by ALECKS P. PABICO

GLORIA MACAPAGAL-Arroyo will go down in Philippine history as the president with an inglorious track record, at least, on two counts.

	BIGGEST DEBTOR. Gloria Macapagal-Arroyo has borrowed a record P3.54 trillion in debts from 2001 to 2007, making her the single biggest borrower among the post-Edsa presidents. [photo by Jaileen Jimeno]

First, her popularity rating has hit the pits of negative 38 percent, the worst scored by a president since the late dictator Ferdinand Marcos.

Second, in just six years in office or until 2007, Arroyo has incurred a record P3.54 trillion in domestic and foreign debt, more than twice the combined total borrowings of the three presidents before her. This is the aggregate amount of debts Arroyo incurred based on official foreign exchange rates, according to the Freedom from Debt Coalition (FDC), a nongovernment anti-debt advocacy group.

When Marcos assumed the presidency in 1965, the Philippines had foreign debt of less than $1 billion. He fell from power in 1986 and left a total debt stock of $28 billion, or at the exchange rate of P20.38 at the time, just P570.6 billion.

In a span of 14 years, the Aquino, Ramos, and Estrada administrations contracted a total of P1.51 trillion in debts, P2.03 trillion less than what Arroyo has borrowed in her first six years in office.

Under Arroyo, the FDC estimates that based on 2007 interest and principal payments, taxpayers carry a debt servicing burden of P1.2 million every minute. Today, the FDC adds, every Filipino man, woman, and child owes creditors P42,819.42.

But when Arroyo delivered her eighth state of the nation address before the joint session of the 14th Congress last July 28, she made much of the fact that the current global economic slowdown triggering runaway surges in oil and food prices “did not catch us helpless and unprepared.”

Arroyo harped about the strongest economic growth the Philippines posted in the last 30 years anchored on the 7.3-percent gross domestic product (GDP) growth rate in 2007 characterized by low inflation, a strong peso, and creation of a million new jobs. These, she said, were the results of the tough choices she made, and which she now claims are shielding the country from the worst effects of the global crisis.

The economic growth, Arroyo said, had almost made the dream of a balanced budget within reach. But more importantly, she emphasized, it enabled the government to “retir(e) debts in great amounts, reducing the drag on our country's development.”

PREPAYING DEBTS

On the strength of such macroeconomic fundamentals, the Arroyo government has been resorting to prepaying some of the country's foreign debts, including at least US$220 million of debts claimed by the International Monetary Fund (IMF) and US$72 million owed to the Asian Development Bank (ADB).

	CHART shows how the post-Marcos governments have addressed the country's debt burden.

During the 12-month period ending March 2008, prepayments as recorded by the Bangko Sentral ng Pilipinas (BSP) totaled US$1.2 billion. Nearly the entire amount, or US$1.16 billion, were for obligations maturing beyond 2008.

As a consequence, the BSP noted in June the continued improvement of the country's major external debt ratio in the first quarter of this year, indicating an improving capacity of the Philippines to service its maturing foreign obligations.

Total outstanding debt as a percentage of aggregate output (GNP), the BSP reported, declined to 32.4 percent, from 35 percent in 2007 and 40.8 percent in March 2007.

In terms of GDP, the external debt ratio also improved to 35.5 percent — from 38.1 percent in 2007 and 44.2 percent in March 2007.

By the end of March 2008, the Philippines's outstanding external debt (as approved and/or registered by the BSP) stood at US$54.6 billion. The figure is slightly lower than the end-2007 level of US$54.9 billion, but is actually higher than the US$54 billion recorded a year ago as of end-March 2007.

What has caused the debt stock to decline by only US$327 million, the BSP explained, are the foreign exchange revaluation adjustments as a result of the continued weakening of the U.S. dollar against the Japanese yen and the euro.

By the close of the first quarter of 2008, the adjustments amounted to US$2.4 billion, almost negating the impact of large net principal payments of US$2.8 billion. During this period, prepayments totaled US$322 million, US$298 million of which pertained to maturing debts in 2009 and beyond.

Year-on-year though, the foreign exchange revaluation adjustments reached US$3.4 billion to surpass net principal payments of US$2.8 billion, causing the debt stock to rise by US$565 million.

Notwithstanding the higher debt stock, the BSP said that no immediate impact on the country’s external debt payments is expected since most of the affected accounts are Japanese yen-denominated with very long repayment terms ranging from 20 to 40 years.