GLORIA ON DEBT RESTRUCTURE PLAN: GHOSTWRITERS WILL BE RP'S RUIN
MANILA, March 12, 2004 (MALAYA) By REGINA BENGCO President Arroyo yesterday warned businessmen of economic ruin if the country puts its fate in the hands of "ghostwriters" of platforms and programs who she said are unaccountable to the people.
Arroyo made the statement before the Asian Business Leader Awards 2004 at Shangri-La Makati in a speech delivered for her by presidential spokesman Ignacio Bunye.
The statement was apparently in reaction to the platform of Fernando Poe Jr. which was crafted by his economic advisers. The platform, "Pagpapanday ng Kinabukasan," places debt restructuring high in his economic agenda.
Poe on Wednesday said his call for debt restructuring should not be confused with a unilateral payment moratorium or outright debt repudiation.
He said government must honor its commitments to creditors and it must not only work to stretch debt maturities but also try to bring debt levels down.
Arroyo warned the country might backslide to the time of President Joseph Estrada, who was surrounded by a lot of advisers, at great cost to the economy.
"I pray that our people would not so easily forget the glaring political lessons of the recent past. Individuals or groups who are unaccountable to the people cannot ghostwrite good governance. We had that before and it almost led us to economic ruin," she said.
She said there must be a continuity of the "down payments" that she made under her three-year administration, which she said would ensure a brighter and more comfortable future.
Bunye said the Philippines must pay its debts "as a matter of honor."
He said Poe cannot unilaterally declare a debt restructuring without putting the country in a bad credit standing before the international financial community.
But Bunye said this will not prevent government from seeking better terms such as longer maturities and a lower cost from its creditors in order to spread out the payment.
He said any debt restructuring should be driven by market forces and must be done with the consent of the creditors.
"We cannot act unilaterally on this. Magiging masama ang impact, sasama ang ating standing sa international financial community kung tayo ay gagawa ng unilateral act. This will have to be in consultation with the international financial community," he said.
Sen. Panfilo Lacson said if elected president, he would create a Debt Management Commission that will be tasked solely with handling foreign debt, particularly in getting lower interest rates.
"A good number of highly-indebted countries have done this and have gotten out of the debt trap. The best know examples are Ireland and Jamaica. Ontario, the largest province in Canada, has a highly successful debt management office," he said.
Lacson said the proposed commission would be insulated from politics and function independently like the central bank.
The new president, he said, should immediately make public the inventory of public debt at the time of assumption, including the projections for both interest expense and amortization of principal. "This must be done so he will not be blamed if the debt problem persists or worse, escalates into a full blown crisis," Lacson said.
He said the situation has reached a point where government could not pay for debt interest without borrowing more.
Among measures he would undertake to remedy the situation, Lacson said, is expanding the tax base "to a potential of 14 million from a very narrow of 2.8 million."
Rep. Carlos Padilla, Lacson's lone senatorial bet, said about 50 percent of this year's budget would go to debt servicing and at the rate it is going, debt payments may soon take up the entire national budget.
Padilla said that contrary to the budget department's claim that debt servicing for this year will amount only to P271 billion, the actual amount could have been P542 billion, including principal payments, based on a P54 to $1 exchange rate.
Using the present rate of P56 to $1, the amount for debt servicing may sink further to P600 billion, he said.
"If the proposed budget for 2004 is P864 billion, and you pay P542 billion for debt service, how can we render services?" he asked.
Reported by: Sol Jose Vanzi
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