The Philippine Debt Audit Campaign

A Renewed Call to the 14th Congress and the Filipino People

Presented byRebecca L. MalayTreasurer, Freedom from Debt Coalition

The Debt Audit

Congressional Debt Audit Where we are Moving forward: issues & considerations

Citizens Debt Audit Commission Where we are General Concept Refinement in structure Proposed members of the Commission

Is the debt problem over?Growing Debt Problem (in trillion pesos)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Aquino Ramos Estrada Arroyo

NG Contingent Liabilities

National Government (NG) Debts

Debt Service

Gross Borrowings

Sources: Bureau of Treasury for NG Debts and Contingent Liabilities, Bangko Sentral ng Pilipinas on Gross Borrowings, and Department of Budget and Management (General Appropriations Act) for Debt Service

Record Breaker

Sources: Bangko Sentral ng Pilipinas on Gross Borrowings, and Department of Budget and Management for Debt Service

Arroyo: Largest Borrowed, Largest Paid (in trillion pesos)

0.520.37

0.57

1.46

0.560.78 0.71

2.05

3.092.83

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Aquino (87-92) Ramos (93-98) Estrada (99-00) Total (Aquino,Ramos, Estrada)

Arroyo (01-06)

Gross Borrowings

Debt Payments

Is the debt problem over?NG Outstanding Debt 3.819

Domestic Debt (by instruments) 2.148

Treasury Bills 0.588

Treasury Bonds/Notes 1.538

Loans 0.022

Others 0

Foreign Debt (by creditors, using $1=P46.35) 1.671

Multilateral 0.251

Bilateral 0.378

Commercial 0.035

Foreign Denominated Securities 1.006

NG Contingent Liabilities 0.530Domestic Debt 0.072

Foreign Debt 0.458

Source: Bureau of Treasury, SDADNote: Breakdown of totals may not sum up due to rounding of digits

National Government Debt as of end-May 2007 (in trillion pesos)

Who pays?Revenues vs. Debt Service (in billion pesos)

0

200

400

600

800

1,000

1,200

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Aquino Ramos Estrada Arroyo

Revenues

Debt Servicing

Source: Bureau of Treasury for Revenues data, Department of Budget and Management for Debt Service data

Government Expenditures 1987-2006 (in billion pesos)

0

100

200

300

400

500

600

700

80019

87

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Aquino Ramos Estrada Arroyo

Debt Service (Interest plus Principal)

Education

Health

Social Security

Who suffers?

Social expenditures received the brunt of expenditure cuts.Most evident during the time of ArroyoThe gap between education expenditure and

debt service grew by 52.06% in 2002, the highest in recent history

Health and Social Security has not been a priority for the longest time compared to debt servicing

Who suffers?

Education Spending*

Average national spending for education by administration show that based on 2000 prices, the amount spent per pupil fell during Arroyo’s timeMarcos (1981-85) : Php 3 027Aquino (1986-92) : Php 4 478Ramos (1993-95) : Php 4 959Estrada (1999-01): Php 5 830Arroyo (2001-04) : Php 5 467

*former Budget Secretary Benjamin Diokno, “Real State of the Nation”, 20 July 2007

Health Spending*

Combined (NG and LGU) per capita health spending show that

Marcos (1981-85) spent Php 240Aquino (1986-92) Php 278Ramos (1993-98) Php 321Estrada (1999-00) Php 360Arroyo (2001-04) Php 303

*former Budget Secretary Benjamin Diokno, “Real State of the Nation”, 20 July 2007

Congressional Debt Audit

The call for a Congressional Debt Audit, calls for a comprehensive investigation of all public sector debts and contingent liabilities.

Last Congress, the House of Representatives swiftly passed the Debt Audit Resolution, but the Senate failed to take it up.

Congressional Debt Audit

13th Congress: Review of engagement

Positive Negative Unanimous approval of Passage House Joint Resolution No. 1 in Sept 2004 through the efforts of Lagman, Zialcita, progressive & minority solons

Discussion of Senate version blocked in the Committee of Finance headed by Sen. Villar

Developed stronger support from several minority senators – Pimentel, Madrigal, Lacson through other engagements

Sen. Biazon not keen on fighting it out; opted to develop an alternative bill creating a Debt Management Office

Linked up for support with key staff of LP Drilon wing

Sen. Enrile apparently unhappy about Biazon’s eventual authorship of the Senate version of the resolution

Congressional Debt Audit

14th Congress: Opportunities & Challenges

OPPORTUNITIES CHALLENGES Lagman’s continued commitment to pursue the debt audit; other allies also committed

Other issues such as charter change may put the debt audit agenda in the sidelines

Senate dominated by opposition; key allies in the HOR now in the Senate (Escudero, A. Cayetano), Trillanes

The Senate President opposes Debt Audit Resolution

Administration legislators dominates the Lower House

Congressional Debt Audit

How to move forward: issues & concerns

1. Joint resolution vs Committee level audit 2. Role of Rep. Lagman – he has the capacity to once

again push for the passage in the Lower House, but the dynamics between him and the Senate should be assessed

3. Authorship of Biazon of the Senate version; possible author is Sen. Pimentel

4. How to handle Sen. Enrile?5. How else to maximize the favorable composition of

the Senate?

