MANILA, Philippines – Does the Philippines know whether the foreign loans it had secured would benefit the borrower or the lender? Protect the interest of the aid-recipient or the aid-giver? Promote faster growth or hold it back?
It appears that it doesn’t. In Tuesday’s Senate Committee on Economic Affairs hearing, Sen. Sherwin Gatchalian, the chairman of the panel, said he was surprised at finding out that the Philippine government didn’t have a system or method in studying the impacts of foreign loans and grants on the country’s economic growth.
The senator also learned from the inputs of resource persons during the hearing that the National Economic Development Authority (NEDA) and the Department of Finance (DOF) didn’t have comprehensive studies that could be used by the government as basis on deciding whether it would be beneficial for the country to secure foreign loans.
Gatchalian also pointed out during the hearing that it appeared that the Philippine government was incapable of checking on the foreign suppliers and contractors that do business in the Philippines as a result of the country’s loan procurement.
“This is a revelation to me na marami tayong pinapasukan na financing modalities pero hindi nave-vet mabuti ‘yong mga suppliers contractors na pumapasok sa ating bansa,” the senator said.
“Ang mechanism ngayon kausap natin ‘yong mga magbibigay ng financing pero ang nakakabit doon, ‘yong contractor na di natin nakikita [The mechanism now is we talk to those who gave us financing but tied to them are the contractors that we don’t see],” added Gatchalian.
He said “it’s not so clear” whether it should be the NEDA or the DOF that should check on these foreign suppliers and contractors and thus the process should be studied.
“We will tighten the rules in terms of acquiring ODAs (official development assistance) and foreign financing,” said Gatchalian.
During the Senate inquiry, the lawmaker asked representatives from concerned government agencies such as the NEDA and the DOF to provide his committee information and studies on the economic gains that the Philippines would get from the loans that China would extend through its One Belt Road Initiative, which underlines the country’s push to take a bigger role in world affairs and coordinate manufacturing capacity with other countries in areas such as steel manufacturing.
The senator likewise asked the NEDA and the DOF to provide his panel studies that would compare tied and untied foreign loans and their effects on the Philippine economy and public welfare.
Tied loans refer to borrowings made by a government agency to a foreign entity that requires the borrower to spend some or all of the loaned funds on goods or services from the lending country, while untied loans give the recipient the freedom to procure goods and services from practically any country.
“We have to remember that once we sign the loan agreement this is a loan that all of us will pay at the end,” said Gatchalian.
“Kaya important na itong mga loans ay [Thus it is important that these loans are] beneficial to our country and that the contractors who will undertake the project are capable and unquestionable,” he added.