Overview on the Fiscal
and Debt Crisis
(work in progress)
Lidy B. Nacpil
Freedom from Debt Coalition
FISCAL CRISIS
FISCAL
 From the latin word “fiscus” meaning
PURSE or TREASURY
 INCOME - revenues from taxes, tariffs,
non-tax, (borrowings)
 SPENDING - budget and off-budget
expenditures (and other disbursements)
SIGNS OF THE FISCAL CRISIS
NATIONAL BUDGET DEFICIT -- increasing
sharply since 1998







1998 (9.30%)
1999 (19.24%)
2000 (19.67%)
2001 (21.02%)
2002 (28.40%)
2003 (24.89%)
2004 Projected (22.88%)
NATIONAL GOVERNMENT EXPENDITURES_DEFICIT 1990 - 2004
(In million pesos)
PARTICULARS
NG Expenditures
Overall Surplus /(Deficit)
Suprlus/(Deficit) as % of
Total Expenditures
PARTICULARS
1990
71,114
1991
74,922
1992
79,571
1993
76,491
1994
79,123
1995
72,851
1996
76,522
223,473
248,679
262,042
276,859
330,203
372,081
416,139
(37,194)
(26,349)
(15,966)
(21,891)
16,286
11,074
6,255
-16.64%
-10.60%
-6.09%
-7.91%
4.93%
2.98%
1.50%
1997
1998
1999
2000
2001
2002
2003
77,971
2004
Programmed
NG Expenditures
Overall Surplus /(Deficit)
Suprlus/(Deficit) as % of
Total Expenditures
491,783
537,433
580,385
682,460
699,878
742,022
811,562
864,763
1,564
(49,981)
(111,658)
(134,212)
(147,100)
(210,741)
(202,000)
(197,816)
0.32%
-9.30%
-19.24%
-19.67%
-21.02%
-28.40%
-24.89%
-22.88%
Source of figures: Department of Budget and Management
NG Expenditures v-a-v Deficit & Revenues
1,000,000
800,000
600,000
400,000
200,000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
-200,000
-400,000
NG Expenditures
Overall Surplus /(Deficit)
NG Revenues
2002
2003
2004
FACTORS THAT LED TO THE
FISCAL CRISIS


THE DEBT -- The problem of the DEBT
is the biggest factor that led to the crisis
FALLING REVENUES
THE PROBLEM OF THE DEBT

The Debt has been a major problem for
the Philippine for more than two decades.

The TOTAL DEBT of the Philippines is
composed of the following:
– Public Debt – government borrowings
– Private Debt – private corporations
and private entities
This is a classification based on the
borrowers

It is the PUBLIC DEBT that is
immediately relevant to the Fiscal Crisis
but the Private Sector Debt has also an
important impact on the economy as a
whole.

Public sector debt as of end December
2003 is 5.9 trillion pesos – about 130%
of GDP (Source: Department of Finance)

Debt is also classified based on
creditor:
– FOREIGN or EXTERNAL
– DOMESTIC
Thus we have PUBLIC DEBT –
external/foreign and domestic
(Private Debt is also both external/foreign
and domestic)

Foreign Debt or External Debt is debt
owed in foreign currency to foreign
creditors such as:
– Multilateral Financial Institutions
 IMF
and World Bank
– Bilateral Creditors
 Governments
and their financial institutions
– International and Foreign Commercial Banks
– Foreign buyers of Phil Government issued bonds
and other similar instruments

Domestic debt is debt owed to Philippine
creditors and includes those in Pesos as well
as dollar-denominated loans:
– Buyers of Treasury Bills and Bonds and
other similar instruments
– Philippine Banks and other Financial
Institutions
Structure of the Public Sector Debt
 National Government
Foreign and Domestic
 14 Monitored GOCCs
Foreign and Domestic
– Central Bank / CB-BOL
Foreign and Domestic
– Bangko Sentral
Foreign and Domestic
– Government Financial Institutions
Foreign and Domestic
Less GOCC Onlent or Guaranteed by NG
14 Monitored GOCCs

Home Guaranty Corporation

Light Rail Transit Authority

Local Water Utilities
Administration

Metropolitan Waterworks &
Sewerage System

National Development Company

National Electrification
Administration

National Food Authority

National Housing Authority

National Irrigation
Administration

National Power Corporation

Philippine Economic Zone
Authority

Philippine National Oil
Company

Philippine National Railways

Philippine Ports Authority
Government Finance Institutions (GFIs)

Al Amanah Islamic
Investment Bank of the
Philippines

National Home Mortgage
Finance Corporation

Development Bank of the
Philippines

Land Bank of the
Philippines

Philippine Crop
Insurance Corporation

Trade & Investment
Development
Corporation of the
Philippines

The Debt is not only a problem of the
Philippines – it a problem of more than 100
countries. Previously referred to as Third
World countries, they are now called “the
South” or South countries.

