Year 2000 is a historic year for all Filipinos. This is the year when the first ever impeachment process successfully reached the Senate. All attention is to this impeachment process that we almost neglect other more important problems the country faces. The economy is in deep crisis. It is slowly deteriorating (unless we do something about this). The country's foreign debt is continuously rising.

Foreign debt refers to a country's debt owed to foreign creditors and is denominated in foreign currency. This includes short-term loans with maturity of one year or less and medium and long-term loans with maturity of more than one year. The creditors are multilateral institutions such as the International Monetary Fund (IMF) and the World Bank (WB), commercial banks and foreign governments.

The foreign debt burden is so important especially since the country is in a political and economic crisis. Because of this, the government cannot borrow from local commercial and government-owned banks for they are also affected by the crisis. The only resort is to borrow internationally.

The year 1999 ended with the Philippines owing creditors $52.21 billion. By the end of June 2000, this amount slightly decreased to $52.164 billion.

This has implications in our lives that are more significant than the figures suggest at face value. Right now, each one of us, from the oldest grandparents to the youngest grandchildren, owes the world $696. That amounts to about P34,800, a sum of money that is equivalent to a fortune for a majority of Filipinos. Just imagine how many years it would take for a college student to pay this amount with this daily allowance.

This article presents the basic data about, analyzes the problem of foreign debt and provide recommendations with the end of making college students understand the fundamentals of this complex problem (Ibon Facts and Figures, 1997).

After the Second World War, the United States and its allies outlined a post-war economic system to open up the market and to gear one's economy for global competition. Key to this system were the IMF and the WB. This system encourages debt-driven growth and dependency in developing countries.

By the 1950's and 1960's, direct foreign investment by capital from industrialized countries resulted in the depletion of domestic savings of countries, because these investments needed to be highly profitable and domestic savings were incorporated into the remittances. Developing countries, then, began to borrow money from abroad to make up for the loss. The Philippines is one of these countries.

Page   1   2    3       back to top

Search This Site The Web for Get a Free Search Engine for Your Web Site

copyright © 2001.
Allyn V. Baldemor; Reinier Dungca; John Andrew Agbay.
University of the Philippines, Diliman, Quezon City
All rights reserved