THE World Bank announced last week the approval of a US$200-M loan to the Philippines, its biggest to the country in the last decade, to finance programs aimed at improving the quality of basic education. The assistance is being welcomed by the government as a necessary source of funds for the country’s battered elementary and secondary education system.

Other groups, however, are raising concerns about the country’s continued dependence on the foreign donor community.

“While this loan will help the education sector, we cannot let ourselves fall prey to the vicious cycle of non-stop lending,” said party-list Rep. Eulogio Magsaysay of the Alliance of Volunteer Educators. He referred to the country’s already massive foreign debt, currently estimated at some P4 trillion. He said the World Bank loan must be “a temporary solution.”

Prof. Leonor Briones, of the nongovernment Social Watch Philippines, has also recently noted the lack of government fund allocations for the country’s anti-poverty and development programs.

“Our studies have shown how highly dependent we are on the donor community,” Briones said at a recent forum celebrating the launch of a publication evaluating the country’s progress toward achieving the Millennium Development Goals (MDGs).

The MDGs are a set of strategies, listed by the international community in 2000, that aim to uplift the world’s poor by fulfilling specific goals for basic needs such as education, health, and equity.

Briones noted, for instance, that the funding requirements for anti-poverty programs are estimated to be around P168.9 billion for one year. Available resources total only P121.9 billion; of those resources, only P9.341 are coming from the national government.

A similar pattern of foreign-assistance-dependence was noted by Briones’s group for the country’s health programs. Achieving the health-related MDGs, said Briones, will require some P8.9 billion for one year, according to the Department of Health (DOH) itself. DOH funding comes to P687.4 million; official development assistance, meanwhile, is estimated at over P783.7 million.

“We like to say that we adore our children and our mothers,” Briones said. “But we don’t take care of them. The donor community does!”

The recently announced World Bank loan will finance four components of the education reform agenda:

Strengthened school-based management (US$71 million). For the development of School Improvement Plans; and the training of school heads and staff for management and financial accountability.

Improved teaching effectiveness (US$23 million). For the improvement of teaching effectiveness by refining and using standards for teachers; the component will finance a “hardship allowance” for basic education teachers placed in areas with the most acute shortage.

Enhanced quality and equity through standards, assessment and support (US$96 million). For the development of nationwide standards for key learning areas; the development of national strategies to improve education in English and Filipino language, Mathematics, and Science; and the development of an ICT framework.

Effective resource mobilization (US$2 million). For the improvement of budget planning and management to ensure the effective delivery of education; and the support of policy development to encourage cost-sharing arrangements with local governments.

The loan will be repaid in 20 years, with a grace period of eight years.

Debt repayments eat up a huge proportion of the country’s expenditures. Every day, according to the Freedom from Debt Coalition, the country coughs up some US$5.5 million for foreign debt service.

Briones’s Social Watch says that in real terms, allocations for debt service have been consistently going up. In 1999, interest payments alone ate up over 18 percent of that year’s budget; by 2005, that share was up to 33.24 percent.

Meanwhile, health is being allocated only about 1.3 percent of the annual budget; and education, around 14 percent.

13 Responses to Warnings raised against dependence on loans


Juan Makabayan

June 28th, 2006 at 1:35 pm

Vinia, Alecks,

One suggestion I hope reaches Briones, FDC, Alliance, etal with same advocacies re debt trap, borrowing cycle:

I suggest A Manifesto Against GMA’s Non-Stop Borrowing:

The GMA: STOP BORROWING Alliance issue a warning to all creditors who continue to grant loans to the Arroyo government that ALL LOANS GRANTED TO THE ARROYO GOVERNMENT SHALL BE CONSIDERED “ODIOUS DEBTS” AND DEEMED GRANTED IN BAD FAITH TO THE FILIPINO PEOPLE UNTIL DETERMINED AND PROVEN OTHERWISE BY A PEOPLE’S DEBT COMMISSION in accordance with the proposed Debt Relief Act . The Alliance shall form a de facto commission to monitor the governments borrowings and to issue warnings to creditors accordingly.

“Odious debts,” are those incurred without the consent of the people, those which cannot have benefited the public, and whereby the lender must have been aware of the two preceding conditions. …proposed Debt Relief Act, a debt relief council could invoke “the relevant privileges” necessary to facilitate “cancellation of odious debt or restructuring of debts or both to ease debt payments.”Sen. Villar proposed a debt cap bill to curb the government’s “borrowing spree” that would set a ceiling on public sector debt. Under the plan, the total debt stock the government would be allowed to maintain could not exceed 75 percent of the GDP of the previous year.