The emergence of the global debt problem –
a short review of history

Philippine debt started ballooning in the 1970’s:
– in 1970: outstanding Foreign debt stood at $2.3 billion;
$1.1 billion of which was public debt
– By 1979: $13.35 billion -- $7.65 billion public debt
– By 1985: US$ 26.25 billion -- $19.12 billion public debt

The Philippines went through a major debt crisis
in the 1980’s, when NG debt payments (principal
and interest) were claiming from 30% to 50% of
the national budget.

In the 1990’s the Philippine debt was declared as
“manageable” or “sustainable” by the IMF and World
Bank, a claim echoed by the Philippine government.

This was after the Brady securitization program was
implemented (Philippines, Argentina, Brazil and several
other countries who went through a debt crisis in the
1980’s)

Brady Plan – conversion of a large part of short-term
commercial debt in longer term bonds

This declaration of “manageable” or “sustainable”
debt was extremely unfortunate. The Philippine
government went into “denial” mode and became
complacent.

Even when the debt was considered sustainable –
NG debt payments were still claiming a big share of
the national budget – average of 20%, and this was
only interest payments. (Payment of NG debt
principal became an off-budget item in 1993).

The outstanding debt continued to grow at a fast
rate. From 1993 to 2002, growth was more than
double.

In the 1980’s, the main problem was FOREIGN
DEBT.

Eventually, public domestic debt grew, as the
Philippine government and related institutions
borrowed domestically to be able to service the
foreign debt. The big increase also took place when
access to international credit was limited.

At one point, more than half of public debt was
domestic debt.

At the present time, the ratio is about 50-50.
Outstanding Public Sector Debt
1993 to 2002 in Php billions
Domestic
External
Total
1993
1,260.70
652.10
1,912.80
1994
1,289.20
660.20
1,949.40
1995
1,453.60
713.50
2,167.10
1996
1,502.60
734.60
2,237.20
1997
1,586.90
1,082.40
2,669.30
1998
1,721.20
1,230.30
2,951.50
1999
2,196.60
1,469.70
3,666.30
2000
2,542.00
1,855.20
4,397.20
2001
2,286.30
2,125.10
4,411.40
2002
2,765.40
2,397.30
5,162.70
Outstanding Public Sector Debt (% of total for the Year)
Domestic
External
1993
65.91%
34.09%
1994
66.13%
33.87%
1995
67.08%
32.92%
1996
67.16%
32.84%
1997
59.45%
40.55%
1998
58.32%
41.68%
1999
59.91%
40.09%
2000
57.81%
42.19%
2001
51.83%
48.17%
2002
53.56%
46.44%
Outstanding Public Sector Debt
(in Php Billion)
6,000.00
External
Domestic
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002

These figures are in Philippine pesos. But
since foreign debt is owed in foreign
currencies, any change in foreign exchange
rates means an automatic change in the
Phil peso value of the foreign debt.
A closer look at the Public Debt

