BSP’s $500-M ‘gift’ to IMF hoax

CONSUMERS' DEMAND!
Herman Tiu Laurel
3/5-11/2012



Our fellow OpinYon columnist and De La Salle professor Louie Montemar looked critically at the “news of the decade” last week emanating from the Bangko Sentral ng Pilipinas (BSP).

The surprise report in the papers that “the Philippines has just become a creditor nation, extending loans to poorer states in the European Union,” prompted Louie to write in his piece, “Making sense of the news,” that this news didn’t seem to compute given the socio-economic realities we see facing our nation.

It certainly does not make any sense. The claim that the Philippines has become a creditor nation is a big farce simply because a country with P4.9-trillion ($120-billion) outstanding national debt can hardly claim to be a real creditor country.

What’s not being stated is that the national government (NG) only borrows dollars for the BSP to pay our country’s $500-million contribution to the International Monetary Fund (IMF)’s new arrangement for borrowing (NAB) program and $251.5 million for the financial transaction plan (FTP), in accordance with the country’s obligations as a member of the Fund.

With help from financial forensics expert Hiro Vaswani, the following instances show how the BSP and the NG went about raising the Philippines’ contributions to the IMF through borrowings:

From January 2006, the headline, “NG to issue bonds to BSP for advances of IMF dues,” spelled out an idea of issuing the same type of zero-coupon bonds as the now infamous CodeNGO PeaceBonds which need not pass through the national budget but instead go straight to government’s debt to form part of our “automatic debt service.”

Then, from 2009, the headline, “BSP advances P9B IMF quota payments,” highlighted the country’s regular ritual of raising contributions for the IMF at a time when the NG incurred a budget deficit but which it repaid in subsequent years to the BSP. There is therefore no reason to expect any difference in this year’s contributions to the IMF.

The Freedom from Debt Coalition (FDC), reacting to the BSP and NG’s trumpeting of our country’s sizeable contribution to the FTP, said in a statement:

“The news suggesting that ‘the Philippines has now become a creditor nation’ may sound good, but (FDC) smells something fishy about this ‘hype’…

“Ricardo Reyes, FDC president, said that while such move ‘seems to suggest that the Philippines has gotten out of its debt problem, which of course is not true,’ considering the outstanding national government debt of P4.93 trillion ($120 billion) at present, the catch lies in the next part of the BSP announcement… (where the monetary authority) ‘lends a part of our dollar reserves to IMF’s FTP’ so the Philippines can borrow again and borrow more from the IMF… (this, notwithstanding the fact that) We have suffered more than enough and continue to suffer as a consequence of (the) IMF’s debt trap.”

So it’s time that we throw rotten tomatoes and eggs, and add the rotten balut, on PeNoy’s face for this shameful attempt to glorify the Philippines’ borrowed financial tribute to the IMF as a clean contribution to the multilateral financial institution’s fund. It is a desperate effort to put an artificial shine on the 26 years of Edsa I’s financial “reforms.”

Those reforms, consisting of the liberalization of currency and capital flows, as well as the deregulation and privatization of the financial system and economy, have actually caused the Philippines to become a shameful laggard in the region.

For the Edsa devotees’ information, our country is now overtaken by Vietnam, which 26 years ago, was just beginning to rebuild from the ravages of 50 years of war with France and then the US.

In spite of that, we still hear of paeans being showered on our alleged “creditor nation status” from the likes of Cory Aquino finance chief Jess Estanislao, whose statements, quoted by Tonette Chan in the Inquirer story, “From butt of jokes in 1986, Philippines has risen to creditor nation,” which proclaim “The Philippines (as) a model of good governance in the world… (thereby enabling it to) overtake Thailand and Indonesia in terms of economic growth,” simply brim with unadulterated hubris.

Why, the reporter even had the unmitigated gall to ask, “Who is having the last laugh now?” It’s certainly not us Filipinos.

If after 26 years of Edsa, we are where we are today given officialdom’s adherence to so-called financial and economic reforms started by Estanislao then handed down to a long list of heirs in the finance department (“Boy Blue” del Rosario, Jose “Mo” Cuisia, Bobby “Bobo” de Ocampo, Jose “Litong-lito” Camacho, Cesar “Foolishima,” etc.), how on earth can they still claim that the Philippines will be “overtaking” Thailand and Indonesia soon when 26 years ago these countries were behind us?

All told, the financial milieu imposed by the Edsa I regime was merely a bankers’ heaven, erected on Cory Aquino’s pledge to “honor all debts.”

It turned our people over to the money masters and the “debt trap” and dismantled all our financial and economic floodgates to effect the massive transfer of public assets to foreign and local corporatists--financed by “sovereign guarantees.”

What we have thus become is an emaciated nation-state, a captive creature shadowing our former glory.

As told by Dani Rodrik in “The Nation-State Reborn” (Economist’s View), the restoration of any nation’s greatness would require its people to “turn for solutions to their national governments, which remain the best hope for collective action” and that even as “the nation-state may be a relic (of) the French Revolution… it is all that we have.”

In our case, that entails a truly sovereign nation-state borne of a new Philippine Revolution and not one captive to corporate powers.

(Tune in to 1098AM, DWAD, Sulo ng Pilipino/Radyo OpinYon, Monday to Friday, 5 to 6 p.m.; watch Destiny Cable GNN’s HTL edition of Talk News TV, Saturdays, 8:15 to 9 p.m., with replay at 11:15 p.m., on “The BSP’s $ ‘creditor nation’ hoax;” visithttp://newkatipunero.blogspot.comfor our articles plus TV and radio archives)