People's Domain

[Opinion] A creditor nation under the bloodsucker IMF

Before me is a piece of paper which provides the data on the outstanding debt of the Philippine government. The country’s debt stands at a whooping P4.93-trillion (US$111.083). Yes, it is in trillions of pesos, even my kids have a hard time counting the zeroes.

When I joined the Freedom from Debt Coalition in 2000, the country’s total outstanding debt then was in billions. Looking at the present debt, it is less likely to decrease when my children grow older.

An FDC data shows that in “almost all post-EDSA eras”, the total amount for debt servicing has exceeded spending for both economic and social services. The funds that can be used for economic services to ensure growth (in the form of social services) were instead used to pay debts, even those that are questionable.

The prospect of our country getting out of indebtedness is grim especially when the global economy is slowing down and some advanced economies like that of the United Kingdom are entering recessions.

Thus, I find disturbing and absurd the news of Bangko Sentral ng Pilipinas (BSP) that the “Philippines is now a creditor nation” and is now in the position of “helping troubled Europe cope with debt.” Without economic facts and figures handy, a Filipino who is unaware of the worsening debt situation of the Philippines will not understand how it can become a creditor nation.

According to BSP, the “creditor status is a reversal of fortunes for the Philippines” and was made possible after joining the “International Monetary Fund (IMF) Financial Transactions Plan (FTP) through which emerging market economies take part in international cooperation efforts to lessen the impact of the euro debt crisis on the rest of the global economy.”

Joining the IMF-FTP will enable the Philippine government to gain access to a new facility called New Arrangements to Borrow (NAB), which the IMF established to assist its “members cope with serious international financial crises.”

Now we are getting a clear idea what the “creditor nation” hype is all about. Malacañang has hailed it as proof of the international community’s strong confidence on the country’s financial system.

This FTP arrangement made available US$251.5 million by the Philippine government to IMF. More than half of the amount from this fund was disbursed by the IMF to European countries such as Ireland, Portugal and Greece to address the financial crisis now shaking the Euro economic zone.

It seems to suggest that the Philippines had gotten out of its debt problem, which of course is not true, considering the outstanding national government debt of P4.93 trillion at present.

The catch lies in the declaration of the BSP that followed which stated that the country’s continued participation in the FTP will pave the way for the BSP’s admission in the New Arrangement to Borrow (NAB). What the BSP statement illustrates is this: the Philippine government through the BSP lends a part of our dollar reserves to IMF’s FTP so that the Philippines can borrow again and borrow more from the IMF.

Six years ago, under Mrs. Gloria Arroyo, the BSP prepaid all outstanding Philippine debts to the IMF. This, however, did not result to a decrease in the country’s debt. While it was true that debt service under the Arroyo administration was the highest among post-EDSA administrations (P598.99 billion annual average), the data also points that gross borrowings under her term (P536.08 billion annual average) was also the highest.

Moreover, the country’s debt stock did not decrease but instead doubled. For instance, from the P2.38 trillion during Arroyo’s first year in office in 2001, the national government’s outstanding debt catapulted to P4.72 trillion at the end of her term in 2010.

We have suffered more than enough and continue to suffer as a consequence of IMF’s debt trap. Together with the World Bank, the IMF imposed structural adjustment programs (SAPs) on close to 90 developing countries, including the Philippines, beginning 1980.

The elements of these SAPs include long-term structural reforms to deregulate the economy, liberalize trade and investment, and privatize state enterprises, coupled with measures like cutbacks in government expenditures, high interest rates, and currency devaluation. The two international financial institutions sought nothing less than the dismantling of the developmental policies of state-assisted capitalism that they judged to be the main obstacles to sustained growth and development.

Through the combined macroeconomic intervention policies tied with their loans and ‘aid’, these international finance institutions have done irreparable damage to our domestic economy. Until now, we still suffer the effects of privatization, deregulation, liberalization and public spending cuts imposed upon us. Why go back to the clutches of this blood sucker IMF?

Leave a Reply

Your email address will not be published. Required fields are marked *