Villar made the call citing a bulk of the P1.05-trillion proposed national budget for 2006 are earmarked for debt service payments.
"Thirty-three percent of our budget this year went to debt servicing and a measly one percent allocated for health services," said Villar, chairman of the Senate committee on finance.
"In the proposed budget for next year, such is the case again, P340 billion will go straight to interest payments. Such disparity has become the norm rather than the exception," he said.
Meanwhile, Senate Minority Leader Aquilino Pimentel Jr. reiterated anew his proposal to form a three-man government debt panel that will work full-time in negotiating with foreign creditor banks and multilateral financing institutions for favorable terms for existing and future loans of the country.
"The government should no longer tolerate a situation which forces it to spend the lion’s share of government revenues on payment of debts," Pimentel said.
The debt-negotiating panel will complement the plan of Congress to establish a legislative debt commission that will undertake a comprehensive inquiry into the country’s borrowings and study measures to ease debt burden, Pimentel said.
According to Pimentel, the panel will be composed of a lawyer who is an expert in international law; a banker or economist who has extensive knowledge on foreign borrowings; and a plain citizen, who is known for probity and integrity to balance the technical know-how of the two other members.
Pimentel said his proposal will deviate from the government practice of relying solely on its economic and finance managers such as the secretary of finance and Bangko Sentral ng Pilipinas governor to negotiate for loans.
Pimentel said the government should secure a debt relief package in view of the move of the Group of 7 highly industrialized nations granting the demand of several African countries for a full or partial condonation and restructuring of foreign debts.
"I find no reason why the Philippines should not be entitled to a similar debt relief package. And I could not understand why our government is not taking serious efforts to seek debt reduction from foreign creditors," Pimentel said.
Pimentel joined Villar in noting that up to P340-billion or a third of next year’s proposed P1.05-trillion budget will be gobbled up by interest payments. The amount is P38.3-billion higher than interest payments for 2005. The government will also shoulder the principal amortization of P381 billion next year.
Villar said the government should prioritize the budget for the basic needs of the people.
With this, he pushed anew for the passage of Senate Bill 1968 or the Fiscal Responsibility Act in a bid to limit government borrowings.
"There is an urgent need for fiscal responsibility. There must be a limit on government borrowings. In addition to the austerity measures, we should put a brake on the government’s borrowing spree," Villar said.
The senator noted that interest payments for 2006 is around P340 billion or 33 percent of the budget.
"In fact, if amortization of loan principal of around P361 billion were included, the total would eat up at least 70 percent of the proposed budget."
Among the salient points of the fiscal responsibility bill are: reducing the national debt to 60-65 percent of the Gross Domestic Product; setting fiscal targets for a three-year period based on an agreement between the executive and legislative branches of the government; repealing of all laws on automatic guarantees of the debts or losses of government-owned and controlled corporations; improve transparency and control measures; control mechanisms on government spending among others.
Villar’s committee has conducted a series of consultative hearings on the matter in coordination with economic managers of the government.
Villar, under Senate Bill 1928, also proposed to the government to create a council that would review loan agreements and treaties entered into by the Philippine government and facilitate cancellation or restructuring of odious debts.