MANILA, Philippines – Supreme Court Senior Associate Justice Antonio Carpio corrected Finance Secretary Carlos Dominguez III, saying that the Philippines has had its own share of loan defaults, contrary to the latter’s claims.
Carpio said on Tuesday, April 2, that the Philippines declared a moratorium on its foreign debt repayments back in 1983 because the then-Central Bank did not have sufficient foreign exchange to service its foreign debts.
Dominguez earlier said that the country has no history of defaulting on its loans.
Dominguez, who served as agriculture chief during the Corazon Aquino administration, even went on to say that those warning of a default “have no faith in the Philippines.”
Dominguez also said that even when the Philippines was cash-strapped, it had never defaulted on any of its loans, recalling that the country paid its obligations on the $2.2 billion Bataan Nuclear Power Plant project despite it turning out to be a "white elephant." @rapplerdotcom— Ralf Rivas (@RalfRivas) April 2, 2019
A New York Times article published in October 1983 said that banks agreed to a 90-day moratorium on payments of the Philippines’ foreign debt.
The request for the moratorium was made by then-prime minister Cesar Virata and then-Central Bank governor Jaime Laya.
The report also said that the political turmoil at that time under dictator Ferdinand Marcos greatly devalued the peso. Foreign reserves were thin as well, making debt payments problematic.
Carpio said that a provision in the Chico River Pump Irrigation project considers it a default when the “borrower stops or suspends repayment to its creditors generally.” (READ: Made in China: Loan terms with waivers, shrouded in secrecy)
“So, it is not correct to say that the [Philippines] never defaulted on its debt because the mere suspension of repayment, like declaring a debt moratorium, is already an ‘event of default,'” Carpio said.
At the end of the Marcos regime, the country’s debt totaled some $26.7 billion, mostly due to anomalous deals and infrastructure projects.
The Philippines is still paying off its obligations, over 3 decades since the Marcoses were ousted from the seat of power.
Carpio earlier warned that loan agreements with China have waivers of sovereign immunity and make mention of patrimonial assets.
Patrimonial assets, which include the gas in the disputed Reed Bank, could be lost in the event of a default. – with reports from Lian Buan/Rappler.com