Senate concurs in AIIB treaty ratification

INQUIRER PHOTO / GRIG C. MONTEGRANDE

Twenty senators voted on Monday to adopt a resolution seeking the Senate’s concurrence in the ratification of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB).

Only Senator Risa Hontiveros voted against Senate Resolution No. 241, saying a “debt audit” should be conducted first before the country joins another international financial institution.

Senator Loren Legarda, who earlier sponsored the resolution on the floor, likened the AIIB to the Asian Development Bank (ADB) and the World Bank.

Legarda, who chaired the hearing of the Senate sub-committee on foreign relations for the AIIB Treaty, said AIIB is a multilateral lending institution, owned by sovereign-member countries, which aims to promote economic development in Asia.

“It aims to foster economic development and promote regional cooperation,” she said.

But before joining another international financial institution, Hontiveros said the country should verify first whether the loan agreements that the country has entered into are in accordance with the principles on responsible sovereign lending and borrowing published by the United Nations Conference on Trade and Development.

“Among others, these principles make lenders responsible for making realistic assessments of the sovereign borrower’s capacity to service a loan based on the best available information and following objective and agreed technical rules on due diligence and national accounts,” she said in explaining her no vote.

“Lenders are also made responsible for performing their own ex ante investigation into and, when applicable, post-disbursement monitoring of, the likely effects of the project, including its financial, operational, civil, social, cultural, and environmental implications.”

This responsibility, Hontiveros said, should be proportional to the technical expertise of the lender and the amount of funds to be lent.

“It is imperative that we do this, considering that our country has accumulated a substantial external debt burden, for which we are compelled to set aside a substantial portion of our annual budget pursuant to Section 26(B), Book VI of the Revised Administrative Code,” she said.

The senator noted that in the 2016 national budget alone, P214.5 billon has been allocated for debt servicing.

“Of this amount, I have been advised by our partners in civil society that around 3.78 Billion will go to interest and principal payments in connection with a number of questionable loan-funded projects, including: the Power Sector Development Program, Sixth Road (Tullahan), Pampanga Development Flood Control, Bohol Irrigation II, and Angat Water Supply Optimization,” she said.

“Thus, before joining another international financial institution, I strongly urge that the Congressional Oversight Committee on Overseas Development Assistance conduct a debt audit to verify whether the loan agreements our country has entered into are legitimate.”

Pending the conduct of this audit, Hontiveros said, the payment of interest on questionable loan-funded projects should be held in abeyance.

“In addition, before contracting additional sovereign debt, we should ensure that adequate safeguards are in place to protect the Filipino people from irresponsible sovereign lending and borrowing,” she said.

“One of the most important ways this can be done is by finally repealing the provisions in our statutes requiring automatic appropriations for debt servicing,” the senator added./ac