Breakdown of PUBLIC SECTOR DEBT
as of the year 2002 is the following
2002 Outstanding Public Sector Debt
(in Php Billion) Source: Dept of Finance
Domestic External
Total*
2,765.4
2,397.4
Total
5,162.8
National Government
1,492.3
1,914.9
3,407.2
14 Monitored GOCCs
895.7
474.4
1,370.1
-
67.1
67.1
Bangko Sentral
164.3
450.4
614.7
Gov’t Financial Institutions
234.2
153.4
387.6
21.1
662.8
683.9
Central Bank/CB-BOL
(* Already less: GOCC Debt
Onlent or Guaranteed by NG)
2002 Outstanding Public Sector Debt
(in % of Total)
Domestic
External
Total
100%
100%
100%
National Government
53.55
62.57
58.27
14 Monitored GOCCs
32.14
15.5
23.43
Central Bank/CB-BOL
-
2.22
1.14
Bangko Sentral
5.89
14.71
10.51
Government Financial Institutions
8.4
5.0
6.62
Total
Less: GOCC Debt Onlent or Guaranteed
by NG
Outstanding Public Sector Debt
(Year end, in Billions of Pesos)
Particulars
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Total Public Sector 1/
Domestic
External
(US$ billion)
1912.8
1260.7
652.1
23.5
1949.4
1289.2
660.2
27
2167.1
1453.6
713.5
27.2
2237.2
1502.6
734.6
27.9
2669.3
1586.9
1082.4
27.1
2951.5
1721.2
1230.3
31.5
3666.3
2196.6
1469.7
36.5
4397.2
2542
1855.2
37.1
4411.3
2286.3
2125.1
41.3
5162.7
2765.4
2397.3
45.2
National Government 2A/
National Government 2B/
Domestic 2/
External 3/
(US$ billion)
1268.8
1074.2
682.1
586.7
21.2
1227.5
1028.1
670.6
556.9
22.8
1325.5
1103.1
724.6
600.9
22.9
1331.8
1107.3
748.3
583.6
22.2
1624
1282.9
757.3
866.7
21.7
1800.4
1421.1
859.6
940.8
24.1
2142.2
1692.5
986.7
1155.5
28.7
2648.8
2074
1080.7
1568.2
31.4
2880.7
2302.3
1270.9
1609.8
31.3
3407.2
2723.3
1492.3
1914.9
36.1
14 Monitored GOCCs 4/
Domestic
External
(US$ billion)
268.6
139.1
129.5
4.7
269.9
147.3
122.6
5
343.2
205.9
137.2
5.2
453.3
312.1
141.1
5.4
622
436
186
4.7
643.9
419.1
224.8
5.8
930.9
644.8
286.1
7.1
1118.7
810.6
308.1
6.2
1139.9
744.9
395
7.7
1370.1
895.7
474.4
8.9
Central Bank/CB-BOL 5/
Domestic
External
(US$ billion)
59.6
81.1
82.6
77.1
112
102.2
74.9
81.8
73.9
67.1
59.6
2.2
81.1
3.3
82.6
3.2
77.1
2.9
112
2.8
102.2
2.6
74.9
1.9
81.8
1.6
73.9
1.4
67.1
1.3
Bangko Sentral 5/
Domestic
External
(US$ billion)
209.3
173.6
35.7
1.3
240.9
183.9
57
2.3
253.8
185.8
68
2.6
332
227.1
104.9
4
301.9
126.29
175.65
4.4
387.5
123.3
264.2
6.8
492.8
193.5
299.3
7.4
587.8
202.6
385.2
7.7
593.8
118.3
475.5
9.2
614.6
164.3
450.4
8.5
Government Financial Institutions
Domestic
External
(US$ billion)
301.1
271.1
30
1.1
329.4
293
36.6
1.5
384.5
343.5
40.9
1.6
267.6
221.4
46.2
1.8
350.5
275
75.4
1.9
396.8
327.9
68.9
1.8
475.2
379.9
95.3
2.4
534.9
460.6
74.3
1.5
301.4
175.3
126.1
2.5
387.5
234.2
153.4
2.9
Less: GOCC Debt Onlent or
Guaranteed by NG 6/
Domestic
External
(US$ billion)
194.6
5.2
189.4
6.8
199.4
5.6
193.8
7.9
222.4
6.2
216.2
8.2
224.6
6.2
218.3
8.3
341.1
7.7
333.4
8.3
379.3
8.7
370.6
9.5
449.7
8.3
441.4
10.9
574.8
12.5
562.3
11.2
578.4
23.2
555.2
10.8
683.9
21.1
662.8
12.5
MEMORANDUM ITEMS
Exchange Rate (P/US$1)
End of Period
27.7
Average
27.12
NG Debt Stock/GNP %
76.10
NG Domestic Debt %
45.50
NG External Debt %
39.10
Public Sector Debt Stock/GNP 1/ % 127.50
Public Sector Domestic Debt 1/ % 84.00
Public Sector External Debt 1/ % 43.50
24.42
26.42
59.20
38.60
32.10
112.30
74.20
38.00
26.21
25.71
56.30
37.00
30.70
110.60
74.20
36.40
26.29
26.22
49.00
33.10
25.80
98.90
66.40
32.50
39.98
29.47
50.70
30.00
34.30
105.60
62.80
42.80
39.06
40.89
50.70
30.70
33.60
