RP’s $500M to IMF: Cruel joke

DIE HARD III
Herman Tiu Laurel
3/2/2012



I do not know why the usual government financial managers and “experts” went out on a limb to attempt the latest PR stunt for the Philippines’ financial status, but it is so lame that they are certain to get rotten eggs and tomatoes on their faces.

Bangko Sentral ng Pilipinas (BSP) deputy chief Diwa Guinigundo said the country’s contribution of $500 million to the New Arrangement to Borrow (NAB) program of the International Monetary Fund (IMF) signals its “creditor” status in the world. Cory Aquino Finance Chief Jess Estanislao, meanwhile, chimed in with his paeans, leading a yellow daily to blare, “From butt of jokes in 1986, Philippines has risen to creditor nation, says ex-finance chief.” All these, when the truth is, the national government (NG) will only be borrowing by way of issuing bonds to raise the dollars to “contribute” its regular quota to the IMF — as it had done in the past.

With help from financial forensics expert Hiro Vaswani, we have gathered several instances where the BSP and the NG went about raising the country’s contributions to the IMF. From January 2006 (“NG to issue bonds to BSP for advances of IMF dues”), there was this idea of issuing the same type of zero-coupon bonds as the infamous CodeNGO PeaceBonds which will no longer pass through the national budget and go straight to government’s debt to form part of our “automatic debt service.” In 2009, with the budget deficit incurred at that time but which the NG repaid in subsequent years to the BSP, another development (“BSP advances P9B IMF quota payments”) highlighted the country’s regular ritual of raising contributions for the IMF. There is thus no reason to expect that there will be any difference in the process this year.

The Freedom from Debt Coalition (FDC), in its reaction to the BSP and NG’s trumpeting of another $251-million RP contribution to the IMF’s Financial Transaction Plan (FTP), said in its press release, “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) ‘BSP lends a part of our dollar reserves to IMF’s FTP’ so the Philippines can borrow again and borrow more from the IMF!” This contribution to the FTP is again no different from our contribution to the NAB of $500 million.

So let’s throw rotten tomatoes and eggs, and add the rotten balut for PeNoy’s head, for this shamefully lame attempt to glorify the Philippines’ borrowed financial tribute to the IMF. This is nothing but a desperate effort to put an artificial sheen to the 26 years of Edsa I’s financial “reforms,” consisting of liberalization of currency and capital flows, deregulation and privatization of the financial system and economy, among others, which have caused the Philippines to become a shameful laggard in the region.

Believe me: The Philippines has now been overtaken by Vietnam, which 26 years ago had just begun to rebuild form the ravages of 50 years of war with France and then the US. Tonette Chan of the Inquirer, who wrote that report on Estanislao, even dared to ask, “Who is having the last laugh now?” It’s certainly not us Filipinos.

But their hubris doesn’t come in short supply. Estanislao was, in fact, quoted to have said before the Institute for Solidarity in Asia that “The Philippines is going to be a model of good governance in the world,” arguing that “public officials and citizens (who) address local issues like instituting political reforms and changing the political culture… would help the Philippines overtake Thailand and Indonesia in terms of economic growth.”

Given the dismal 26 years of Edsa I financial and economic reforms that Jess Estanislao started and bequeathed to a long list of Finance heirs, from “Boy Blue” del Rosario, Jose Cuisia, Bobby de Ocampo, Lito Camacho, to the latest, Cesar Purisima, how the hell can our country even dream of “overtaking” Thailand and Indonesia, when these countries were well behind the Philippines 26 years ago?

Ah, but the financial milieu imposed by Edsa I was all but a banker’s heaven, erected on Cory Aquino’s pledge to “honor all debts,” which turned our people over to the money masters and the “debt trap,” and dismantled our financial and economic floodgates to effect the massive transfer of public assets to foreign and local corporatists, all financed by “sovereign guarantees,” leading to the emaciation of our nation-state to the shadow of a captive creature that it is today.

As a recent commentary from the Economist’s View (“The Nation-State Reborn” by Dani Rodrik) tells us, the restoration of any nation to greatness would require its people to “turn for solutions to their national governments, which remain the best hope for collective action” because even as the “nation-state may be a relic… (of) the French Revolution… it is all that we have.” For us, that only means a truly sovereign nation-state borne of a new Philippine Revolution; not one that’s captive to corporate powers.

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