economic growth and provide social
services and other basic needs of the people.
His bill proposed that the external debt service
should be reduced each year by not more than 20 percent of the
foreign-exchange receipts of the immediately preceding year
“provided that during the critical economic recovery period, the
external debt service shall not exceed 10 percent of merchandise
trade or commodity export receipts.”
Sen. Edgardo Angara has decided to tackle the
problem of foreign debt incurred by the GOCCs. He noted that in the
first quarter of 2007, GOCCs already had debts totaling P418.364
billion, all of it guaranteed by the government.
He identified Presidential Decree 1177 or the
Budget Reform Decree of 1977 as the “culprit” behind the
“fiscal imprudence” of GOCCs by automatically backing all their
debts with the government’s guarantee.
Angara has filed a bill seeking to end the
government’s automatic guarantee of GOCC debts to make their
officers more responsible for the loans they make. The bill also
requires the inclusion of the GOCC budgets in the proposed annual
budget of the national government submitted by the President to
Congress.
At present, Congress has no say on the budgets
of the GOCCs although the servicing of their debts is included in
the general appropriations bill submitted by Malacañang to the
legislature.
Several legislators besides Angara and Pimentel,
among them the late Sen. Raul Roco, former Senators Wigberto Tañada,
Alberto Romulo and Teofisto Guingona, had gone to the Supreme Court
questioning the executive department’s continuing enforcement of
PD 1177 and other decrees issued during the Marcos dictatorship on
the automatic servicing of foreign debt that emasculated the
legislature’s power to appropriate. The Supreme Court ruled that
the executive government could continue to implement these decrees
until Congress repeals them.
Sen. Jinggoy Estrada has filed Senate Bill 1558
to end the automatic appropriation of debt service. He echoed fears
that unless this is curbed, time might come when debt service would
comprise the bulk of the annual budget, and Congress could not do
anything about it.
“This bill will once and for all cleanse our
statute books of the remaining vestiges of martial rule and restore
to Congress its enviable, absolute and exclusive power of the
purse,” Estrada said.
His bill seeks to repeal all decrees issued by
the late President Ferdinand Marcos to amend Republic Act 4860 or
the “Foreign Borrowing Act, and specific sections of PD 1177, PD
81 and PD 1967.
With the repeal, Estrada wants to revive the
original Section 2 of RA 4860 which requires all revenues realized
from projects financed by foreign loans to be turned over in full to
the National Treasury. Congress will then appropriate the fund for
the payment of the principal, interest and other normal banking
charges on the loans when they become due.
Section 6 of RA 4860 also provides that if the
revenue realized is insufficient to cover the principal, interest
and other charges, the GOCC or government entity involved shall set
aside such portion of its budgetary savings as may be necessary to
cover the balance or deficiency.
In the House, the chairman of the Committee on
Appropriations Rep. Edcel Lagman of Albay has taken the lead in
lightening the burden of national debt payments.
He has filed a resolution, which would become
national policy if passed also by the Senate, calling for the
creation of a Congressional Commission to review and assess debt
policies, strategies and programs of the Philippines. He wants the
Commission to conduct a public audit of all loans made by the
government including assumed and contingent liabilities. The
Commission would also verify the executive department’s report of
how the loan proceeds were used and of payments made.
The Commission, Lagman, will also recommend
policies and strategies to reduce debt service as well as
“institutional and infrastructural measures to ensure sound fiscal
and monetary status of the national government principally through
effective debt management.”
“The country’s debt burden today may not be
as heavy as it was during the crisis years 1983 and 1991, however,
it remains heavy and crisis-vulnerable. It continues to crowd
out provisions for basic social services and infrastructure
development from the national budget. The disproportionately large
appropriation for debt service has not only inordinately constricted
budgetary allocation for basic social services, but it has derailed
economic growth,” the resolution says.
Lagman noted that the outstanding debt stock of
the National Government (NG) has been increasing to unparalleled
levels, from P700 billion in 1997 to P2.8 trillion in 2002 and to
P3.0 trillion in 2003. In 2006, the outstanding debt stock hit P3.8
trillion and as of March 2007, the outstanding debt stock amounted
to P3.9 trillion or an NG debt of P44,000 for every Filipino.
The House appropriations chief laments the
National Government’s continuing absorption of liabilities from
government owned and controlled corporations, local government units
and even private companies. These further increase the debt stock.
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