'No law that requires president to consult Congress on $1-B loan'

Manila, Philippines -  Senators Miriam Defensor-Santiago and Franklin Drilon defended yesterday the move of the Aquino administration – through the Bangko Sentral ng Pilipinas – to commit $1-billion loan to the International Monetary Fund (IMF) without getting Congress approval.

The minority bloc in the House of Representatives also said it’s not raising any objection to the loan offer.

“At present, there is no such law that requires the President to consult Congress or the Senate. If the Senate wishes to participate in the foreign loan process, then it should pass a bill to that effect,” Santiago said in her speech at the induction of officers of the Credit Management Association of the Philippines (CMAP) in Makati City yesterday.

“Is the loan constitutional, since it was granted without congressional participation? Answer: Under the Constitution, there is no legal obstacle to the loan,” she said.

The BSP said the loan would be the country’s contribution to global efforts to help financially distressed European nations.

Some of Santiago’s colleagues, particularly senators Ralph Recto and Francis Escudero, had sounded concerns over the BSP’s loan commitment.

“Questions of wisdom in foreign policy should be addressed to President Aquino when, as the country’s lone spokesperson in foreign affairs, he is privy to confidential information that is not available to Congress,” Santiago said on arguments that the country should not feel obliged to offer loan considering its Third World status.

“The Constitution provides that the President may contract foreign loans on behalf of our republic,” she said.

“The only limitation on the President’s power is that he should have the prior concurrence of the Monetary Board, and that his power is subject to such limitations as may be provided by law,” she added.

She also explained that the Central Bank Act provides that the Monetary Board may authorize the BSP to grant loans to and receive loans from foreign banks and other foreign or international entities.  

Santiago also slammed critics who recommended that the funds be used instead for improving basic services or infrastructure.

“There is no impact whatsoever on budget allocation of the national government,” she said referring to the loan.

She also stressed that BSP money should not be confused with national government funds. National government money comes from tax and non-tax revenues while BSP’s comes from investment income, supervisory fees and miscellaneous income.

Under the law, Santiago pointed out that the BSP can freely convert part of international reserves into other assets.

Santiago also noted that the controversy over the loan offer may have stemmed “more from the trauma that the Philippines suffered during our country’s own foreign debt crisis in the 1990s. The IMF demanded painful structural adjustments such as budgetary cutbacks, trade liberalization, deregulation and privatization then in exchange for the IMF bailout.” Drilon, for his part, also said the BSP is authorized to extend such loan based on the Central Bank Act.

“So, there is an expressed authority from Congress through Republic Act 7653 for the Central Bank to be able to lend to IMF. It is clear that the Central Bank is authorized to grant loans to the IMF on its own without a need for an authority from the President,” Drilon said. 

He said any disturbance or instability in the European economy would have effect on the Philippine economy. “Why? Our exports to Europe amount to $6.5 billion or 17 percent of our total export market per year,” Drilon noted.

“If the European market is unstable and will collapse, you can kiss goodbye this export market. $3.5 billion is the annual remittance of our overseas Filipino workers in Europe out of $20 billion annually,” he added. – With Jess Diaz