From debtor to creditor

Published by the Visayan Daily Star Publications, Inc.

NINFA R. LEONARDIA Editor-in-Chief & President

CARLA P. GOMEZ Editor CHERYL CRUZ Desk Editor PATRICK PANGILINAN Busines Editor NIDA A. BUENAFE Sports Editor RENE GENOVE Bureau Chief, Dumaguete MAJA P. DELY Advertising Coordinator

CARLOS ANTONIO L. LEONARDIA Administrative Officer

The decision of the Philippine government to lend $1 billion to the International Monetary Fund in its efforts to build a war chest of more than $400 billion to bail out economies on the verge of collapse in Europe and avert a global financial meltdown has been met with mixed reactions.

There are those who see the loan as a positive sign for the country, especially after having graduated to being a creditor nation after decades of being on the receiving end of IMF financial assistance. The Bangko Sentral ng Pilipinas said the Philippines, as a member of the global community of nations, has an obligation to ensure economic and financial stability across the globe and the $1 billion loan to the IMF will be used to support global efforts to stabilize the world economy and put it on a growth path. They emphasize that aside from earning goodwill from the international community, we will also get the money back with interest.

On the other hand, militant groups are up in arms over the $1 billion loan, saying that the money could better be used on more pressing needs such as housing, health services, or education. They say that the Philippine government should not be giving away the money to the IMF when it can be used for its own people. Many people have trouble reconciling how a poor country like the Philippines that is mired in debt can have an extra $1 billion to loan to the IMF.

Much of the confusion comes from the source of the money, which, upon closer scrutiny, is found to  come from the country’s dollar reserves which, by definition, are not convertible to pro-poor or infrastructure projects. What is basically happening is that the country’s financial managers have decided to invest a small portion of our $75 billion in dollar reserves that cannot be used for government projects anyway, by giving $1 billion to the IMF as a loan. That money will earn interest as well as serve as the Philippines’ contribution to the efforts of the IMF in averting a global financial meltdown, which should increase our stature among the international community.

If that money that was lent to the IMF could have been spent on projects for the Filipino people, then it is indeed a travesty. But if that billion dollars would otherwise be gathering dust in our vaults would now earn interest, and at the same time elevate our standing in the international community, then it would be money well used.*