105.30
61.40
43.90
40.31
39.09
54.00
31.50
36.80
116.90
70.00
46.90
50
44.19
59.30
30.90
44.80
125.70
72.70
53.10
51.4
50.99
58.80
32.40
41.10
112.60
58.30
54.20
53.1
51.6
63.50
34.80
44.60
120.30
64.50
55.90
1/ Includes National Government, 14 monitored GOCCs, CB/BOL/BSP and GFIs
2/ Includes direct, assumed and contingent liabilities
2A/ Includes direct, assumed and contingent liabilities
2B/ Excludes onlent and contingent/guaranteed liabilities which have not been assumed
3/ Includes direct, guaranteed and assumed liabilities
National Government Debt
 The
outstanding NG debts as of
February 2004 in Philippines
pesos is 3,407,109,000,000
(trillion).
The Outstanding NG debt figures in
Philippine pesos for the years 1999 to 2004:
 1999 – 1,775,356,000,000 (trillion)
 2000 - 2,166,710,000,000 (trillion)
 2001 - 2,384,917,000,000 (trillion)
 2002 - 2,815,468,000,000 (trillion)
 2003 - 3,355,108,000,000 (trillion)
 2004 - 3,407, 109,000,000 (trillion)
National Government
Outstanding Debt
I. DOMESTIC
A. NG Direct
B. Assumed Liabilities
II. FOREIGN
A. Direct
B. Assumed
C. NG Foreign Bonds
National Government
Outstanding Debt
I. DOMESTIC
A. NG Direct
Govt. Securities
Agencies
Relent
B. Assumed Liabilities
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
National Government Outstanding Debt
II. FOREIGN
A. Direct
Agencies
Relent
B. Assumed
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
C. NG Foreign Bonds
National Government Outstanding Debt 2004
(In Million Pesos)
Source: Bureau of Treasury
Particulars
TOTAL
2004 (Feb)
3,407,109
I. DOMESTIC
1,755,330
NG Direct
1,753,033
Govt. Securities
Agencies
Relent
1,737,472
15,561
-
Assumed Liabilities
2,297
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
II. FOREIGN
Direct
2,291
6
-
1,651,779
808,897
Agencies
Relent
696,295
112,602
Assumed
6,961
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
NG Foreign Bonds
48
1,168
5,432
271
42
835,921
* Breakdown of totals may not sum up due to rounding Foreign Exchange rate used US$ = P 56.25
National Government Outstanding Debt 1999 to 2004
(In Million Pesos)
Particulars
TOTAL
1999
1,775,356
2000
2,166,710
2001
2,384,917
2002
2,815,468
2003
3,355,108
2004 (Feb)
3,407,109
I. DOMESTIC
978,404
1,068,200
1,247,683
1,471,202
1,703,781
1,755,330
NG Direct
958,035
1,049,083
1,233,825
1,462,950
1,701,484
1,753,033
918,292
39,732
11
1,033,542
15,541
-
1,218,508
15,317
-
1,447,341
15,609
-
1,685,924
15,560
-
1,737,472
15,561
-
20,369
19,117
13,858
8,252
2,297
2,297
6,006
13,967
389
6
-
5,590
13,159
362
6
-
3,842
9,761
249
6
-
1,979
6,138
129
6
-
2,291
6
-
2,291
6
-
796,952
1,098,510
1,137,234
1,344,266
1,651,327
1,651,779
Govt. Securities
Agencies
Relent
Assumed Liabilities
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
II. FOREIGN
Direct
541,477
647,468
626,958
705,414
815,942
808,897
Agencies
Relent
458,667
82,810
554,794
92,674
544,375
82,583
613,292
92,122
702,521
113,421
696,295
112,602
Assumed
13,122
13,472
11,631
9,815
7,985
6,961
359
2,174
9,890
438
261
329
2,163
10,443
462
75
244
1,831
9,091
401
64
152
1,592
7,673
342
56
56
1,349
6,260
272
48
48
1,168
5,432
271
42
242,353
437,570
498,645
629,037
827,400
835,921
* Breakdown of totals may not sum up due to rounding
Forex Rate Used
40.250
49.950
Source: DMAD-BTr
51.500
53.050
55.550
56.250
PNB
DBP
NPC/PNPP
PGC
NDC
PAL
NG Foreign Bonds
IMPACT of the NATIONAL GOVERNMENT (NG)
ON THE FISCAL CRISIS

