Getting Out of the Debt Trap03.01.11
Aired on January 3, 2011
Narration by Baben Grace Lumapas
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Getting Out of the Debt Trap
Have you ever had difficulty sleeping at night because of debt? Or dreaded phone calls from creditors? Have you lost your appetite because you found it hard to pay your credit card bills?
Then it won’t be difficult for you to understand what I mean by credit burden. Credit burden pertains to the hardship we experience as a result of unmanaged debt. It is constantly living in debt because our income is not sufficient to sustain our minimum basic needs like food, shelter, and education. Put this on a bigger scale and you understand what is meant by a national debt burden.
Do you know that around 40 percent of our national budget automatically goes to debt payments alone? It means out of every one peso our country spends, around 0.40 centavos directly goes to debt servicing. Technically speaking, it means 0.40 centavos is spent on interest payments alone. The 0.40 centavos does not pay for the principal—the original amount borrowed.
Simply put, this doesn’t get us off the hook. The debt cycle continues, the dreaded phone calls from collectors don’t stop. The sleepless nights of our nation persist.
Thirty years ago, a Presidential Decree ( P.D 1177, Section 31-B ) was passed to automatically appropriate payments for public debts. In those thirty years, up to this time, no review was ever made to monitor the impact of such a policy. Is automatic appropriation a wise way of handling the debt issue? Or are there better ways of managing it? Is there a way to creatively solve this concern without sacrificing the funding needed for basic social services—like health, education, and infrastructure?
Repealing the law is one. Another is transparency and the creation of a process that allows the public to scrutinize all loans being entered into. Yet one is an office that will specifically manage our public debt, harnessing the best and the brightest in banking and finance to assist fiscal management and ensure we get out of the debt trap by living within our means and expanding the resources necessary for our people to live decently.
Written byCatherine Joy “ Sukha” Valdez. Ms. Valdez is a writer of ISACC.