Deeper in debt
The 1987 Constitution requires the government to give “the highest budgetary priority” to education. Like the constitutional provision on the separation of church and state, however, the provision on budget priorities has never been followed. Debt servicing, not education, has always eaten up the biggest chunk of the annual national budget. The strong peso has shaven off a substantial chunk of the country’s foreign debt, but the amount is still in the trillions, saddling generations of Filipinos with debt.Yet the government continues adding to that mountain of debt, the latest of which is a whopping $1.8-billion loan from China. That’s approximately P84 billion at yester-day’s exchange rates; the amount could balloon if the peso weakens. Government officials have pointed out that the loan from the Chinese Export-Import Bank will have easy repayment terms. The cash-strapped government can use foreign assistance especially for badly needed infrastructure. But because what is involved here is not a grant but a loan, the repayment of which will be shouldered by taxpayers, with interest, the government must give a full accounting to the public about the purpose of the loan.
A big part of the loan — $330 million — will be used to finance a broadband network for the government. The deal has been awarded to Chinese company ZTE. The $1.8-billion loan was signed a few days ago by Philippine and Chinese government officials. It is not clear whether awarding the contract to a Chinese company is part of the loan agreement. Too many things, in fact, are not clear about the broadband deal, starting with the circumstances surrounding the disappearance of the original document that was signed in the presence of President Arroyo in China last April by ZTE executives and Transportation Secretary Leandro Mendoza. The lost document is supposed to have been reconstituted, but this new version also has not been made public.
A big question is whether the country needs the broadband service at all. Another question is why this service is double the price of the offer for a similar service by another interested party. The nation is already up to its neck in debt. The least that the government can do is convince the public that any new indebtedness is justified.
