1. PHILIPPINE DEBT STARLIGHT EXPRESS DANNA ACAP STEPHANIE CHIONG KRYSTAL PUENTEVELLA ENA VELASCO

2. HISTORY In 1961, Diosdado Macapagal departed from thenationalist policies of predecessor Carlos Garciaand he embraced free enterprise and opened doorsto free investment. In return, the United States, the InternationalMonetary Fund and the World Bank offered thegovernment huge loans. It was thought that theforeign capital could be a catalyst for development.This was however our entry into the debt trap. 3. When Ferdinand Marcos became president in 1965, hecontinued Macapagals economic liberization policies.And the outcome was that the debt rose from 277.7million dollars to 840.2 million by the end of his term. When Marcos imposed martial law, the trend towardeconomic liberalization accelerated. And he borrowedfrom outside to finance deficit and nationalists likeTaada, Recto, Garcia, and Diokno did not even opposeths decision. Almost 20 years after Marcos regime, his successorswere still not able to rescue the country from debts andrather only increased it. It went from 28 billion dollars to69 billion dollars.The biggest borrowings were duringthe Arroyo administration which was bigger than theborrowings of Ramos and Erap combined and this wasonly in a span of three years. 4. External Debt, 1982- 90n.a.--not available. 1In billions of United States dollars.2In percentages; GNP--gross national product.3In percentages.4As of June.Ratio of Debt Outstanding Ratio of DebtYearDebt Service1 Service to Debt1 to GNP2Exports31982 24.543.50 62.5 42.51983 24.363.02 71.5 36.31984 24.382.30 77.2 33.41985 26.922.57 83.5 32.01986 28.373.04 94.1 34.51987 30.033.61 87.8 38.51988 29.163.48 74.8 31.51989 28.923.38 65.2 26.31990 26.974 2.35 57.9 n.a. 5. THE FOREIGN DEBT EXPERIENCES 6. THE FOREIGN DEBT EXPERIENCES The foreign debt experiences through the Marcos (1966-85),Aquino (1986-91), Ramos (1992-97), Estrada (1998-2000) andArroyo (2001-present) administrations have then correspondinglyvaried There is first of all the situation such as during the Marcosdictatorship when foreign debt soared at unprecedented ratesfrom 1966 to 1985. Foreign debt of just US$599 million in 1965increased forty-four-fold over 20 years at an average annualamount of US$1.3 billion a year to reach US$26.4 billion by theend of 1985. Borrowing was heavily concentrated in the post-oilshock period of the 1970s. The Aquino government took over in the wake of the "debt crisis"which started in Latin America in 1982 that, among others,greatly constricted global lending. Thus the averageaccumulation during the Aquino government was only US$591million per year or less than half that during the Marcos period. 7. THE FOREIGN DEBT EXPERIENCES The Ramos administration was in contrast a period of rapidincreases in foreign borrowing at an annual average ofUS$2.2billion. This rate in nominal terms even far surpassed that of theMarcos administration. In large part this reflectedthe so-called"emergent market" syndrome in the 1990s in which a handful ofSouthern countries - especially in East andSoutheast Asia - wereseen as particularly profitable outlets for surplus finance capital.In East Asia and the Pacific alone,total net resource flows soaredfrom US$27 billion in 1990 to US$128 billion in 1997; thisincluded an increase in theamount going to the Philippines fromUS$895 million in 1992 to US$5.2 billion in 1996. This momentumwas maintainedcoming into the Estrada administration. Foreigndebt rose at a historically high rate of US$2.7 billion per year,over ninetenthsof which was public debt and then largely in justthe first two years of the Estrada term. 8. FOREIGN DEBT SERVICEThe foreign debt service burden from 2001-2005 has consequently beenthe heaviest in Philippine history whether measured in absolute terms, inper capita or in its ratio to gross domestic product (GDP). Put anotherway, the 2001-2005 period has seen the most severe drain on nationalresources in its history with attendant adverse implications on economicperformance and development. For the purposes of seeing the immediatedrain on the Philippine economy, the debt service burden which measuresactual payments is more appropriate than the debt stock which mainlyreflects the sum of outstanding claims reaching into the future. 9. WHY IS SUCH A LARGE AMOUNTALLOCATED FOR IT IN THE NATIONALBUDGET? Almost 1/3 or more of the national budget goes to interestpayments on the debt of the government. The countryowes a lot of money from creditors. As figures indicate, the debt continues to snowball. Thereis no evidence that it will ever significantly decrease inthe near future. The proof of the pudding is that themoney saved for debt service balloons every year. The government borrows to pay the money that weborrowed and this has been a practice for many years. Tokeep the government afloat and service its debt, it resortsto borrowing from foreign and local creditors. 10. REFERENCES http://www.photius.com/countries/philippines/geography/philippines_geography_external_debt.html http://msgrlope.multiply.com/journal/item/13?&show_interstitial=1&u=%2Fjournal%2Fitem http://www.afrodad.org/downloads/Phillipines%20FTA%20final.pdf