Thursday, November 29, 2007
Foreign debts at historic high P1.7T under Gloria
The country's foreign debts reached a record P1.7 trillion duringthe term of President Arroyo, according to Walden Bello, the newly electedpresident of the anti-debt group Freedom from Debt Coalition (FDC).The Arroyo government should take its cue from Argentina indealing with foreign creditors to cut its debt payment and improve theeconomy, Bello said."We have paid our debts many times over,yet owing to the tyranny of global finance, we will never be able to leavethe treadmill of debt repayment if we stick to unfair rules that mainlyserve the interests of creditors," Bello said.As of August2007, the national government's foreign debt stood at P1.7 trillion($1=P46.85). This represents 44 percent of the total P3.87-trillionnational government debt.He lamented that for the Arroyogovernment, debt servicing must proceed according to the terms of thecreditors because, "in their view, that is the only way to continue toaccess international capital markets.""But this is thebankrupt logic that has led to debt being piled on debt. We have notreally escaped the infernal logic of contracting new debt to pay off olddebt. Meantime, our total debt mounts dangerously and brings us closer tothe edge of bankruptcy," Bello warned.Bello explained that therelationship between debtors and creditors has been altered by severalevents during the last few years, and this has implications for thePhilippines.He cited the determination of former ArgentineanPresident Nestor Kirchner who showed the world that his government cantake on a country's creditors and come out on top."As a resultof Kirchner's successful campaign to drastically reduce debt repayments,Argentina has been growing at 10 percent of GDP for each of the last fouryears, the result partly of the fact that money that would otherwise leavethe country for debt servicing has been channeled into investment in thedomestic economy," he said.The former executive director ofFocus on the Global South also explained how the International MonetaryFund (IMF), which used to be the enforcer of the creditors, has become aseverely weakened institution today as a result of the bad policies itimposed on Asian countries during the 1997 financial crisis and onArgentina in 2002."Some of its biggest borrowers have walkedaway from it, and since the fund's budget stemmed in great part fromrepayments from these borrowers, the IMF is today facing both a crisis ofcredibility and a budgetary crisis. It is in real trouble," stressedBello, also the former chairman of the board of Greenpeace SoutheastAsia.Unfortunately, Bello said these developments have notregistered with the Philippine government."(The government's)policies toward its creditors continue to be the old policy of being a'model debtor' that was initiated by (former) President Corazon Aquino inthe 1980s. The conditions for a successful break with the old and thecrafting of a new bold policy of unilaterally writing down the Philippinedebt are better today than they have ever been," he said.