Philippines: For debt audit and repeal of automatic debt servicing

PRESS RELEASE - 19 September 2016

26 September 2016 by Freedom from Debt Coalition , Butch Fernandez

Ferdinand and Imelda Marcos during a state visit at the White House in 1966 (CC - Wikimedia)

FDC calls on PDU30 to prioritize debt audit, repeal of 40 year-old auto-debt payments

MANILA, Philippines – Doves seemed to flock in Malacañang today as activist group Freedom from Debt Coalition (FDC) carried their demands for debt audit and repeal of automatic debt servicing imprinted on images of the bird symbolizing peace and freedom.

“Freedom from illegitimate debts! We march today to bring our petition to President Duterte. We call on him to include in his priority legislative agenda the repeal of the automatic appropriations law embodied in Presidential Decree 1177 and the immediate comprehensive audit of all public debts,” said FDC Secretary-General Sammy Gamboa.

Presidential Decree 1177, commonly called the Automatic Appropriations Law (AAL), was a legacy of the late dictator Ferdinand Marcos. It mandated the automatic appropriations of funds for interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. and principal payments of the debts of the national government.

By virtue of AAL, debt payments do not need approval from the Congress and are thus, not scrutinized during budget deliberations.

“For 40 years, we have suffered the impact of this oppressive law. Debt payments are prioritized and are given the first cut of the national budget before appropriations are made for social and economic services. Generations have been denied of their right to live a life of dignity and generations more will endure the same fate if we don’t get rid of this law now,” Gamboa said.

“And we don’t even know what it is that public funds are being used to pay for. How did we end up with these huge debts? How were these loans utilized? Did we even benefit from them or did they just fatten the crooks in government and their private contractors?” Gamboa added.

Recently, FDC revealed in a news release that P6.13 billion of the government’s foreign debt service Debt service The sum of the interests and the amortization of the capital borrowed. for 2017 will go to 13 fraudulent, wasteful or useless loans for construction of farm-to-market roads, flood control, irrigation, power sector reforms, and elementary education, among others. Many of the loans came from the Asian Development Bank, Japan International Cooperation Agency and the World Bank World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.


The group wants President Duterte to immediately convene a technical working group (TWG) for the repeal of AAL and for the official debt audit. The TWG will be composed of representatives from the government and the civil society.

“Our proposal to convene a TWG has been identified during the Social Development Initiatives Summit organized by the Duterte administration in Davao. It is one of the strategies toward achieving progress and development. We are pushing for immediate action on this,” said Gamboa.

For FDC, there will be no real change without freeing the people from the slavery of paying for illegitimate debts and without scrapping or overhauling the policies and institutions that facilitate the imposition of this burden on the public, especially the Filipino taxpayers.

Freedom from Debt Coalition (FDC)



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