The NG debt payments (interest and principal) is the
biggest contributing factor to the current fiscal crisis.

Payments on interests on the NG debt have been
claiming a large portion of the NG budget for a long
time, crowding out spending for other items.

It is the largest item in the NG Budget, and the % has
been increasing in recent years. In 2004, it is larger
than all Social Service items combined.

Interest payments and principal payments of the NG
debt is equivalent to 80% of 2004 revenues; For 2005 –
debt payments are projected to be equivalent to 95% of
revenues.
Secotral Allocation og NG Budget 1993 - 2004
300,000
250,000
200,000
150,000
100,000
50,000
0
1993
1994
1995
ECONOMIC SERVICES
1996
1997
SOCIAL SERVICES
1998
DEFENSE
1999
2000
2001
GENERAL PUBLIC SERVICES
2002
2003
2004
DEBT SERVICE (INTEREST)
NG EXPENDITURES
1993
ECONOMIC SERVICES
% of total for the year
SOCIAL SERVICES
% of total for the year
64,691
1994
85,076 102,443
23.37% 25.76%
64,732
1995
27.53%
In Millions of Pesos
1996
1997
1998
1999
2000
2001
2002
2003
2004
105,400 131,779
129,394
139,205
167,216
141,236
151,255
164,108
155,924
25.33%
26.80%
24.08%
23.98%
24.50%
20.18%
20.38%
20.22%
18.03%
122,864 158,864
175,152
192,838
212,982
217,217
230,495
235,568
248,252
77,300
99,985
23.38% 23.41%
26.87%
29.52%
32.30%
32.59%
33.23%
31.21%
31.04%
31.06%
29.03%
28.71%
DEFENSE
% of total for the year
20,002
23,125
27,493
30,978
29,212
31,512
32,959
36,208
32,782
38,907
40,645
43,191
7.22%
7.00%
7.39%
7.44%
5.94%
5.86%
5.68%
5.31%
4.68%
5.24%
5.01%
4.99%
GEN. PUBLIC SERVICES
% of total for the year
48,294
59,686
65,613
79,215
92,576
101,254
105,900
122,526
120,019
132,878
134,944
140,365
17.44% 18.08%
17.63%
19.04%
18.82%
18.84%
18.25%
17.95%
17.15%
17.91%
16.63%
16.23%
NET LENDING
% of total for the year
INTEREST PAYMENTS
% of total for the year
2,649
5,893
3,696
1,161
1,381
329
3,193
2,634
7,023
2,626
5,500
5,500
0.96%
1.78%
0.99%
0.28%
0.28%
0.06%
0.55%
0.39%
1.00%
0.35%
0.68%
0.64%
76,491
79,123
72,851
76,522
77,971
99,792
106,290
140,894
181,601
185,861
230,697
271,531
27.63% 23.96%
19.58%
18.39%
15.85%
18.57%
18.31%
20.65%
25.95%
25.05%
28.43%
31.40%
416,140 491,783
537,433
580,385
682,460
699,878
742,022
811,462
864,763
100%
100%
100%
100%
100%
100%
100%
(49,981) (111,658) (134,212)
(147,100)
TOTAL
% of total for the year
276,859 330,203 372,081
100%
100%
100%
100%
100%
SURPLUS/DEFICIT
% of TOTAL EXP.
(21,891)
16,286
11,074
6,255
1,564
-7.91%
4.93%
2.98%
1.50%
0.32%
-9.30%
-19.24%
-19.67%
-21.02%
(210,741) (202,000) (197,816)
-28.40%
-24.89%
-22.88%
(target)
Source: Various DBM Publications
Trends on Debt Payments and Deficits 1990 - 2004
(In million pesos)
PARTICULARS
NG Expenditures / Budgetted
Interest Payments
as % of Expenditures
Principal Amortization
TOTAL DEBT PAYMENTS
as % of NG Revenues
as % of NG Budget+Principal Pymnts
Revenues
Revenues as % of Expenditures
1990
1991
1992
1993
1994
1995
1996
223,473
248,679
262,042
276,859
330,203
372,081
416,139
71,114
31.82%
74,922
30.13%
79,571
30.37%
76,491
27.63%
79,123
23.96%
72,851
19.58%
76,522
18.39%
35,232
106,346
58.79%
46,560
121,482
55.02%
29,651
109,222
45.00%
36,887
113,378
43.54%
38,845
117,968
35.09%
64,517
137,368
38.03%
41,220
117,742
28.69%
41.11%
41.15%
37.44%
36.14%
31.97%
31.46%
25.74%
180,902
220,787
242,714
260,405
336,160
361,220
410,450
80.95%
88.78%
92.62%
94.06% 101.80%
97.08%
98.63%
2002
2003
Source of Raw Data: Department of Budget and Management
PARTICULARS
1997
1998
1999
2000
2001
2004
Programmed
NG Expenditures
Interest Payments
as % of Expenditures
491,783
77,971
15.85%
537,433
99,792
18.57%
580,385
106,290
18.31%
682,460
140,894
20.65%
699,878
181,601
25.95%
742,022
204,267
27.53%
811,562
223,200
27.50%
864,763
271,531
31.40%
Principal Amortization
TOTAL DEBT PAYMENTS
as % of NG Revenues
47,678
125,649
26.63
23.29
64,717
164,509
35.57
27.32
99,106
205,396
42.92
30.23
86,949
227,843
44.26
29.61
99,605
281,206
50.38
35.17
172,098
376,365
66.36
41.17
243,582
466,782
79.92
44.24
270,660
542,191
80.78
47.75
471,843
95.95%
462,516
86.06%
478,503
82.45%
514,762
75.43%
558,218
79.76%
567,141
76.43%
584,062
71.97%
671,194
77.62%
as % of NG Budget+Principal Pymnts
Revenues
Revenues as % of Expenditures
Source of Raw Data: Department of Budget and Management
Total Debt Payments v-a-v NG Revenues; NG Budget + Principal Amortization 19902004
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1990
1991
1992
1993
1994
1995
1996
TOTAL DEBT PAYMENTS
1997
1998
Revenues
1999
2000
2001
NG Budget + Principal
2002
2003
2004
THE AUTOMATIC APPROPRIATIONS
LAW ON DEBT PAYMENTS

