Malacañang receptive to proposed cap on borrowings

Malacañang welcomed discussions yesterday on the plan to set a cap on foreign borrowings.

Presidential Spokesman Ignacio Bunye told Radio Mindanao Network the proposal of Senate President Franklin Drilon to set a debt cap should be discussed in the light of the financial crisis the country is facing.

But Bunye noted that, in spite of the proposals to limit foreign borrowings, international financial facilities are still available to be tapped.

This, he explained, manifests the confidence of international financial institutions on the long-term prospects of the Philippines.

"The (lending) facilities of the funding agencies and the lending agencies remain open for the Philippines. Because they know that even though we have a problem, our long-term outlook remains healthy," Bunye said in Filipino.

He said that the country can avail of these facilities any time it needs the funds.

Drilon recently revived Senate Bill 1118, or the Debt Cap Act, which he introduced during the last Congress but was never acted on.

The bill aims to limit foreign borrowings in order to stop the ballooning deficit and avert a fiscal crisis.

With an estimated P3.3 trillion in debt, the country has to allocate a substantial portion of its national budget in order to settle the interest payments alone.

Drilon said that the P3.3 trillion is exclusive of the debts of government-owned and controlled corporations like the National Power Corp., which stand at P2.1 trillion.

The consolidated public sector deficit would be around P5.4 trillion or 130 percent of the gross domestic product.

For almost two decades, legislators have been trying to push for the passage 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.

Foreign Affairs Secretary Alberto Romulo, when he was still a senator, was the first to advocate the repeal of the Marcos decree. But when he was appointed budget secretary of President Corazon Aquino, he used the decree to automatically allocate principal and interest payments.