Pimentel files bill imposing limits on debt servicing

Senate Minority Leader Aquilino Pimentel Jr. (PDP-Laban) pushed yesterday for legislation that will limit the debt service to a level proportionate to the country’s capacity to pay in view of the continuing revenue shortfall caused by the global economic slump.

Pimentel urged the government not to be squeamish but aggressive in seeking debt relief in the light of perceived receptiveness of developed nations to help poor, developing countries make full use of their scarce resources in alleviating poverty.

He said it is about time a debt reduction strategy must be pursued by the government following President George W. Bush’s announcement that the Philippines can seek the cancellation of its $430-million concessional debt to the US in exchange for a commitment to implement a forest conservation program.

"Debt service must be limited to an amount commensurate with our capacity to pay, what our economy can afford," Pimentel said.

He said the country can still comply with its debt obligations but "without sacrificing in any manner our larger concern – the raising of our people’s standard of life and living, the alleviation of poverty, generation of more productive employment, promotion of equity and social justices and attainment of sustainable economic growth."

Pimentel filed Senate Bill 847 seeking to strictly implement a policy to limit external debt to an amount not exceeding 20 percent of the foreign exchange receipts of the preceding year.

The bill removes the discretion of the President to exclude certain categories of external debt from the ceiling whenever necessary in connection with a general rescheduling, restructuring or refinancing of the country’s debt by foreign creditors.

Pimentel, a member of the congressional contingent in President Arroyo’s recent US trip, said the country’s eligibility to Washington’s debt-for-nature swap scheme disproves the prevailing notion that developed countries and foreign lending institutions frown on debt relief being sought by borrowing countries, particularly those saddled with financial problems.

During Mrs. Arroyo’s visit to the White House, Bush announced that the Philippines is entitled to debt reduction privileges under the US Tropical Forest Conservation Act of 1998.

Pimentel decried that the government has always been hesitant to seek debt relief for fear that the country’s credit standing may be impaired and foreign lenders may impose sanctions.