DEVELOPING countries, such as the Philippines, tend to rely on financial assistance from international and multilateral financial institutions to fund their programs and projects through loans.
Activists protested outside the Department of Finance (DOF) on Friday to urge the national government to halt its borrowings from these institutions as this places developing countries in a “worsening debt crisis.”
Finance Secretary Ralph G. Recto, who is currently in Washington, DC, for the World Bank-International Monetary Fund (WB-IMF) Spring Meetings from April 15 to April 21, has secured the WB’s support in the government’s digitalization program to enhance tax administration as well as assist in the areas of energy, agriculture, and investments in human capital.
The Spring Meetings of the Boards of Governors of the IMF and the WB Group gather central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organizations and academics to discuss the world economic outlook, poverty eradication, economic development, and aid effectiveness.
Flora Asiddao-Santos, national president of the women’s group Oriang, said that as the national government’s debt balloons from its continuous borrowings, its payments of debt are also nonstop.
Oriang, together with activists from the Asian Peoples’ Movement on Debt and Development (APMDD), the Freedom from Debt Coalition (FDC), and others, urged the government to “cancel” these loans arguing that it uses its funds to pay for its debts instead of allotting budget for public service.
“Walang serbisyo na nararamdaman ang mga mahihirap nating mga kakabayan. Bayad nang bayad [ng utang ang gobyerno] pero hindi naman napupunta sa tao [There is no public service that can be felt by the poor. The government keeps on paying its debt but it does not go to the people],” Asiddao-Santos told the BusinessMirror on the rally’s sidelines.
Recto, who also serves as this year’s Chair of the Board of Governors at the Intergovernmental Group of Twenty-Four (G-24), appealed to the World Bank, IMF, and other financial institutions to “intensify” their efforts in assisting developing countries to alleviate the factors threatening their economic growth.
“We call on the international financial institutions to develop more innovative and responsive financing solutions that will help us sustain productivity, enhance long-term growth prospects, and increase resilience to economic shocks,” the Finance chief said in the G-24 Ministerial Meeting on April 16.
Specifically, Recto mentioned the International Development Association, or IDA21, as a “critical lifeline” for developing countries as it provides grants and low-interest loans for low-income nations.
Asiddao-Santos appealed to Recto and President Ferdinand R. Marcos, Jr., to stop securing loans from the IMF-WB and instead prioritize funding public services, particularly education, health, and livelihood.
“The revenues the country generates go to interest payments for the IMF-WB. They are already rich. Why are we putting them first?” Asiddao-Santos noted, adding that the government must think of ways to generate funds instead of relying on borrowing from external sources.
The national government’s outstanding debt as of end-February this year reached a new record high of P15.178 trillion, up by 10.37 percent from the P13.752 trillion reported in the same month last year, according to the Bureau of the Treasury.
The bulk of the total debt stock is domestic debt at 69.68 percent or P10.576 trillion, while 30.32 percent or P4.602 trillion is external debt.
Last year, the government borrowed a total of P2.193 trillion due to a narrower budget deficit, 75 percent of the amount would come from the local debt market, while 25 percent will be borrowed externally.
A total of P559.035 billion, or 25.49 percent of the 2023 borrowings, was borrowed externally. Of which, P204.279 billion was borrowed through program loans.
As of end-January, the government paid P74.221 billion for interest payments. Of which, interest payments to external entities amounted to P25.398 billion.
Debt service in 2023 rose by 23.97 percent to P1.603 trillion compared to the P1.293 trillion total recorded in the previous year.