Presidential bets tackle issue: Are loans good or bad for PH?
The Philippine debt as computed by the Ibon Foundation (Graph by Ed Lustan)
MANILA, Philippines — Are loans good or bad for the Philippines?
That was one issue that nine presidential candidates tackled on Sunday during the “Presidential Debate” hosted by CNN Philippines.
Specifically, moderators asked them to react to the figure “11.7 trillion” – which represents the Philippines’ total debt to date.
Not bad per se
“‘Foreign debt per see is not bad,” Vice President Leno Robredo said in Filipino. “But let’s make sure that what we borrowed will go to things that we really need. Let’s make sure that the return on our debts would be bigger than what we borrowed.
Robredo said the recent loans were understandable in the face of the COVID-19 pandemic. The government lacked funds due to high expenses for testing, quarantine, healthcare materials and equipment, and eventually, vaccinations.
However, she stressed that people would stand to lose the most if part of their taxes would be used for loan payments, — without their getting any benefit from the services.
“So I will make sure, if we get to sit as president, that we will look into how they are being spent. And we will make sure that we will pay the debts. We will make sure that they will go where they’re supposed to because the people will really lose if they just pay for the debts without getting any benefit from them,” Robredo said.
Former presidential spokesperson Ernesto Abella agreed with Robredo.
“That’s right. We should not be afraid of debt because it depends on us where we put i,” he said. “If we monitor it, then we can actually supervise it and make it grow. What we’re looking into now, what we’re planning to do is to develop agriculture and [turn it into a] mega-industry,” he explained.
Balanced budget needed
Sen. Panfilo Lacson, a longtime budget reform advocate, said that a balanced budget would ensure that the funds would be distributed with little corruption.
“One of the solutions is a balanced budget,” he said. “That’s because the budget should be balanced. The non-essentials should not be given a budget because, according to a study done by former Deputy Ombudsman Cyril Ramos, the amount that the national budget every year is P700 billion.”
“And then there’s our unutilized [funds]. I always study the national budget. So for the past 10 years, as I said earlier, its P328 billion on average from 2010 to 2020. So we need to have judicious spending,” he added.
‘All debts are bad’
But Dr. Jose Montemayor Jr. said that not a single loan would be good.
“There’s no good debt, contrary to the answer of VP Leni and Secretary Abella, who said there was nothing wrong with it,” he said. “You know that’s bad. We are mortgaging the future generation. Our children will suffer. Our grandchildren will suffer. Now how do we solve this?” he said.
“So what will we do? We will restructure […] We will clog all loopholes for corruption,. That’s all. It’s really simple.. There no good debt, all debts are bad.”
Labor leader Leody de Guzman also tagged loans as bad — but only because the P11.7 trillion loans had been accumulated since the presidency of Ferdinand Marcos — which he said various officials preyed on through the years.
“These are bad loans because they were made since the time of Marcos, by past administrations,” he said. “These were made by trapos [traditional politicians], of dynasties in government. That’s why much of what was borrowed was stolen. So what we have to do is to audit them and let those whoever stole them pay.”
Some loans can be good
Abella and Sen. Manny Pacquiao — who in the past claimed that he knew how to solve the country’s financial woes — countered Montemayor, saying that loans could be good.
“A debt is bad if you just neglect it,” he said. “But it’s not bad if you will monitor it. So, like a businessman, you really have to look into it. Somebody borrows money. Where did the capital come from? You borrowed it, right? So you need to invest it properly.”
“The point is: If you are really serious in making the country prosper, you should have capital, something to give it a push. And that is something you need to be responsible for,” Pacquiao added.
He stressed that there are two kinds of loans.
“There are those who borrow so they can put it in an investment. There’s an income return.,” he said. “There are those who borrow because they will spend it. That is, you will spend it on your needs every year. That is what’s bad. But it’s okay to borrow if you will put it into an investment.”
“For example. if we have a shortage of power here, we will put a power generator here to add to our power. That’s not bad because there’s an income return. But if you borrow for yearly expenses, that’s what I would say made our country mismanaged.”
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