THIRTEENTH CONGRESS OF THE REPUBLIC ) 
5 SEP -6 
p2:17 
OF THE PHILIPPINES 
1 
Second Regular Session 
) 
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@d 
RECEIVED BY: 
SENATE 
S.B.No. 
2113 
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Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
The Philippines is caught in a debt trap. We are trapped in the national effort to pay 
interest on our foreign debts. The first step we must take in order to get out of this self-imposed 
trap is to repeal the automatic appropriations law. 
Executive Order No. 292, otherwise known as the Revised Administrative Code of 1987, 
in its Section 26 of Book 6, institutionalizes automatic appropriations for debt servicing. 
Effectively, this measure gives highest priority to debt service over all government 
spending such as education, health agrarian reform, poverty reduction, disaster relief, social 
safety nets, rural infrastructure, etc. 
For example, 33% of the 2005 national budget went to debt servicing. In the budget 
proposed by Malacaiiang for 2006, debt servicing is again given the highest priority. Out of a 
total budget of P1 .O5 trillion, Malacaiiang is proposing P721 billion for debt payments consisting 
of P381 billion in principal amortization and P340 billion in interest payments. This amounts to 
approximately P931 million per day for the interest alone. Such appropriations should, at the 
very least, be based on the country's economic growth levels or our capacity to pay. 
Furthermore, it should not unduly deprive other government priority programs of scarce 
resources. 
. 
Because of this mandatory appropriation for debt servicing, Congress is forced to work 
with whatever is left of the budget. 
It effectively deprives Congress of exercising its 
constitutionally granted power of the purse by undermining its authority to determine how to 
allocate the national revenues. 


Furthermore, automatically approving payment for debts incurred or guaranteed by the 
national government without auditing or reviewing the loan agreements and the nature of these 
debts lends a cloak of legitimacy to odious debts. These behest loans become an obligation that 
each Filipino must suffer for. 
The current state of economic affairs dictates that government take a firm, innovative, 
responsible and pragmatic approach to dealing with the external debt problem. 
The foreign debt service burden should be subordinate to the national development goah 
of alleviation of poverty, generation of more and productive employment, enhancement of social 
justice and equity, and promotion of sustainable economic growth. Economic growth, equity and 
social justice should have prior claims over and above the interests of foreign creditors. 


THIRTEENTH CONGRESS OF THE REPUBLIC ) 
Second Regular Session 
OF THE PHILIPPINES 
5 SEP-6 
p?:17 
1 
I 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
REPEALING THE AUTOMATIC APPROPRIATION FOR DEBT SERVICE, 
AMENDlNG FOR THE PURPOSE SECTION 26, CHAPTER 4, BOOK VI 
OF EXECUTIVE ORDER NO. 292 OTHERWISE KNOWN AS 
THE REVISED ADMINISTRATIVE CODE OF 1987 
Be it enacted by the Senute rand the House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 26, Chapter 4, Book VI of Executive Order No. 292, otherwise 
known as the Revised Administrative Code of 1987, is hereby amended to read as follows: 
BOOK VI 
NATIONAL GOVERNMENT BUDGETING 
Chapter 4 -BUDGET AUTHORIZATION 
Section 26. Automatic Appropriation. - All expenditures for (1) personal 
retirement premiums, government service insurance, and other similar fixed 
expenditures, [(2) principal and interest on public debt, (3) national government 
guarantees of obligations which are drawn upon,] are automatically appropriated: 
provided, that no obligations shall be incurred or payments made from funds thus 
automatically appropriated except as issued in the form of regular budgetary 
allotments. 
x x x  
SECTION 2. Repealing Clause. - Any law, presidential decree or issuance, executive 
order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent 
with the provision of this Act is hereby repealed, modified or amended accordingly. 


SECTION 3. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
publication in two (2) national newspapers of general circulation. The publication shall not be 
later than seven (7) days afier approval hereof. 
Approved,