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In Depth with Foreign Debt

And with the present administration, in a span of two years the foreign exchange liability already increased by $4.347 billion. The foreign debt grew by 8.3% in two years time.(See Table 5)

Table 5: Foreign Exchange Liabilities, 1998-2000, June (In $ million)


1998	47,817
1999	52,210
June 2000	52,164

Source: BSP

And with this rate the foreign debt could reach $60 billion when Estrada's six-year term ends.

What now?

With this kind of up-trend on the external debt of the country, more poor people suffer because of the increase in daily cost of living. The tropical ecosystem of the country suffers too, since most of the forest, soil and waters have been severely depleted by the export drive which aims to increase foreign exchange earnings that will be used for paying debt.

Solution?

Debt reduction is essentially to alleviate poverty and suffering. But the government should know who to prioritize, whether the people or the debt of the country.

There are several solutions proposed by creditor government. One of the proposed solutions is the debt moratorium, which is a suspension of debt payments by a debtor country. Another solution is the debt forgiveness wherein a portion of the foreign debt owed by a debtor country will be cancelled when it is recognized to be not collectible. Though are several solutions proposed to resolve the debt crisis, still everything depends on the policy of the government: whether to please the foreign creditors or to improve basic social services for the people.

Sheryle C Pablo

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