Palawan Rep. Abraham Mitra, however, clarified that his suggestion is not a debt repudiation saying the three-month break from debt payments must not be unilateral and should be negotiated with the country’s creditors.
While the moratorium on interest payments seems short at 90 days, its windfall to the Treasury will be great due to the size of the country’s debt burden amounting to P271.5 billion for 2004 alone, he said.
"We are just asking our creditors to understand our plight so if they can please move back our scheduled payments by three months so we can breathe," Mitra said.
"The bottom line is this: we cannot survive with this kind of a debt load.
He said thousands of classrooms can be built and every rural hospital can be modernized and provided with dialysis machines.
After spending the money on vital health and education projects, Mitra said there will be still enough money left to buy some modest aircraft for the Air Force and patrol cars for the Philippine National Police.
The money can also be used to rehabilitate the Pan Philippine Highway or half the amount can be poured into irrigation to improve farm output and create income to improve the country’s capacity to pay debts.
The government has earmarked P271.5 billion for debt service in 2004, one-fourth of which is the amount that can be saved in the three-month moratorium in interest payments.
Mitra said the principal payments will be paid as scheduled.
To give time for negotiations, he suggested the "debt payment holiday" begin next year.
Mitra said he expects critics to counter that a 90-day pause would not automatically result in the withholding of the P67.9 billion or 25 percent of the debt service fund for 2004 as there are varying payment schedules.
He said the answer to that is for the government to negotiate an across-the-board rescheduling by three months of the country’s debt payments.
"It’s tempting to propose a one-year moratorium but that would downgrade the country’s credit rating and may make us a pariah in international finance so the best option is a brief debt payment break," Mitra said. – Paolo Romero