UN Rights Expert Urges Debt Relief for Philippines
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Outstanding overseas debts are costing the country billions as it tries to recover from the devastating Typhoon Haiyan, which caused massive destruction five months ago.
By Reuters 8 April 2014
MANILA — A United Nations human rights expert on Tuesday urged international creditors to cancel the Philippines' debt and give it unconditional grant aid instead of new loans to fund massive post-typhoon reconstruction.
The Southeast Asian country, hit hard five months ago by Typhoon Haiyan—one of the strongest storms to make landfall anywhere—estimated the total cost of a four-year reconstruction effort could surpass the current estimate of 361 billion pesos (US$8 billion).
The Philippines' outstanding external debt was $58.5 billion at the end of 2013, according to the central bank.
"I welcome the international support provided to the Philippines in the aftermath of the cyclone, but am concerned that more than $22 million leaves the country everyday, paying off overseas debts," Cephas Lumina said.
Lumina is an independent expert charged by the UN Human Rights Council to monitor the effects of foreign debt on the enjoyment of all human rights, particularly economic, social and cultural rights.
Haiyan, which swept ashore in the central Philippines on Nov. 8, displaced around 4 million people from their homes, and destroyed 500,000 houses, the United Nations estimates. Damages to infrastructure, hospitals, schools and public services were estimated at $12 billion.
"While around $3 billion has left the country to serve its debt since the typhoon struck, the country has received so far only $417 million for its strategic response plan by international and private donors, about half of the total relief requested," Lumina said in a statement.
The Philippines, excluded as a lower middle-income country from international debt relief initiatives, is expected to pay $8.8 billion to service debt this year alone, the United Nations said.
"By definition, loans for reconstruction cannot generate returns to enable the debt to be paid," Lumina said. "International lenders should rather consider cancelling debt, to ensure that the country can recover."
About a fifth of the Philippines' external debt as of end-2013 was owed to the World Bank and the Asian Development Bank, according to the United Nations.
The country's top bilateral lenders are Japan, the United States, the United Kingdom, France and Germany, the agency said.
Odious Debts
There was no immediate comment from Philippine Finance Secretary Cesar Purisima on the United Nations statement.
Manila has set aside funding of 54 billion pesos for the rebuilding effort. At least 80 billion pesos more would come from concessional loans offered by the World Bank, the ADB and the Japan International Cooperation Agency.
Once one of the world's most prolific global bond issuers, the Philippines has been relying less on foreign borrowing to plug its budget gap, and has been pursuing more debt buybacks and swaps and innovative deals such as local-denominated global bonds, prompting debt ratings agencies last year to lift the country to investment-grade status.
Lumina, however, said "the disaster should rather serve as an opportunity for lenders to acknowledge that odious debts emanating from the rule under Ferdinand Marcos should be cancelled."
Marcos, the late dictator who ruled the heavily indebted and impoverished Philippines for two decades, was toppled in an army-backed popular uprising in 1986.
Reuters ...