MANILA, Philippines – Loans secured by the Arroyo administration went through the necessary procedures and approvals and have been subjected to the necessary audits by funding agencies, former Finance secretary Margarito Teves said during the weekend.
Teves said there was no diversion of the loan from the French government supposedly intended to fund the Philippines’ adaptability to climate change.
Simply put, Teves said the loan provided by Agence Française de Développement (AFD) was not for climate change as what Dominique Lebastard, economic counselor of the French embassy has claimed.
Lebastard said the loan was in support of the Philippines’ effort to protect the environment and mitigate effects of climate change.
The STAR reported on Saturday that the Arroyo administration used up a 150-million euro loan (roughly P10.5 billion) provided by the AFD during the election season from February to May for plugging the budget deficit.
Finance Undersecretary for the International Finance Group Rosalia de Leon, however, pointed out the government is allowed to use official development assistance (ODA) loans intended for budget support to reduce the government’s debt service burden and to finance other requirements.
“As provided in the loan agreement, the loan will co-finance the budget support program loan of the Asian Development Bank for Local Government Finance and Budget Reform Program. It was never intended for any climate change fund,” De Leon told The STAR.
De Leon added the government has been accessing ODA loans for budget support to reduce debt service burden to finance its budgetary requirements. The government had set a budget of P1.54 trillion for 2010.
“The AFD loan is part of the financing program for this year, “ De Leon said. “This, the original intention of the loan, is for budget support.”
The government is dealing with a widening budget deficit because of problematic revenues and the need to spend more. It has been relying on borrowings from the foreign and local debt markets to plug the deficit.
The Aquino administration has revised upward this year’s deficit ceiling to P325 billion from roughly P300 billion set by the previous administration.
It is looking at borrowing an additional P58 billion this year to plug the additional deficit of P325 billion, the Bureau of Treasury said.
President Aquino said he wanted to raise revenues by plugging tax leakages instead of imposing new taxes.