Thus said Senate President Franklin Drilon in reaction to a statement issued by National Economic Development Authority (NEDA) Secretary Romulo Neri expressing his objection on the proposed debt cap bill now pending in the Senate.
Drilon said he was surprised by Neri’s comments, revealing that it was the Department of Budget and Management (DBM) which actually recommended the filing of the debt cap bill.
Neri was quoted as saying that he was against the approval of the debt cap bill because subjecting foreign borrowings to a congressional approval will only complicate and "politicize" the process.
Neri said the proposal for a cap on government debts would violate the 1987 Constitution, which gave such power to the policy-making Monetary Board.
"I find Neri’s observation ironic," Drilon said. "It was actually the Department of Budget and Management that recommended the filing of this bill."
The Senate chief filed last February Senate Bill No. 2504 or the "Debt Cap Act," which impose a debt cap to ensure that the government’s debt service payments remain affordable within the context of budget priorities.
"There is a need for the government to adopt fiscal discipline in all areas of government operations. The government should, at all times, live within its means by minimizing deficit spending to levels that will ensure fiscal sustainability," Drilon stressed.
"Since the government cannot default in the payments of its debts, escalating debt service payments in the General Appropriations Act has effectively crowded out expenditures for social services and physical infrastructures," he added.
It was learned that debt service payments in absolute amount and as a percentage of the total budget has increased dramatically starting in 1998 after steadily declining from 1992 to 1997.
From P78.0 billion or 15.9 percent of expenditures in 1997, interest payments increased to P175 billion or 24.6 percent in the 2001 budget. For the 2003 national budget, an amount of P223 billion or 28 percent is allocated for interest payments.