Amadeusz Juskowiak

Manila officials split over debt strategy

A rift has occured among Philippine officials over debt talks opening tomorrow in New York with Economic Planning Secretary Solita Monsod accusing the chief negotiator of softening his stand to gain a quick agreement

Monsod told Reuters Finance Secretary Jaime Ongpin had decided not to insist on Manilas creditor banks pledging to fund half of a projected 198892 financing gap of seven billion dlrs

He Ongpin wants to finish the negotiations as fast as possible Im saying thats very shortsighted Monsod said

Monsod said any pricing agreement on rescheduling 36 billion dlrs of the Philippines total foreign debt of 278 billion dlrs would ignore a looming 14 billion dlr net resource transfer in the same period

Manila is seeking a spread of 58 percentage points over the London Interbank Offered Rates LIBOR

Monsod said Right now we are saying to the banks lets share the financing burden

Ongpin said last month the countrys consultative group of multilateral and bilateral aid donors had endorsed a growth facility to bridge the funding gap

He said the government and the consultative group would meet annually to gauge financing needs for each year The aid donors and commercial bank creditors would then be asked to finance any gap on a shared basis

He told reporters on Saturday it would be unwise to try to pin the banks down on Monsods proposed growth facility

Ongpin acknowledged there was a dispute over tactics Secretary Monsod and I get along famously he said She talks and I listen but I dont necessarily agree

Monsod said a firm commitment from the banks on bridging the financing gap would have aided the governments pumppriming program and 198792 mediumterm development plan

She said if private sector investment continued to be held back by the fear of a balance of payments crisis and rising interest rates the country would fail to achieve its gross national product GNP growth target of an average 65 pct over the next six years

If you dont get those seven billion dlrs there is no plan How can there be a program if there is no finance she said adding Ongpins stand was not good for the economy

It Ongpins stand is going to make it much more difficult for the economy to attain its growth targets Monsod said

Considering what the Philippine negotiating team is going to press for there is absolutely no reason why they should not be able to come back from New York in a day she said

Monsod the governments chief economic planner stressed Manilas policy was growth before debt

She said if the banks refused to lend the new money the Philippines should copy Brazils action last week in freezing all debt repayments

If the banks do not cooperate by lending you back some of the money that you are sending abroad then of course you have an option Monsod said You just dont send it abroad You do a Brazil