Citizens Debt Audit

Where we are Convened 36 individuals and political bloc

representatives as convenors of the Citizens debt Audit in 2004

Met three times in 2005; difficulty in convening in 2006 as a result of the political crisis

FDC’s work since 2006 up to the present allowed it to consolidate sectors (YAD), and expand support for the debt audit initiative (Budget Consortium, ODA Watch, GCAP, LnM, other anti-GMA, faith-based, etc.)

Citizens Debt Audit Commission

General Concept1. Critical examination of the Philippine

public debt based on: Data and existing studies by resource persons

and organizations Studies prepared by working groups and

technical teams to be organized by the Citizens Debt Audit Commission

Testimonies and inputs from affected communities, sectors and people’s organizations

Citizens Debt Audit CommissionMechanics of the study: The review and examination process will follow an outline

of the themes/topics. The presentations and discussions will be aimed at establishing the over-all picture (data, trends, etc.) and answering general and specific questions addressing the issues and problems related to the themes/topics.

Studies, data and testimonies will be presented to the Commissioners and to the general public in Public Hearings. These sessions will devote sufficient time for questions, clarifications and open discussion.

The Commissioners may also have smaller discussion-meetings with resource persons, witnesses, working groups and technical teams.

Citizens Debt Audit Commission

2. Preparation and release of reports summarizing the findings of the Citizens Debt Audit and formulation of recommendations and options based on the findings. Thematic reports with corresponding recommendations will be issued periodically as theme of the review is completed. A comprehensive over-all report with recommendations will be issued at the end of the process.

Citizens Debt Audit CommissionMechanics of the reports and recommendations: The draft report and recommendations for each

theme will be prepared by assigned commissioners together with the working group(s), resource persons and technical team concerned.

The draft report will be presented to all the commissioners in Public Forums to which the general public may be invited. The findings and recommendations will be openly debated in the Forums

The commissioners will finalize the report/recommendations and submit it to appropriate government entities, which may be done with people’s participation (i.e. with accompanying mobilization). A summary will be presented to the media in press conferences

Citizens Debt Audit CommissionThemes and Topics 1. Overview of the Current Public Debt Situation2. Overview of the Historical Development of the Philippine

Debt Problem Including: Global context Periods of Crisis, Policies implemented, Results History of Renegotiations and Debt Relief Schemes Critical Issues that Emerged

3. Borrowings – Laws, Policies, Regulations, Trends and Issues

4. Debt Payments - Laws, Policies, Regulations, Trends and Issues

5. National Government Debt – Overview, Trends and Issues6. NG External Debt – BNPP (lessons)7. NG External Debt – Project and Program Loans – outcome

and impact of the projects, terms and conditionalities

Citizens Debt Audit Commission

8. NG External Debt – Loan Conditionalities; Debt as Leverage for Adjustment Programs; Relations with Multilateral Financial Institutions

9. Private Loans and Liabilities Assumed by the National Government; Behest Loans; Brady Securitization Deal

10. Interest Rates – Trends and Issues11. NG External Debt – Bonds - Trends and Issues12. Government-Owned and Controlled Corporations (GOCCs) and

Government Financial Institutions (GFIs) Debts NAPOCOR debts, etc

13. Build-Operate-Transfer (BOT) Projects– Debts and Liabilities 14. NG Debt – Domestic Debt15. Old Central Bank and Bangko Central

Other Topics for Background1. Debt Relief, Debt Reduction Instruments and Options2. Lessons and Experiences from Other Countries

Citizens Debt Audit Commission

Structure of the Commission Members of the Commission (not to exceed 20

individuals with established credibility & expertise) Organizing and presiding over the process; Taking the lead in the review, examination and

preparations of reports and recommendations; Ensuring people’s participation in the audit process Ensuring that the process is open and transparent

manner to the general public Finalizing the reports and recommendations

Citizens Debt Audit CommissionStructure (cont’n) Technical Committee

composed of consultants and technical experts Thematic Committees

composed of people’s organizations, NGOs and individuals to focus on putting together studies on a particular theme or specific topic for the audit process, to be submitted to the Citizens Debt Audit commission.

will also work with assigned commissioner/s in the preparations of the report and recommendations, which will eventually be presented and discussed in public forums.

Secretariat - events organizing, public information and media; research and data base-building; administration and finance (start with two staff)

Freedom from Debt Coalition (FDC) – Philippineshttp://www.freedomfromdebtcoalition.orgmail@freedomfromdebtcoalition.org+63(02)9246399 (Tele-fax), +63(02)9211985

Thank you.