June 28th, 2006 at 3:09 pm

Sick Policy, a moron strategy, your earning is 100 pesos but you spend 1,000 pesos, how could you live like that. Why not control graft and corruption in all egency-earner, this is the great source of income that could help mediate the needs of other departments especially in education sectors. Take for example the application of passports in DFA how many applicant would go to DFA every Monday to Friday just to seek for a passport an average of 1,500 daily how much is the passport would cost 600 to 800 pesos, multiply by the average applicant everday multiply by month, and multiply it by a year how much would that be, and how much is the remittances of the OFW, how much is the collection of BIR, how much is the collection of the NBI application, police clearance, land registration etc. etc.. To sump up, is this government is true enough to the word public service, is this government is true enough to its word addressing the needs of the poor, then there is no need to borrow this huge amount just for an education department, we have lots of trees, illegally logged by illegal loggers, why not catch them ang government shall start making school building and furnitures, and the rest of the remaining to be expeses is small only I think, and that can I think can be supported by other agencies if however the education budget is not really substantial, and to replace the trees why not obliged students to tree planting projects. Why Loan such a huge amount where the people in this country will suffer. This government will never learn, anyway their is really a huge money of kickbacks when you loan, that maybe the case.



June 28th, 2006 at 4:27 pm

jm y flagwaver, what do you mean by non-stop borrowing? Do you mean that always the National Appropriations Act (Budget) must provide for zero deficit? But when you cut the deficit by not borrowing that would mean reduced EXPENDITURES, who will absorb such reductions, don’t you think it’s more dangerous? How can you reduce further basic services when it’s already to the bottom? How can you not incur capital expenditures when we don’t have enough roads? Even the most riches nations incur deficit and resort to borrowings, what is important is our development plan when in a few years we will have a balance budget even if we increase our expenditures, it’ll be balanced out by higher revenues when we attained the desired GDP.

Maybe what Briones et. al. is saying is that our situation now is so dangerous, which is true, it is critical therefore that we hit the medium development plan as projected and okayed by worldbank and IMF (and other creditors). What is good for now is that our credit is still taken well, although our interest liabilities are higher than other countries because of so many uncertainties one of which is politics.

Nevertheless, whoever is our president, borrowings can not be avoided so long that we continuously incur BUDGET DEFICIT. By the way, if I remember right, the HIGHEST DEFICIT that we experience is during the time of Briones in ERAP administration, ‘am not so sure though.



June 28th, 2006 at 4:29 pm

oooppppsss, GNP pala, sorry


tongue in, anew

June 29th, 2006 at 2:13 am

Gwaping, gov’t has admitted P1.2 Trillion (wow!) lost to corruption in Gloria’s past 5 years at the helm. An average amount of P240 Billion (wow pa rin!) each year.

The latest world bank loan, at today’s exchange rate of P53.50 to the greenback, is a mere P10.7 Billion! Without corruption, we could have saved the loaned amount, and for the next 22 years, continue to improve the education system by infusing the additional P10.7B yearly into making our graduates probably the most envied in the world. And that comes from one year savings (P240B) from corruption alone! If we can only cut corruption by a half, we still achieve the same for 11 years. What we get instead is we get tied up for the next 20 years in paying back this new burden.

Without the attendant plunder, Gloria could have provided the required additional poverty alleviation funding of P47B, additional health funds of P8.2B, the additional P10.7B for education, and still have P174B for roads, bridges and ports. At the bottomline, you would have already improved your savings, therefore, the deficit, cut further our loan payments, pump-primed the economy, better-educated well-prepared workforce, you know the drift.

Yet we claim to be a poor country?


Ambuot Saimo

June 29th, 2006 at 3:39 am

Your suggestion makes sense.
Why can’t we adopt the “pay as you go” fiscal policy. That’s what Clinton did and he ereased the trillion dollars U.S. deficits incurred by his republican predecessor presidents. In fact, during his final years as president, the “National Debt Clock or Index” was taken out of Time Square” when it reached zero. But when the Republican’s took over congress again, they resorted to their old ways and the trillion deficits is back again.
As FW aptly said, a family cannot live a healthy life if it spends beyond what what it earn by means of borrowing. We should learn to live by what we earn. Maghigpit ng sinturon i’ka nga!!!
Unlike the U.S. we are not policing the world and not providing aids to other nations. If we will sacrifice a little bit and reduce or eliminate corruption which according to a recent study eats up more or less 30% of the national budget I think we can survive without additional borrowings or imposing additional taxes on the poor people. Additionally, the “can affords” should also share the burden by doing more philantrophy works by donating schools for example . Three days ago, Warren Buffet almost give his entire wealth to charity by giving away a whooping 38 billion dollars to another billion dollars charity, the Bill & Melissa Gates Foundation. He just left a couple of millions to his two children. Why? He said that he’s getting old and he cannot bring that wealth to his grave. His philosophy? It’s better to spend that money for the betterment of humanity and see the result while he’s alive than when he’s dead.
We have Filipinos dollar billionaires listed in the Forbes List and thousands super millionaires. Assuming we have 100,000 of them and each donate a single schoolroom, it means 100,000 new classrooms to benefit our children and the next generation. PhP400,000.00 (cost of a classroom per govt. estimate) is peanut when you have 50 – 500 millions! Mega rich people… please think about it. (If I able to donate a PhP 150,000.00 Barangay Quadrangle even if I have only a couple of hundreds in the bank why can’t you? ) Please….please!!!