Marcos Presidential Decree 1177

Institutionalized by Pres. Aquino in the
Administrative Code

Debt payments as the highest priority in
government spending
THE PROBLEM OF REVENUES

The other factor to the crisis is the problem of
revenues.

Growth of revenues has been slowing down in
the last few years:
– 1997 financial crisis – affecting growth and
correspondingly tax collection
– aggressive trade liberalization since 1995
– problems of efficiency in collection, tax avoidance
and evasion
THE PROBLEM OF REVENUES

Aggressive trade liberalization since1995
– 1995 to 2003 – value of imports grew by
41.1%
– but customs collections of import duties
declined by 35.7%
THE PROBLEM OF REVENUES

Growth of expenditures has also slowed
down since the late 1990’s but it is
growing faster than revenues.
NG Expenditures v-a-v Deficit & Revenues
1,000,000
800,000
600,000
400,000
200,000
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
-200,000
-400,000
NG Expenditures
Overall Surplus /(Deficit)
NG Revenues
2002
2003
2004
NG Tax_NonTax Revenues 1990 -2004
(In million pesos)
PARTICULARS
REVENUES
Tax Revenues
Nontax Revenues
1990
1991
1992
1993
1994
1995
1996
1997
180,902
151,700
29,202
220,787
182,275
38,512
242,714
208,706
34,008
260,405
230,170
30,235
336,160
271,305
64,855
361,220
310,517
50,703
410,450
367,895
42,555
471,843
412,165
59,678
Source: Bureau of the Treasury
Growth of Revenues
from Previous year
22.05%
9.93%
7.29%
29.09%
7.45%
13.63%
14.96%
Growth of expenditures
frm Previous year
11.28%
5.37%
5.65%
19.27%
12.68%
11.84%
18.18%
1998
1999
2000
2001
2002
2003
REVENUES
462,516
478,503
514,762
558,218
567,141
584,062
671,194
Tax Revenues
416,585
431,687
460,034
498,880
496,372
530,774
601,392
45,931
46,816
54,728
59,338
70,769
53,288
69,802
PARTICULARS
Nontax Revenues
2004
Source: Bureau of the Treasury
Growth of Revenues
from Previous year
Growth of expenditures
from previous year
-1.98%
3.46%
7.58%
8.44%
1.60%
2.98%
14.92%
9.28%
7.99%
17.59%
2.55%
6.02%
9.36%
6.57%

The major solution of previous
governments to the problem of huge debt
payments and the growing deficit has been
to BORROW and to KEEP ON
BORROWING.

