Cancel Debt Payment to Free Up Funds for Calamity Relief, Gov’t Urged

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Instead of appeals for more foreign aid to rehabilitate the country from the effects of disasters, research group Ibon urges government to cancel debt payments and free up resources for relief and rehabilitation.

According to research head Sonny Africa, “Environmental shifts mean that extreme weather events will become more frequent and there must be much greater investments in the country’s disaster-preparedness.”

“Extreme weather conditions are beyond government’s control, debt payments are not,” he added. “It is the height of insensitivity of the country’s leaders if they dogmatically insist on repaying debt in the face of the multiple crises facing the country.”

The Arroyo administration paid P1.52 trillion ($32,576,082,297 at an exchange rate of $1=P46.66) in foreign debt service, interest and principal, from 2001-2008. It is scheduled to pay a further P224 billion ($4,800,685,812) in 2009 and P253.5 billion ($5,432,918,988) in 2010. In contrast, the programmed calamity fund for 2009 and 2010 were just P2 billion ($42,863,266) annually.

This unceasing debt service is undermining the government’s capacity not just to prepare for disasters, give relief and support rehabilitation after calamities, but also to meet the people’s basic needs for health, education and housing – which could have ensured their adaptability to extreme weather changes and resilience to calamities.

The government has a range of options for debt cancellation, said Africa. It can start from identifying a target overall percentage of debt stock and corresponding payments to cancel. It can identify particularly loans such as any still left over from the Marcos dictatorship or others funding particularly onerous or anti-developmental projects. Government can prioritize loans from multilateral development banks such as the World Bank or Asian Development Bank (ADB) which, unlike commercial creditors, purportedly extend loans for developmental purposes.

The drastic economic slowdown especially with the onset of the global crisis, the looming fiscal crisis with deficits rising rapidly and now the calamities due to tropical storms Ondoy and Pepeng are enough justification to call for emergency cutbacks in foreign debt payments. More than trickles of foreign aid, debt cancellation would free up resources for relief and rehabilitation and for overall economic development.

“This is an opportunity for the government to exert political will and cease being a mendicant in its dealings with foreign governments and creditors,” said Africa. “We Filipinos are fully capable of helping ourselves if only the government stops its self-destructive debt policy.

Ibon reiterates how successive governments including the Arroyo administration have vigorously opposed any debt moratorium, cancellation or repudiation on the grounds of protecting creditworthiness. However, this long-standing lack of vision in the government’s debt management policy has proven to be extremely burdensome for the people. (Posted by Bulatlat)

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