June 29th, 2006 at 11:49 am

tounge, inanew, so when Gloria is out today, tomorrow there’ll be no corruption anymore? WOW! WOW again! Let’s get her out NOW NA! :)

Look, the deficit is calculated, it is anticipated in a legislative process, BLAME everybody not just GLORIA!



June 29th, 2006 at 10:52 pm

basta ang alam ko, di pa ako pinapanganak eh nagbabayad na ako ng utang ng Pilipinas, nagkaanak na ako, nagbabayad pa din ako, di magtatagal magkakaapo na ako, magbabayad pa din ako. sana lang ang mga inuutang na yan eh mapunta sa kanilang pinaglaanan, hindi yung sa sariling bulsa ng mga gahaman.


Juan Makabayan

June 29th, 2006 at 10:55 pm


Thanks, your points really clarify the issues regarding the debt burden. Interesting, in the Philippines the “National Debt Clock or Index” must be put beside the Human Development Index to illustrate clearly the humantarian, not just financial or developmental aspect of the national debt crisis — the cycle of borrowing, the automatic appropriations for debt servicing and endemic corruption.

When the government increased and expanded the consumer tax (RVAT), the government should have regarded these extreme sacrifice imposed on our overburdened people with an obigation to force the issue of putting a cap on debt servicing and channel funds to mission critical projects like hunger incidence and poverty alleviation.

It would take statesmanship with moral suasion to deal with int’l creditors and political will to deal with corruption. We have to meet our obligations, but within concience. Either way, we must bite the bullet.



June 29th, 2006 at 10:57 pm


how can you explain the doubling of our foreign debt from the time of marcos, cory, ramos & erap combined against gloria? is that an effective leader to you? Who’s to blame for this? The Filipino people? without debt relief or maybe wiping off some of our debts from foreign banks do we have the chance to achieve your so called balance budget?


tongue in, anew

June 30th, 2006 at 2:18 am

Gwaping, your president rose to power on a platform promise that was supposed to make her very much unlike her immediate predecessor’s supposed corrupt ways. And what do you know, she really is very much unlike all of them. My God, she’s made Erap look like a saint and Marcos even pales in comparison with her pillaging of the people’s money.

Yeah you’re right, the deficit is calculated and anticipated… with the 30% kickbacks built-in! I’m not blaming Gloria alone, I also blame JDV, her coalition congressmen, all her department secretaries and their subalterns, AFP/PNP Brass, and people like you who worship the goddess of deceit, patron or thieves, icon of cheats. I won’t stop you from fooling yourself. Who said corruption will stop the next day we remove Gloria? Even your failed logic won’t save your wrong argument.

I will also subscribe to Juan M’s proposal of a People’s Debt Commission, complete with pressure groups that forewarns creditor organizations to monitor and audit how the loans are spent. I regularly visit ADB and I was told they have revised their lending programs, even their organization structures in debtor countries, specifically those in their “most corrupt countries hotlist” where the Phils. occupies either of the top two spots, because they are now making doubly sure the loaned money is spent where it should be.

Instead of the usual country-based organizations they now adopt smaller but more numerous project-based monitoring groups ensuring full feedback of all expenses connected to the loan.

Philippine bonds are not as attractive in New York today than say, last year. The last two local offerings were all rejected because banks wanted higher rates. The gov’t wanted to keep its “pogi” posture but in the end, just this week, succumbed to the pressure and sold at the bankers’ preferred rates. There goes the strong economic fundamentals folly.

Desperadong magkapera before the impeachment! O baka naman kulang ang pocket money ng mga nag-junket sa Europe? Magkano kaya ang asking price ni Garci for next year’s operations? Kwentuhan ng mga private bankers, bantayan daw si Iggy at Mike sa Spain dahil baka mag-sidetrip sa mga offshore banks at magdedeposito ng pinagnakawang pera.

Don’t you notice the dollars become scarce, therefore, more expensive everytime Mike Arroyo leaves for abroad, whether to “self-exile” in some plush Las Vegas hotel or “sacrificing” in Stanley Ho’s casinos?

What’s the rush in making this trip at a time when a volcano is about to spew havoc on a province in your country. Unless of course you find it very urgent that your inlaws be named saints immediately as if that is possible.

Or maybe “updating” your secret accounts stashed in Europe’s safe havens just can’t wait.



June 30th, 2006 at 7:18 am

jrlad, did i ever said she’s effective?



June 30th, 2006 at 7:20 am

People’s Debt Commission, hmmmm, better they run for election so they’ll be sanction to manage our debt ‘di ba?

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