Levels of borrowing has increased
dramatically since 19980.

And by borrowing more and more, the
government gets deeper and deeper in
debt.
BUDGET DEFICIT FINANCING, 1981 - 2000
(In million pesos) Source: Bureau of the Treasury
1980
1981
1982
1983
1984
1,985
1,986
1987
1988
1989
1990
1991
A. Gross Domestic Borrowings
5,067
12,403
10,541
8,097
35,899
15,779
35,461
58,618
47,339
37,210
30,096
64,722
B. Gross Foreign Borrowings
3,055
6,724
5,387
7,684
5,069
3,704
9,769
15,420
17,290
19,953
24,406
23,086
19,127
15,928
15,781
40,968
19,483
45,230
74,038
64,629
57,163
54,502
87,808
3,055
3,619
6,724
2,805
5,387
3,150
4,096
22,964
2,715
6,952
2,329
13,201
4,621
32,920
4,051
25,299
3,973
28,503
4,843
35,232
6,021
46,560
8,340
4,530
15,508
13,123
12,631
18,004
12,531
32,029
41,118
39,330
28,660
19,270
41,248
3,583
3,897
3,560
4,997
10,409
14,652
21,612
36,905
45,865
54,714
71,114
74,922
1995
1996
1997
1998
1999
2000
2001
2002
2003
TOTAL Gross
Less: Amortization
C. Net Borrowings
Interest Payments
A. Gross Domestic Borrowings
B. Gross Foreign Borrowings
TOTAL Gross
Less: Amortization
C. Net Borrowings
Interest Payments
1992
1993
148,146
(16,992)
4,620
58,653
62,584
(2,430) 105,311
160,450
145,330
211,081
235,989
290,283
34,143
38,223
12,285
16,833
21,955
22,995
48,302
120,354
145,434
58,284
200,267
240,122
182,289
21,231
16,905
75,486
84,539
20,565
153,613
280,804
290,764
269,365
436,256
530,405
29,651
36,887
38,845
64,517
41,220
47,678
64,717
99,106
86,949
99,605
172,098
243,582
10,969
43,319 (27,113)
88,896
181,698
203,815
169,760
72,851
76,522
99,792
106,290
140,894
152,638
79,571
1994
(15,656) (21,940)
76,491
79,123
77,971
181,601
95,309
204,267
81,285
223,200
NG Foreign and Domestic Borrowings 1986-2003
(In million pesos)
PARTICULARS
Cory Aquino Fidel Ramos
1986-1991 1992-1997
(6 years)
( 6 years)
Joseph EstradaGloria Arroyo
1998-2000
2001-2003
(3 years)
(3 years)
A.
Gross Domestic Borrowings
273,446
254,581
411,091
737,353
B.
Gross Foreign Borrowings
109,924
146,434
314,090
498,673
C.
Total Borrowings
383,370
401,015
725,181
1,236,026
Interest Payments
305,132
462,529
346,796
609103
Principal Amortization
181,715
258,798
250,772
439,434
486,847
721,327
597,748
1,048,537
Source: Bureau of the Treasury
Total Payments
NG Domestic and Foreign Debt Per Administration
1400000
1200000
In M illion Pe s os
1000000
800000
600000
400000
200000
0
1986-1991
1992-1997
Domestic
1998-2000
Foreign
Accumulated Debt
2001-2003
Borrowings and Debt Payments per Administration
1,236,026
1,200,000
1,048,537
1,000,000
800,000
721,327
725,181
600,000
597,748
486,847
400,000
383,370
401,015
200,000
0
1986-1991
Cory Aquino
1992-1997
Fidel Ramos
Total Borrowings
1998-2000
Joseph Estrada
Total Payments
2001-2003
Gloria Arroyo
Debt Payments Per Administration
1200000
1,048,537
1000000
721,327
800000
597,748
486,847
600000
609103
439,434
462529
400000
258,798
305132 181,715
250,772
346976
200000
0
1986-1991
Cory Aquino
1992-1997
Fidel Ramos
Interest Payments
1998-2000
Joseph Estrada
Principal Amortization
2001-2003
Gloria Arroyo
Total Payments
Borrowings per Administration
1,000,000
930,279
900,000
800,000
725,181
700,000
600,000
385,306
411,091
314,090
400,000
300,000
544,973
401,015
383,370
500,000
273,446
109,924
200,000
254,581
146,434
100,000
0
1986-1991
Cory Aquino
1992-1997
Fidel Ramos
Gross Domestic Borrowings
1998-2000
Joseph Estrada
Gross Foreign Borrowings
2001-2003
Gloria Arroyo
Total Borrowings
Contingent Liabilities

