By Siesta-friendly
Here it is:
All expenditures for principal and interest on public debt, and national government guarantees of obligations which are drawn upon, are automatically appropriated. [1]
Who else but the Great Repressor Ferdinand Marcos would come up with such a cruel provision? Of course, it didn’t help that Cory Aquino arrogantly declared after Marcos’ ouster - despite the golden opportunity to repudiate the obviously illegitimate debts of her evil successor – that the Philippines will pay all debts. Not even a renegotiation! Such insensitivity! Well, it’s only proper that she’s at the forefront of any action against repression. She is partly to blame.
US-trained Fidel Ramos was definitely no better. Erap Para sa Masa was obviously just a campaign slogan. And what else can we say about In Excessive Gloria who has turned the vicious cycle of borrowing-to-pay-for-borrowing into an art?
A third world country needs all the funds it can get to set up, among others, vital infrastructure for the efficient flow of people and goods, obtain meaningful health service and indispensable education for its people, provide significant subsidies for its key industries. Yet what have our governments done? They’ve continuously diverted much needed funds to appease the moneymen on whom the country will always depend because it never spends to be financially independent.
Classic Example
Even as we feel we don’t need to anymore prove the provision’s viciousness, it won’t hurt to go through the motions of presenting evidence. Let’s take the regime of the one with the MA and Ph.d. in Economics simply because she should know better (from her academic history and the history of her predecessors).
In 2001 (her 1st year), the country’s total outstanding debt was P2.38T. After 7 years, it’s at P3.71T.[2] As we all know, her government automatically set aside most of its annual budget to pay for debt. She couldn’t stop bragging about it. And what happened? It increased to 1 trillion pesos more!
To be fair, she didn’t borrow P1T. She actually borrowed about P3T! So much more than the combined total of P1.51T obtained by the unholy trinity of Cory, Fidel and Joseph, and within half the time: hers of 7 years and theirs of 14.
In all those 7 years, did we see, feel, or even smell the fruits of the Three Trillion Pesos? Do we have new roads, bridges, public schools, even classrooms? Wasn’t the government’s economic chest-beating all about the higher credit rating and the stronger peso? A higher credit rating really just rates the likelihood of our settling our debts. And, we all know by now, that the peso isn’t getting stronger; the dollar is just weakening.
The atrocity becomes stark knowing that not only did the government have P3T of borrowings to spend for its people but it had billions more to use from taxes it generated. And who hasn’t felt the ubiquitous VAT?
What are taxes for?
Taxes are generally imposed to raise funds for infrastructure, public works, public_transportation, public services (education, health care, pensions, unemployment benefits), public utilities (like water, electricity and waste management), industry subsidies (like agricultural subsidies to increase production). But, of course, the Philippines belongs to that geographic black hole where what is wrong is accepted and what is right is forced to migrate.
Anyway, back to our point: with the automatic appropriations provision, coupled with the government’s addiction to borrowing and lack of sympathy towards its people’s plight, the natural recipients of tax funding have been relegated as lesser priorities, if they’re still priorities at all.
Did you know the Constitution mandates the government to “assign the highest budgetary priority to education”?[3] You think our government does so? Neither do we. On constitutionality alone, the Automatic Debt Service Provision should be struck down.
Corruption Prevention
Repealing the Automatic Debt Service Provision (a.k.a. the Automatic Appropriations Law) will go a long way to stem corruption. With no automatic appropriation of funds for the payment of principal and interest, there’ll be more time to examine government debt: if it’s really for a legitimate purpose, if there was a real need for it, if it was legitimately obtained, if the end-result of borrowing will not be against national interest but favorable to the nation and will actually benefit the country, if the funds were spent appropriately (and in no way pocketed by anyone), and if anything else relating to it is above board.
The free reign given to the executive department on its borrowing ways, as marvelously exemplified by Gloria’s regime, will be curtailed. Predatory lenders will think twice before pushing their greedy agendas once they realize the country will not automatically pay the principal and interest on their loans and will actually first evaluate their soundness.
It’s been looong overdue for our leaders to hold off their reverence towards foreign obligations and instead begin prioritizing their obligations to the people.
[1] Section 26, Book VI, Executive Order No. 292 “Instituting The ‘Administrative Code Of 1987”. 25 July 1987.
See also Section 31, Presidential Decree No. 1177, “Revising The Budget Process In Order To Institutionalize The Budgetary Innovations Of The New Society”. 30 July 1977.
[2] Bureau of Treasury, “NG Debt Indicators”, http://www.treasury.gov.ph/statdata/yearly/yr_debtindicator.pdf.Accessed 8 May 2008.
[3] Sec. 5, Art. XIV, Philippine Constitution.
