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Aid agencies call for cancellation of Philippines’ foreign debts

Source: Thomson Reuters Foundation - Thu, 5 Dec 2013 04:57 PM
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A view of the Bataan Nuclear Power Plant (BNPP) in Morong, Bataan, north of Manila.The U.S.-built plant, completed in 1984, sits on an earthquake fault line and has never generated electricity. Photo March 17, 2011. REUTERS/Erik de Castro
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LONDON (Thomson Reuters Foundation) – Lenders should cancel the Philippines’ international debt of $60 billion to help the country pay for work needed to recover from Typhoon Haiyan and prepare for future emergencies, Christian Aid said on Thursday, a view echoed by other aid agencies.

The Philippines pays its international lenders nearly $22 million a day in interest, so has paid more than $550 million since Typhoon Haiyan struck nearly one month ago, Christian Aid said in a statement.

Repayments of debt and interest on loans amassed over 40 years, including the extravagant Marcos era, total some $132 billion, it said.

The president of the Freedom from Debt Coalition, Ricardo Reyes, agreed with the call, saying he believed that “justice for the Filipino people demands debt cancellation, especially the illegitimate debts, which are odious, onerous, illegal, violate human rights, harmful to the people, environment and climate, and bereft of institutional processes and the consent of the people.”

“Climate justice demands reparations to enable the Philippines to develop resilience to climate change and compensation for losses and damages,” he added.

“International lenders should put life before debt and cancel the Philippines’ foreign debt obligations as a matter of urgency, “ the director of Jubilee Debt Campaign, Sarah-Jayne Clifton, said. “The Philippines urgently needs funding for relief and reconstruction efforts, as well as to adapt to the unavoidable impacts of climate change and support communities who live in areas that are beyond adaptation,” Clifton added.

Reconstruction costs after Typhoon Haiyan, which killed more than 5,600 people and wrecked more than a million homes, are estimated at between $6.5 billion and $15 billion.  The World Bank and the Asian Development Bank  have announced a total of $1 billion in loans for rebuilding.

An IMF country report published in April said that one-fifth of the country’s yearly revenue goes on debt servicing. 

“The Philippines is prone to natural disasters such as typhoons and earthquakes. Debts that should have been cancelled years ago are limiting the country’s capacity to respond and prepare for future emergencies. Action on this is clearly needed before any new debts are added,” said Christian Aid’s senior economic justice adviser, Joseph Stead.

The Jubilee Debt Campaign, Freedom from Debt Coalition, Jubilee South (Asia) and Christian Aid have launched a petition calling on lenders such as the World Bank and the Asian Development Bank to cancel the Philippines’ debt.

The campaigners say the Philippines has not derived much benefit from its sizeable loans. In one case, they say, loans were taken for a nuclear power plant, but the U.S. builder sited it on an earthquake fault line near a volcano, and it never generated any electricity.

The Philippines was excluded from the global Jubilee movement, a campaign for the cancellation or repudiation of developing country debts, as it was considered to be too rich.

There were 16 million malnourished people in the Philippines in 2011, according to an FAO report.

The campaign resulted in the cancellation of $130 billion of debt, most of it owed by African countries.

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