From: apakabar@IGC.APC.ORG ("Indonesia Publications/Task Force", by way
 of gustilo@pop-server.upenn.edu)
Newsgroups: soc.culture.filipino
Subject: PH: Disagreement on Debt (forwarded from SEASIA-L)
Date: 26 Jul 92 20:31:50 GMT

/* Written 12:10 am  Jul 26, 1992 by newsdesk in cdp:ips.englibrary */
/* ---------- "PHILIPPINES:Forgiving debt on one h" ---------- */
Copyright Inter Press Service 1992, all rights reserved.  Permission to re-
print within 7 days of original date only with permission from 'newsdesk'.

Title: PHILIPPINES:Forgiving debt on one hand and taking with the other


an inter press service feature

by candy gourlay

london, july 23 (ips) -- shadow development minister ann clwyd has
joined non-governmental organisations in pressing for a better
deal for the philippines on the eve of its signing a controversial
debt package in london.

the package involves the conversion of a 4.8 million dollar loan
into ''low-interest'' bonds as part of a much-applauded debt
forgiveness scheme.

but critics say the philippines - which has an external debt of
28 billion dollars - will lose more than it gains, since the bonds
will bind the country into paying fraud-tainted loans incurred
under ousted former president ferdinand marcos.

clwyd has written to minister for development lynda chalker to
urge the british government to pressure banks into excluding so-
called ''fraudulent loans'' from the package and improving the
loan terms.

''there are many witnesses to the suffering of the people of the
philippines, 70 percent of whom live below the poverty line,''
clwyd said. ''most of the people are being deprived of basic
social services by their government because 40 percent of its
budget is allocated to debt servicing.''

the deal casts a shadow over the brady initiative proposed in
1989 by united states treasury secretary nicholas brady which
seeks to provide debt relief for severely indebted middle-income
countries.

under the initiative, the world bank, international monetary fund
and other donors are paying 30 to 35 billion dollars from 1989 to
1992 to underwrite debt forgiveness in various forms with banks
participating on a voluntary basis.

''the principle is good but in some cases implementation has been
poorly handled,'' says neil mcculloch of the world development
movement (wdm), a group campaigning for debt relief. ''the brady
deal vindicates the wdm's argument that debt forgiveness can
reduce debt and enable countries to get back on their feet but
there is grave danger when it comes to a dodgy debt.'

the philippine debt package includes payment of a 256 million
dollar loan to the marcos government used to build a nuclear plant
in an earthquake zone. the resulting scandal unearthed a series of
shady payments of commissions and kickbacks to various marcos
cronies. (more/ips)

philippines:forgiving debt on one hand and taking with the other(2-e)

philippines: debt (2)

''why should the people suffer when the money probably went
straight to a tidy little account in europe?'' says maggie burns,
spokesperson for the philippine resource centre in london.
''the majority of the debt came from the marcos era, and you can
go one further and say that the majority of these loans were
incurred on a fraudulent basis.''

''it is a travesty of justice that they should be securitising
debts if they are based on fraudulent loans,'' mcculloch says.

the package to be signed tomorrow between philippine debt
negotiators and 50 commercial banks will shrink the philippines'
debt but will convert the balance into more secure bonds.

filipino taxpayers last week asked the country's supreme court to
stop the signing of the package, citing a constitutional provision
that ''all debt relief measures pursued by the government should
not be inimical to the national interest''.

''the banks are giving with the one hand and taking with the
other,'' a london-based filipino analyst said.

''unlike south america which has negotiated excellent deals under
the scheme, we are not in a very strong position. where latin
american debtors owe such a significant amount that the banks just
have to negotiate a good deal or go down with them, our debts are
not quite as significant nor as important,'' he said.

though latin american packages under the initiative have been
dubbed ''good deals'', the scheme has had no immediate impact on
the economies of participating debtor countries.

mexico, for example, received relief for a third of its
commercial debt, but the bulk of the relief will arise only when
the debt is paid off in the future.

clwyd also argues that the philippine package is ''manifestly
inferior'' to an argentinian deal. not only did argentina get
lower interest rates under the scheme, but it also clinched new
money worth 7.3 billion dollars.

''argentina, which has been in arrears for three years in the
amount of 8 billion dollars, receives new money in the amount of
7.3 billion, while the philippines which had so far demonstrated
'exemplary behaviour' is estimated to receive the uncertain sum of
100 million dollars,'' clwyd pointed out.

corazon aquino, who took power from marcos after the uprising,
chose to defer the signing of the agreement in the last days of
her term. she has handed the decision to her successor fidel
ramos, who became president in early july.

in previous years, the philippine government has sought
postponements on principal payments while keeping up interest
payments. but the philippine congress and various ngos have
consistently opposed even interest payments to debts incurred by
the marcos regime. (end/ips/de/cg/jmd/92)


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