The Philippine Debt Audit
Campaign
A Renewed Call to the 14th Congress
and the Filipino People
Presented by
Rebecca L. Malay
Treasurer, Freedom from Debt Coalition
The Debt Audit

Congressional Debt Audit
Where we are
 Moving forward: issues & considerations


Citizens Debt Audit Commission
Where we are
 General Concept
 Refinement in structure
 Proposed members of the Commission

Is the debt problem over?
Growing Debt Problem (in trillion pesos)
5.00
4.50
4.00
3.50
3.00
NG Contingent Liabilities
National Government (NG) Debts
Debt Service
Gross Borrowings
2.50
2.00
1.50
1.00
0.50
0.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Aquino
Ramos
Estrada
Arroyo
Sources: Bureau of Treasury for NG Debts and Contingent Liabilities, Bangko Sentral ng Pilipinas on Gross
Borrowings, and Department of Budget and Management (General Appropriations Act) for Debt Service
Record Breaker
Arroyo: Largest Borrowed, Largest Paid (in trillion pesos)
3.50
3.09
2.83
3.00
2.50
Gross Borrowings
Debt Payments
2.05
2.00
1.46
1.50
1.00
0.78
0.52 0.56
0.50
0.57
0.71
0.37
0.00
Aquino (87-92)
Ramos (93-98)
Estrada (99-00)
Total (Aquino,
Ramos, Estrada)
Sources: Bangko Sentral ng Pilipinas on Gross Borrowings, and Department of
Budget and Management for Debt Service
Arroyo (01-06)
Is the debt problem over?
NG Outstanding Debt
3.819
Domestic Debt (by instruments)
2.148
Treasury Bills
0.588
Treasury Bonds/Notes
1.538
Loans
0.022
Others
0
Foreign Debt (by creditors, using $1=P46.35)
1.671
Multilateral
0.251
Bilateral
0.378
Commercial
0.035
Foreign Denominated Securities
1.006
NG Contingent Liabilities
0.530
Domestic Debt
0.072
Foreign Debt
0.458
National
Government
Debt as of
end-May 2007
(in trillion
pesos)
Source: Bureau of
Treasury, SDAD
Note: Breakdown of totals
may not sum up due to
rounding of digits
Who pays?
Revenues vs. Debt Service (in billion pesos)
1,200
1,000
800
Revenues
Debt Servicing
600
400
200
0
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Aquino
Ramos
Estrada
Arroyo
Source: Bureau of Treasury for Revenues data, Department of Budget and Management for Debt Service data
Who suffers?
Government Expenditures 1987-2006 (in billion pesos)
800
700
600
Debt Service (Interest plus Principal)
Education
500
Health
400
Social Security
300
200
100
Aquino
Ramos
Estrada
Arroyo
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0
Who suffers?

Social expenditures received the brunt of
expenditure cuts.
 Most
evident during the time of Arroyo
 The gap between education expenditure and
debt service grew by 52.06% in 2002, the
highest in recent history
 Health and Social Security has not been a
priority for the longest time compared to debt
servicing
Education Spending*

Average national spending for education by
administration show that based on 2000 prices, the
amount spent per pupil fell during Arroyo’s time
Marcos (1981-85) : Php 3 027
Aquino (1986-92) : Php 4 478
Ramos (1993-95): Php 4 959
Estrada (1999-01): Php 5 830
Arroyo (2001-04) : Php 5 467
*former Budget Secretary Benjamin Diokno, “Real State of the Nation”, 20 July 2007
Health Spending*

Combined (NG and LGU) per capita health
spending show that
Marcos (1981-85) spent Php 240
Aquino (1986-92) Php 278
Ramos (1993-98) Php 321
Estrada (1999-00) Php 360
Arroyo (2001-04) Php 303
*former Budget Secretary Benjamin Diokno, “Real State of the Nation”, 20 July
2007
Congressional Debt Audit
The call for a Congressional Debt
Audit, calls for a comprehensive
investigation of all public sector debts
and contingent liabilities.
 Last Congress, the House of
Representatives swiftly passed the Debt
Audit Resolution, but the Senate failed to
take it up.

Congressional Debt Audit

13th Congress: Review of engagement
Positive
Negative
 Unanimous approval of Passage
House Joint Resolution No. 1 in Sept
2004 through the efforts of Lagman,
Zialcita, progressive & minority solons
 Discussion of Senate version
blocked in the Committee of Finance
headed by Sen. Villar
 Developed stronger support from
several minority senators – Pimentel,
Madrigal, Lacson through other
engagements
 Sen. Biazon not keen on fighting it
out; opted to develop an alternative
bill creating a Debt Management
Office
 Linked up for support with key staff
of LP Drilon wing
 Sen. Enrile apparently unhappy
about Biazon’s eventual authorship of
the Senate version of the resolution
Congressional Debt Audit

