Philippine debt as calculated by the Ibon Foundation (graph by Ed Lustan)

MANILA, Philippines — Are loans good or bad for the Philippines?

It’s a question that nine presidential candidates addressed on Sunday during the “presidential debate” hosted by CNN Philippines.

Specifically, the moderators asked them to react to the “11.7 trillion” figure – which represents the Philippines’ total debt to date.

Not bad in itself

“’External debt in itself is not bad,’ Vice President Leno Robredo said in Filipino. “But let’s make sure that what we borrow will go to things we really need. Let us make sure that the return on our debts is greater than what we have borrowed.

Robredo said the recent loans were understandable in the face of the COVID-19 pandemic. The government was short of funds due to high spending on testing, quarantine, health materials and equipment, and eventually vaccinations.

However, she pointed out that people would lose the most if part of their tax dollars were used for loan repayments, without them benefiting from the services.

“So I will make sure, if we become president, that we will look at how they are spent. And we will make sure that the debts are paid. We will make sure that they go where they are supposed to go, because people will really lose s ‘they just pay the debts without getting any benefit from it,’ Robredo said.

Former presidential spokesman Ernesto Abella agreed with Robredo.

“That’s right. We shouldn’t be afraid of debt because it’s up to us where we put it,” he said. “If we watch it, we can actually watch it and grow it. that we are looking at now, what we plan to do is to develop agriculture and [turn it into a] mega-industry,” he explained.

Balanced budget needed

Senator Panfilo Lacson, a longtime proponent of budget reform, said a balanced budget would ensure funds were distributed with little corruption.

“One of the solutions is a balanced budget,” he said. “It’s because the budget has to be balanced. Non-essential items should not receive a budget because according to a study by former Deputy Ombudsman Cyril Ramos, the amount of the national budget each year is 700 billion pesos.

“And then there’s our unused [funds]. I am still studying the national budget. So over the last 10 years, as I said earlier, its 328 billion pesos on average from 2010 to 2020. So we have to have wise spending,” he added.

“All debts are bad”

But Dr. Jose Montemayor Jr. said no loan would be good.

“There is no good debt, contrary to the response of Vice President Leni and Secretary Abella, who said there was nothing wrong with that,” he said. “You know it’s bad. We are mortgaging the future generation. Our children will suffer. Our grandchildren will suffer. Now, how can we solve this problem? ” he said.

“So what are we going to do?” We will restructure […] We will close all loopholes to corruption. That’s all. It’s very simple. There is no good debt, all debt is bad.

Labor leader Leody de Guzman also called the loans bad loans – but only because the 11.7 trillion peso loans had been accumulated since the presidency of Ferdinand Marcos – which he says various officials have attacked over the years. years.

“These are bad loans because they’ve been made since the days of Marcos, by previous administrations,” he said. “These were made by trapos [traditional politicians], from dynasties to government. This is why much of what was borrowed was stolen. So what we need to do is audit them and let those who stole them pay.

Some loans can be good

Abella and Senator Manny Pacquiao – who in the past have claimed he knows how to solve the country’s financial problems – hit back at Montemayor, saying loans could be good.

“A debt is bad if you neglect it,” he said. “But it’s not bad if you watch him.” So, as a business person, you really need to educate yourself. Someone borrows money. Where does the capital come from? You borrowed it, right? It must therefore be invested correctly.

“The thing is, if you’re really serious about making the country prosper, you should have some capital, something to give it a boost. And that’s something you have to be responsible for,” Pacquiao added.

He pointed out that there are two types of loans.

“There are those who borrow so they can put it into an investment. There is a return on income. “, did he declare. “There are those who borrow because they are going to spend it. In other words, you will spend it on your needs every year. That’s what’s bad. But there is nothing wrong with borrowing if you want to put it into an investment.

“Eg. if we have a power shortage here, we will put a generator here to supplement our electricity. That’s not bad because there is a return on income. But if you borrow for annual expenses, I would say that is what has made our country mismanaged.

RELATED STORY

Montemayor asks whether rising wages hurt employers; Ka Leody says workers shouldn’t be treated like slaves

Subscribe to our daily newsletter

Read more

Don’t miss the latest news and information.

Subscribe to INQUIRER PLUS to access The Philippine Daily Inquirer and over 70 titles, share up to 5 gadgets, listen to the news, download as early as 4am and share articles on social media. Call 896 6000.