GMA orders review of foreign loans with ‘onerous’ conditions

President Arroyo ordered her economic managers yesterday to conduct a thorough review of foreign loans and assistance programs which carry "onerous conditionalities" for possible scrapping.

The President cited in particular the $175 million Grains Sector Development Program (GSDP) being secured by the Philippine government from the Asian Development Bank (ADB).

The President tasked the National Economic Development Authority (NEDA) headed by Secretary Dante Canlas to review these foreign loans and official development assistance (ODA) with Finance Secretary Alberto Romulo and Budget and Management Secretary Emilia Boncodin.

She said the review of these loans and ODAs will be conducted in consultation with the intended beneficiaries and affected sectors from non-governmental organizations (NGOs).

"One of the loans which was considered in the past by the NGOs and the farmers to have carried such an onerous conditionality was an ADB-budget support program which will require bringing down or even taking out the subsidies to our farmers," President Arroyo said.

The President, who was principal sponsor in the Senate’s ratification of the Philippine accession to the World Trade Organization (WTO), expressed surprise over this ADB loan conditionality.

"But the WTO allows subsidies to farmers for developing countries up to 10 percent. So if we allow up to 10 percent subsidy under the WTO which is about for fair trade, then why should we capitulate to zero percent subsidy to get a loan," the President pointed out.

"This is a kind of loan that we have to review. We will review that kind of loan where we are also able to set aside and provide for other uses for the local counterpart funds," she said.

The Chief Executive said she called for a review of these foreign loans during the weekly Cabinet meeting last Tuesday when they were going over the status of the various loans and ODAs that the Philippine government needs to provide counterpart funding for the projects to push through.

Aside from the budgetary deficit, the President also deplored "another unwanted legacy" of her predecessor which is the big number of "poorly implemented" ODA-funded projects. – Marichu Villanueva