The Pitfalls of Borrowing13.12.10
Aired on December 13, 2010
Narration by RG Foncardas
The Pitfalls of Borrowing
Is it true that credit is good ? Is it a necessary solution to a financial crisis?
As of May 2010, the total external debt of the Philippines has ballooned to a whopping 55.4 Billion US Dollars or 2.6 Trillion Pesos! How did we accumulate such an enormous debt? Well, for next year, 2011, the government’s planned spending program amounts to P1.645 Trillion pesos. How much is the country’s internal revenue per year? No more than P900 Billion pesos. Clearly, we will be spending way beyond our income as a nation as we have been doing for many years. It is no surprise that we have become mired in such a crisis of debt.
Like many other countries in the South, we are moved to borrow huge sums of money because in in general our expenditures exceeds our revenue. A of wisdom is enough to know that the country should not be relying on borrowed money . A country wisely governed government strives to raise its revenue through creative and honest means. If we keep on looking for foreign capital and finances to bail us out, we will never arrive at permanent creative ways of solving our country’s financial woes.
Some have suggested that we simply ought to stop all attempts at overcoming the countries debts, especially those that have been illegitimately incurred. Why pay for debts created by corrupt and greedy officials. But then again, can we really afford not to pay? Will this not only serve to inflate the compounded interests of our existing debt and worsen our debt scenario?
Fundamentally, we need to ask ourselves whether is it responsible for a country to simply abandon its financial obligations. Before we borrow, we should be confident that the debt can and will be repaid. If its most likely that the debt cannot be repaid, it is foolish to consider borrowing in the first place.
Scripture has a word for those who borrow and do not repay, Psalm 37:31 calls them ‘wicked’ .
Adapted and translated into English from Mr. Rex Resurreccion’s Sa Ganang Amin editorial entitled, “Dapat Bang Bayaran ng Pilipinas ang Utang Niya?” Mr. Resurreccion is ISACC’s Fellow on Enterprise Development.