11 FEBRUARY 2008
P C I J I N V E S T I G A T I O N — ODA SURGE SPARKS SCANDALS FOR ARROYO, DEBT WOES FOR RP
SO MUCH MONEY
De Ocampo believes that China, like the West before it, will sooner or later adopt strict and formal credit policies as befits an emerging economic power. But he warns that the deal struck with the Chinese telecommunications firm ZTE Corporation for the NBN project underscores a number of trends that could increase credit risks.
Japan, the Philippines’ biggest ODA provider, resumed fresh lending to Manila last year after ceasing loan approvals since April 2004 because of the government’s low absorptive capacity.
In 2006, ADB approved a record $650 million worth of loans, a sign of the lender’s growing confidence in the government’s financial position after Arroyo imposed new and higher taxes following a brush with fiscal crisis the previous year.
Doubts linger about whether the Arroyo administration is keen or able to spend the growing amounts of aid money wisely.
“It’s like the U.S. subprime crisis in effect because they (lenders) are lending to debtors or projects that are not really qualified,” says Diokno, referring to turmoil in global financial markets that stemmed from excessive lending by American banks to home buyers without capacity to pay back the mortgage loans.
At the core of the doubts is NEDA, which used to command a reputation of being fiercely independent and competent, an agency that stood up to top officials and politicians pushing ill-conceived if not corrupt projects. The late journalist Luis Beltran Jr. once even called NEDA as the only agency that could not be bribed.
For sure, its former chief Neri earned praise for his moral courage when he told the Senate last August that then Comelec Chairman Abalos offered him P200 million to approve the NBN project. Neri, however, was also rebuked for approving the project anyway with perfunctory scrutiny.
From Neri’s account, it seemed like the NEDA staff just limited themselves to validating the cost-benefit analysis submitted by the project proponent, the Department of Transportation and Communications (DOTC), and its supplier, ZTE Corp. Little effort was made to verify the project’s costs. Worse, NEDA did not examine alternative financing methods, such as build-operate-transfer (BOT) or other schemes.
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