SONA must include foreign debt report
The state of the nation address of President Ferdinand Marcos Jr. on Monday that will outline his fiscal (taxing and spending) plans, among other things, must include a status report on the heavy foreign debt burden that had been dumped on his lap.
With the country reeling from pandemic and economic blows, Marcos will have to come up fast with fair and efficient ways of raising the income of households, businesses, and the government, and improving the quality of life of everybody.
To boost revenue, aside from plugging the leaks in the system and prosecuting tax-evaders, the government is giving hints it might impose higher or additional taxes on targeted sectors.
The overburdened populace may resist swallowing a bigger bitter pill, partly because of a perception that the President himself may not be exactly a model taxpayer, to put it mildly.
As Clive Reyes JR @datumx11 twitted Sunday: “Before the Marcos admin introduces new taxes, I believe the family should pay first the unpaid estate tax and return the still unrecovered ill-gotten wealth. That way, it would be fair to the gov’t, Filipino people and even to the Marcoses themselves.”
With the Sri Lanka debt disaster in the background, the new Congress could open a full-blown inquiry into the foreign loans contracted by past administrations. An honest probe might just improve tax collection from citizens who still believe in supporting the government.
In the same way that Marcos has described inflation (6.1 percent or whatever) as an imported problem, he could air laments about bad loans having been merely inherited from past administrations.
He may want to share in his SONA his thoughts on how, under his stewardship, we will avoid falling into the dreaded debt trap.
* * *
If the Congress decides to look into the huge loans amassed in the last six years, one of the bases for an inquiry is Sec. 20, Art. VII, of the Constitution which says:
“The President may contract or guarantee foreign loans on behalf of the Republic of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within 30 days from the end of every quarter of the calendar year, submit to the Congress a complete report of its decision on applications for loans to be contracted or guaranteed by the Government or government-owned and controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law.”
Finance Secretary Benjamin Diokno, who as the then governor of the Bangko Sentral ng Pilipinas was Monetary Board chair, can answer the questions himself – but a public hearing with other experts testifying might be a better way to quell speculations.
The investigation should also unearth what the previous Senate and the House did to the Monetary Board reports, if there were any submitted quarterly as mandated by the Constitution.
* * *
The Congress or a competent body (like the Commission on Audit) should produce a status report on each of the projects and programs that had received foreign loans or grants, although current interest focuses on the Build! Build! Build! projects of Duterte.
Then Sen. Ping Lacson, who had built a reputation of not accepting any share from the congressional pork barrel, said during the last election campaign where he ran for president (and lost) that only 12 of the 118 BBB projects had been completed.
A COA audit and/or Senate investigation may clarify the status of BBB projects despite the fact that of the 24 senators only Risa Hontiveros and Koko Pimentel are the ones left of the opposition.
The country’s external debt has been steadily rising from $73.1 billion in 2017, $78.96 billion in 2018, $83.62 billion in 2019, and $98.49 billion in 2020, finance department data show.
Marcos has inherited a nation sucked dry by corruption, a budget deficit (in May) of ₱146.8 billion in spite of double-digit growth in revenues and a cut in spending, and a ₱12.03-trillion national debt.
While President Noynoy Aquino left Duterte in 2016 with a 40.3-percent debt-to-gross domestic product ratio, Duterte left Marcos last June 30 with a debt-to-GDP ratio of 63 percent.
Before the May elections, Diokno said the country’s foreign obligations went up to $106.43 billion last year as the government borrowed more to finance the country’s COVID-19 response measures.
The inquiry should look at the possibility that with the offer of easy terms, sweetened by unwritten incentives, for loans to meet development goals, the borrowing authority may have thrown discretion to the wind.
One check to that is the required concurrence of the Monetary Board, which is presumed to be technically competent and more discerning, unless its members had become captives of the political leadership.
• Advisory for Pinoys in New York
The Philippine Consulate General in New York advises the Filipino community to remain vigilant after an 18-year-old Filipino tourist from Cebu was reported to have been violently assaulted near the Philippine Center in Manhattan on Wednesday.
The Consulate reminds members of the Filipino community as well as kababayan visiting New York to exercise the necessary precautions while on the streets or in the subways.
Based on information received by the Consulate the other day, the victim was walking with three other Filipinos near the corner of 6th Avenue and 46th Street when assaulted. The victim sustained facial injuries from the beating by the suspect who was subdued and turned over to authorities.
This is the 41st incident since last year involving a Filipino who was either a victim of a hate crime or incident or a criminal act. The Consulate is in touch with the New York City police to get more information on the incident. It could not be immediately ascertained if the incident was anti-Asian-hate-related.