"Debt servicing has been eating a substantial portion of the annual budget. Because of mandatory interest payments, there is little room for expenditures in the national budget for urgent social and physical infrastructures needed to stimulate the economy," he said.
Drilon has reintroduced Senate Bill 1118, entitled "Debt Cap Act," which he filed in the last Congress but which had been relegated to the legislative graveyard.
"The national government debt is alarmingly increasing every year. In 2001, the national government debt was estimated at P2.88 trillion or 79.1 percent of gross domestic product (sum of products sold and services rendered here). As of August 2004, this has reached P3.3 trillion," he said.
Drilon’s figures do not include the debt incurred by the National Power Corp. (Napocor), National Food Authority, National Electrification Administration, Philippine National Oil Co., and other government-owned and -controlled corporations (GOCCs) that are losing hundreds of billions in taxpayers’ money every year.
The accumulated indebtedness of GOCCs amounts to about P2.1 trillion. The combined debt of the national government and GOCCs, officially called the consolidated public sector deficit or CPSD, stood at P5.39 trillion as of August, or roughly 130 percent of GDP.
That means that the value of goods sold and services rendered in the country for one year is not enough to pay for the country’s financial obligations.
According to a study by economists of the University of the Philippines, the country’s financial condition is not far from that of Argentina when the latter defaulted on its domestic and foreign debt.
Drilon’s bill aims to bring down the CPSD to 100 percent of GDP in five years. That is a conservative target, according to some of his Senate colleagues, who say the country’s economy would have collapsed in five years if the government’s borrowing spree were not tempered in one year or two years.
Just this week, despite the public outcry against borrowings, the government raised an additional $1 billion from foreign lenders to prop Napocor, the biggest money loser among GOCCs.
Since the post-martial law Congress convened in 1987, some lawmakers have been pushing in vain for the enactment of a debt cap bill and the repeal of a Marcos issuance, Presidential Decree 1177, which mandates the President to automatically set aside payments for loan principal and interest.
Malacañang, whoever was its tenant, had always successfully resisted the setting of a limit on borrowings and the repeal of PD 1177.
It was former senator and now Foreign Affairs Secretary Alberto Romulo who first advocated the repeal of the Marcos decree. And when he became budget secretary of President Corazon Aquino, he used the martial law issuance to automatically allocate principal and interest payments.
For next year, such payments are estimated to amount to P659 billion. The principal and interest installments would eat up nearly all of the projected revenues of a little over P700 billion. — With Mike Frialde