WE SHOULD ALSO LOOK INTO THE
PROBLEM OF CONTINGENT LIABILITIES
which include:
– Sovereign guarantees to debts
– Risk guarantees to BOT projects

In 2002, the WB estimate of contingent
liabilities is 3.2 trillion pesos.
HOW DO WE ADDRESS THE
FISCAL CRISIS?

We cannot solve the problem of the fiscal crisis simply
by measures to increase revenues.

Cuts on wasteful spending is imperative, but not
enough to make up for the deficit.

Cutting down on other items will seriously affecting
basic services and important economic programs. As it
is, we are not spending enough on education, health,
housing, agrarian reform etc.

We cannot continue to borrow at the same rate or even
higher because it only brings us deeper into debt.
HOW DO WE ADDRESS THE
FISCAL CRISIS?

Steps need to be taken to cut debt
payments and reduce the outstanding
debt.
THE PROBLEM OF ONEROUS and
UNJUST DEBTS

The problem of the debt is more than
the amounts :




debts from onerous transactions
debts with unjust terms
debts tainted with bribery and fraud
debts that financed disastrous and
damaging projects
 debts of private corporations that the
public is paying for
 debts of the dictatorship

International creditors should share in the burden,
especially those who were accomplices in onerous loan
transactions and contracts.

Private corporations, international and domestic, who
were party to grossly disadvantageous debt-creating
transactions and contracts must also share the burden.
(ex. IPP contracts)

Private corporations and individuals whose debts we are
paying for must also share the burden. (behest loans)

Past and present government officials must be held
accountable for unjust, onerous and fraudulent debts,
and debts wasted on corruption

Our people should not be made to pay for debts that
cannot be justly considered their debts
We urgently call for a THOROUGH
INVESTIGATION and AUDIT of PUBLIC
DEBT and CONTINGENT LIABILITIES as
a necessary and vital step towards a
comprehensive and long-term solution to
the problem of the debt.
Objectives of the DEBT AUDIT

Correcting flaws and weaknesses in the
structures, policies and processes related to
borrowings, payments, guarantees and
contingent liabilities

Stronger, more comprehensive, coherent and
consistent laws and regulations, and
transparent and accountable oversight and
regulatory mechanisms on public borrowings,
public guarantees and contingent liabilities
Objectives of the DEBT AUDIT

Developing a more judicious, accountable
and transparent debt payments policy that

upholds the Philippine national interest and
the Filipino people’s rights and welfare as
paramount

upholds national sovereignty over the public
resources, restores the full power of the purse
to Congress, and ensures democratic
processes and transparency in determining
debt payments

upholds the provision in the Constitution that
states Education should have the highest
priority in the National Budget
Objectives of the DEBT AUDIT

results in substantial reduction in the current
level of allocations for debt service

addresses the issue of illegitimate debts >
debts involving onerous terms and transactions, fraudulent
claims & representations, the circumvention of laws &
democratic processes, the financing of projects that have
damaging effects on the environment, violates human rights &/or
results in the massive displacement and dislocation of people
and communities

takes into account creditor responsibility and
accountability
OTHER IMMEDIATE STEPS

Repeal of Automatic Appropriations
Law

Non-payments of illegitimate and
onerous debts such as the BNPP debts

Cancellation/annulment of onerous
agreements and contracts – ex.
NAPOCOR Contracts with Independent Power
Producers

Allocation of Education Budget to serve as
reference point for a ceiling on debt
payments