Philippines
- Total external debt: $61.5 billion
- Total external debt payments: gives $9.9 billion each year to the rich world in debt payments.
- Population: 83.1 (millions)
- Percentage of adults who can read and write: 92.6%
- Average life expectancy: 71 years
- HIV prevalence: less than 0.1%
- Total public health spending: 1.4% of GDP (2003)
- Total spending on debt service payments: 10% of GDP
- Annual GDP: $99 billion
(Statistics from World Bank, 2005, and UN Human Development Report, 2005)
DROP THE DEBT FAST
The Philippines is the focus of the Drop the Debt Fast on Sunday 27 April. On this day in 1521 an anti-colonial victory was scored in the Philippines when Ferdinand Magellan was killed in the Battle of Mactan.
Political history
President Ferdinand Marcos governed the country from 1965 to 1985. It is reported that he stole at least $10 billion from his country. Marcos stood ardently against communism and so received strong support from many Western countries. In 1972 he declared martial law and dissolved the parliament. He also shut down all media that was unsupportive of his regime. Marcos was ultimately forced by the Filipino “people power” movement and replaced by Cory Aquino in 1986.
Marcos inflicted immeasurable damage on democratic values. He offered the Filipino people economic progress and national dignity, but the results were dictatorship, poverty, militarised politics and a politicised military, and greatly increased dependence on foreign governments and banks.
Where has the debt come from?
Most of the Philippines debt was accrued during the presidency of Ferdinand Marcos from 1965 to 1986. When Marcos assumed the presidency in 1965, the foreign debt of the Philippines stood below $1 billion. He fled the country in February 1986 during the first People Power, when the country had amassed a foreign debt of $28 billion. Filipino taxpayers will continue to pay for the foreign debts of Marcos until 2025, 59 years after he assumed office and 39 years after he was overthrown. Much of this debt burden is illegitimate – either stolen or used for useless projects that were mired in corruption, enriching Marcos and his advisors, as well as the lenders.
Just one, notorious, example of the latter is the Bataan Nuclear Power Plant, built by a US company, Westinghouse, and backed by loans from the US export credit agency, the Export-Import Bank. The deal was surrounded by allegations of corruption, and the plant was built on an earthquake fault line at the foot of a volcano. Marcos, his cronies, and Westinghouse all did well financially out of the plant, which has never produced any electricity. Meanwhile the Filipino people, a third of whom live in poverty, paid millions of dollars every day for this power plant until 2007 when the debt was finally paid off.
Debt cancellation status
Philippines is officially classed as a lower middle-income country by the World Bank. It is therefore not eligible for the Heavily Indebted Poor Countries initiative or the Multilateral Debt Relief Initiative. Nor is it eligible for additional debt relief from the UK or other bilateral donors. This is regardless of the size of its external debt in comparison to the value of exports, its domestic debt or what the Philippines needs to spend on tackling poverty.
The New Economics Foundation calculates that the Philippines requires 63% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below an ethical poverty line of $3 a day.
Last updated: April 2008
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