In a first for the country, the Philippines has legislated to hold a debt audit into 20 projects to determine the legitimacy of the loans. The audit is part of the 2017 General Appropriations Act, signed into law by President Duterte on 22 December 2016.
Under the audit, the Congressional Oversight Committee on Official Development Assistance will investigate the legitimacy of debts arising from projects including the Power Sector Development Program, Sixth Road Project, Pampanga Development Flood Control project, Bohol Irrigation project Phase II and the Angat Water Supply Optimization project.
Lenders to the 20 projects under investigation include the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation.
Eduardo Tadem, president of the Freedom from Debt Coalition, the Filipino campaign against illegitimate debt, said:
“We congratulate the senators, particularly Senator Risa Hontiveros who relentlessly pursued the inclusion of a debt audit provision in the 2017 budget, Finance Committee Chair Senator Loren Legarda who supported the amendment, and Senate President Koko Pimentel who also co-introduced a separate resolution for a wider examination of foreign loans contracted in the last 15 years.”
Senator Risa Hontiveros said:
“This is truly a historic first. With this provision, we commit to diligently scrutinize the country’s debts if they are indeed in accordance with the principles on promoting responsible sovereign lending and borrowing by the United Nations Conference on Trade and Development (UNCTAD), and repudiate the illegitimate part of our overall debt.”
The Freedom from Debt Coalition hope the audit will be a first step towards investigating the legitimacy of debts arising from 481 projects on which payments are still being made. In 2016, the Freedom from Debt Coalition found 13 projects were questionable because of unfair terms or misuse of funds, all of which will be investigated through the debt audit.
Secretary General of the Freedom from Debt Coalition, Sammy Gamboa, has said:
“We have to arrest the further bleeding of public coffers on these fraudulent, wasteful or useless debts and rechannel funds to finance much-needed programs to address poverty and inequality, the speedy recovery of disaster-stricken areas, and the creation of jobs. We need to take the first step of examining, comprehensively, all public debts, immediately.”
According to the World Bank, the Philippines government external debt payments averaged $6.6 billion a year between 2010 and 2015, which was the equivalent of an average of 15 per cent of government revenue each year.
In 2013 Jubilee Debt Campaign supported the Freedom from Debt Coalition’s call for a suspension of debt payments following the devastation caused by Typhoon Haiyan, and for reconstruction funds to be given as grants rather than loans.