Senate bet wants repeal of automatic debt payments and strengthen ODA regulation

Press Release

28 March 2019

As “Best Defense” vs. “Onerous Chinese Debts”:

Senate bet wants repeal of automatic debt payments and strengthen ODA regulation

Manila, Philippines – Labor’s senatorial bet Leody De Guzman vowed to file a bill repealing the automatic appropriations act for debt payments if elected this May, insisting that “only loans transacted with due diligence, good faith, without a taint of corruption should be paid by taxpayer’s money.”

“Hindi makatarungan na parusahan ang mga susunod na henerasyon ng pagbayad sa mga utang na hindi naman lehitimo dahil lamang mas matimbang sa Pangulo ang mga bangkerong Tsino kaysa sa kapwa niya Filipino,” De Guzman said.

Section 26(B) of Book VI, Executive Order (EO) 292, or the “Revised Administrative Code of 1987”, states that principal and interest payments for government debts are automatically appropriated. The provision is copied from Section 31(B) of Presidential Decree (PD) 1177 or the “Budget Reform Decree of 1977” which also serves as the legal basis for Section 26(B).

De Guzman explained that repealing Section 26(B) of EO 292 and Section 31(B) of PD 1177 would “act as a deterrent to unscrupulous creditor countries who might want to exploit corrupt administrations.”

“One of my first bills would be to replace automatic debt payments with automatic audit of loan agreements involving stakeholders, the economic team of Congress, third party accountants, and civil society,” he pronounced.

“Automatic appropriations is debt servicing, it clips the power of the purse of the legislative branch. I challenge all senatoriables to take a position on this, unless they are unwitting accomplices of Duterte's treasonous betrayal to China,” he posed.

Senate Audit of China Loans

The lone senate bet of Partido Lakas ng Masa also asked the sitting Senate to “immediately commence a review of all the China loans transacted by the Department of Finance”, including but not limited to the Chico River deal.

“I recall that the first budget signed by (President Rodrigo) Duterte for 2017 contains a special provision calling for an audit of specific debts. The Congress and Senate would do well to include such provision in the 2020 budget,” De Guzman said.

De Guzman warns the administration to “learn from the mistakes” of former President and now House Speaker Gloria Arroyo, who was embroiled in controversies in the $329-million National Broadband Network (NBN) project, the $503-million North Luzon Railways Project Phase 1 and Phase 2 (Northrail), the $884-million South Luzon Railways Project Mainline (Southrail), and the $465-million Cyber Education Project (CEP).

“Duterte’s designs will be foiled by the people, in the same way Arroyo’s designs were thwarted before,” he insisted.

Strengthening ODA Regulations

De Guzman adds that it is “not enough” for existing debts to be audited; the next Congress should also move to “clip” and regulate the President’s power to contract Official Development Assistance.

“Part of my proposal would include revisions in Republic Act 8182. Specifically, I would insist on a borrowings cap as well as restoring Section 11 of the original RA 8182, which was modified by RA 8555 to allow creditors to specify modes of procuring labor and other materials,” he cited.

The labor leader said that the practice of “tied aid”, wherein foreign workers and suppliers are tapped for foreign loan funded projects, should be replaced by “a system of preference and an obligation to transfer technology Filipino workers as well as competitive and transparent bidding among Filipino suppliers”.

“The Filipino people will pay for these loans. That being said, I see no reason why Filipino workers and businesses should not benefit from these loans.” De Guzman ended.###