14th Congress: Opportunities & Challenges
OPPORTUNITIES
CHALLENGES
 Lagman’s continued commitment
to pursue the debt audit; other allies
also committed
 Other issues such as charter
change may put the debt audit
agenda in the sidelines
 Senate dominated by opposition;
key allies in the HOR now in the
Senate (Escudero, A. Cayetano),
Trillanes
 The Senate President opposes
Debt Audit Resolution
 Administration legislators
dominates the Lower House
Congressional Debt Audit
How to move forward: issues & concerns
1.
2.
3.
4.
5.
Joint resolution vs Committee level audit
Role of Rep. Lagman – he has the capacity to once
again push for the passage in the Lower House, but
the dynamics between him and the Senate should be
assessed
Authorship of Biazon of the Senate version; possible
author is Sen. Pimentel
How to handle Sen. Enrile?
How else to maximize the favorable composition of
the Senate?
Citizens Debt Audit

Where we are



Convened 36 individuals and political bloc
representatives as convenors of the Citizens debt
Audit in 2004
Met three times in 2005; difficulty in convening in
2006 as a result of the political crisis
FDC’s work since 2006 up to the present allowed it
to consolidate sectors (YAD), and expand support for
the debt audit initiative (Budget Consortium, ODA
Watch, GCAP, LnM, other anti-GMA, faith-based,
etc.)
Citizens Debt Audit Commission
General Concept
1. Critical examination of the Philippine public
debt based on:



Data and existing studies by resource persons and
organizations
Studies prepared by working groups and technical
teams to be organized by the Citizens Debt Audit
Commission
Testimonies and inputs from affected communities,
sectors and people’s organizations
Citizens Debt Audit Commission
Mechanics of the study:
 The review and examination process will follow an outline of the
themes/topics. The presentations and discussions will be aimed at
establishing the over-all picture (data, trends, etc.) and answering
general and specific questions addressing the issues and problems
related to the themes/topics.
 Studies, data and testimonies will be presented to the
Commissioners and to the general public in Public Hearings. These
sessions will devote sufficient time for questions, clarifications and
open discussion.
 The Commissioners may also have smaller discussion-meetings with
resource persons, witnesses, working groups and technical teams.
Citizens Debt Audit Commission
2. Preparation and release of reports summarizing
the findings of the Citizens Debt Audit and
formulation of recommendations and options
based on the findings. Thematic reports with
corresponding recommendations will be issued
periodically as theme of the review is
completed. A comprehensive over-all report
with recommendations will be issued at the end
of the process.
Citizens Debt Audit Commission
Mechanics of the reports and recommendations:

The draft report and recommendations for each theme
will be prepared by assigned commissioners together
with the working group(s), resource persons and
technical team concerned.

The draft report will be presented to all the
commissioners in Public Forums to which the general
public may be invited. The findings and
recommendations will be openly debated in the
Forums

The commissioners will finalize the
report/recommendations and submit it to appropriate
government entities, which may be done with people’s
participation (i.e. with accompanying mobilization). A
summary will be presented to the media in press
conferences
Citizens Debt Audit Commission
Themes and Topics
1. Overview of the Current Public Debt Situation
2. Overview of the Historical Development of the Philippine Debt
Problem Including:

Global context

Periods of Crisis, Policies implemented, Results

History of Renegotiations and Debt Relief Schemes

Critical Issues that Emerged
3. Borrowings – Laws, Policies, Regulations, Trends and Issues
4. Debt Payments - Laws, Policies, Regulations, Trends and Issues
5. National Government Debt – Overview, Trends and Issues
6. NG External Debt – BNPP (lessons)
7. NG External Debt – Project and Program Loans – outcome and
impact of the projects, terms and conditionalities
Citizens Debt Audit Commission
8. NG External Debt – Loan Conditionalities; Debt as Leverage for Adjustment
Programs; Relations with Multilateral Financial Institutions
9. Private Loans and Liabilities Assumed by the National Government; Behest
Loans; Brady Securitization Deal
10. Interest Rates – Trends and Issues
11. NG External Debt – Bonds - Trends and Issues
12. Government-Owned and Controlled Corporations (GOCCs) and
Government Financial Institutions (GFIs) Debts
NAPOCOR debts, etc
13. Build-Operate-Transfer (BOT) Projects– Debts and Liabilities
14. NG Debt – Domestic Debt
15. Old Central Bank and Bangko Central

Other Topics for Background
1. Debt Relief, Debt Reduction Instruments and Options
2. Lessons and Experiences from Other Countries
Citizens Debt Audit Commission
Structure of the Commission
 Members of the Commission (not to exceed 20
individuals with established credibility &
expertise)





Organizing and presiding over the process;
Taking the lead in the review, examination and
preparations of reports and recommendations;
Ensuring people’s participation in the audit process
Ensuring that the process is open and transparent
manner to the general public
Finalizing the reports and recommendations
Citizens Debt Audit Commission
Structure (cont’n)
 Technical Committee


composed of consultants and technical experts
Thematic Committees
composed of people’s organizations, NGOs and individuals to focus on
putting together studies on a particular theme or specific topic for the
audit process, to be submitted to the Citizens Debt Audit commission.
 will also work with assigned commissioner/s in the preparations of the
report and recommendations, which will eventually be presented and
discussed in public forums.


Secretariat - events organizing, public information and media;
research and data base-building; administration and finance (start
with two staff)
Freedom from Debt Coalition
(FDC) – Philippines
http://www.freedomfromdebtcoalition.org
mail@freedomfromdebtcoalition.org
+63(02)9246399 (Tele-fax), +63(02)9211985
Thank you.