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Enormous debtBianca V. BansalanViha Marie BaylosisRonyn M. LascoHannah Mayen C. Sevilla
Problem/ IssueExternal debt of the Philippine government.
What we already know?Republic of the Philippines external debtis the amount of money owed by theFilipinosto foreign creditors such asAsian Development Bank(ADB) and theWorld Bank.
In 2010, the total outstanding foreign debt of the country is US$ 60 billion, which accounts for 31.8% of theGross Domestic Product(GDP) of that same year. The external debt portfolio consists mostly of medium to long-term loans, used to finance the economic activities and reforms of the government.
Beginning of Phil. High external debtsFerdinand Marcos (Dec 1965 - Feb 1986)
During the years 1966 to 1969, Marcos borrowed a great amount of money to finance his domestic expansion and reforms. This expansion in thegovernment budgetled to increases in thecurrent account deficitand crisis in thebalance of payments. Corazon Aquino (Feb 1986 - Jun 1992)
When Corazon Aquino won the February 1986 presidential elections, the external debt increased to some US$ 28 billion. She aimed to meet debt-service payments and reduce debt size in the long run.
Fidel V. Ramos (Jun 1992 - Jun 1998)
The 12th president of the Philippines, President Fidel Ramos was able to uplift the economy of the country through focusing on people empowerment and global competitiveness.During his time, the Philippines was considered as one of the Tiger Cub Economies in Asia with its continuous growth and prosperity.Joseph Ejercito Estrada (Jun 1998 - Jan 2001)
The Estrada administration was not able to follow through on the achievements of the previous administration. Plagued with rumors on corrupt and inept actions of the government, the country lost some of the trust of foreign entrepreneurs and investors, thus reducing the source of finances of the administration. This had further caused the country to borrow from banks and financing institutions in national and international levels, which in turn caused the Philippines to be more in debt.
Gloria Macapagal-Arroyo (Jan 2001 - June 2010)During Arroyo administration, foreign debt of the country had reached its peak in 2003 with an outstanding of US$ 57.6 billion, which is more than the combined borrowings of the last two governments. This has eventually led to a state offiscal crisiswith huge amount of deficit, as admitted by President Arroyo in 2004.
What do we need to know?
External Debta portion of the total debt of a country that is borrowed from creditors outside the country. Thesecreditorsmay include foreign banks, private corporations or individuals. These loans are to be paid in the currency in which the loan was made thus, the country may export goods to the lending country.Type of DebtThe external debt remained predominantly medium to long-term (MLT) in nature, with these accounts representing 90.6 percent of the total external debt. MLT accounts are those which are paid more than a year and is distributed over a longer period of time.
BorrowerTheBangko Sentral ng Pilipinas(BSP) is the financial institution that regulates and approves the amount of external debt the Philippines. It also controls and makes sure that there is enough money to be paid and there is sustainability in the countrys external debt.
TheWorld Bankis a financial institution that aids third-world countries in their development by lending them money. Its main goal is to lessen poverty in the whole world.
The Philippines does not only borrow from financial institutions but also to foreign countries with high supply of money. Some of these countries are theUnited States of America,Japan,United Kingdom,France, andGermany.
Risk of External debts to the PhilippinesThe country might focus too much and allot a big part of its budget to the payment of the debt and forget the other aspects of the country that it has to work on.
The reputation of a country is also at stake when external debt is looked at and may discourage investments to enter into the country.
High external debt also tends to precipitate crises - if, at some point, investors lose faith in the Philippines' ability to service its external debt or its ability to roll the debt over, they would be expected to pull capital out of the country. World Bank
MottoWorkingfor a World Free of PovertyTypeInternationalorganizationLegal statusTreatyPurpose/ focus:CreditingLocation:Washington, D.C.,U.S.Membership188 countries (IBRD)172countries (IDA)PresidentJim Yong KimMain organBoard of DirectorsParent organizationWorld Bank GroupWebsiteWorldbank.orgHistory:The World Bank was created atBretton Woodsin 1944 to lend toEuropeancountries to help them rebuild after World War II. It was the world's first multilateral development bank, and was funded through the sale of World Bonds. Its first loans were to France and other European countries, but soon lent money to Chile,MexicoandIndiato build power plants and railways. By 1975, the Bank also lent money to countries to help with family planning, pollution control and environmentalism.
The World Bank comprises two institutions: theInternational Bank for Reconstruction and Development(IBRD) and theInternational Development Association(IDA).PresidentJim Yong KimA naturalised American citizen before taking office. Physician and anthropologist, co-founder ofPartners in Healthand 17th President ofDartmouth College. Electedon 16 April 2012.Purpose The World Bank has one central purpose: to promote economic and social progress in developing countries by helping to raise productivity so that their people may live a better and fuller life.
GOALS:The World Bank focuses its policies around achieving eightMillennium Development Goalsby 2015. The World Bank claims that the goals "provide [it] with targets and yardsticks for measuring results" and working toward its ultimate goal of reducing global poverty and growing developing nations (About Us - Our Work, 2012).The goals are as follows:1) Eradicate extreme poverty and hunger2) Achieve universal primary education3) Promote gender equality and empower women4) Reduce child mortality5) Improve maternal health6) Combat HIV/AIDS, malaria and other diseases7) Ensure environmental sustainability8) Develop a global partnership for development
ISSUESHenry Hazlitt argued that the World Bank along with the monetary system it was designed within would promote world inflation and "a world in which international trade is State-dominated" when they were being advocated. Stiglitz argued that the so-calledfree marketreform policies which the Bank advocates are often harmful toeconomic developmentif implemented badly, too quickly ("shock therapy"), in the wrong sequence or in weak, uncompetitive economies.
The other issue of the World Bank has been the way in which it is governed. While the World Bank represents 188 countries, it is run by a small number of economically powerful countries. These countries (which also provide most of the institution's funding) choose the leadership and senior management of the World Bank, and so their interests dominate the bank.Titus Alexander argues that the unequal voting power of western countries and the World Bank's role in developing countries makes it similar to the South African Development Bank under apartheid, and therefore a pillar of global apartheid.
The United States Senate Committee on Foreign Relations reported the World Bank and other international financial institutions for focusing too much on issuing loans rather than on achieving concrete development results within a finite period of time and called on the institution to strengthen anti-corruption efforts.October Rebellionwas the collective name for the series ofprotestevents surrounding the fall 2007 meetings of theWorld BankandInternational Monetary Fundon October 19 20, 2007, inWashington, D.C., United States. The events were organized by the October Coalition. According to the October Coalition's call to action, the group demanded an end to allthird world debtusing the financial institutions' own resources, the end to structural adjustment policies believed to prioritize profit over the lives of individuals, and an end to social and environmental issues caused by oil and gas production, mining, and certain kinds of infrastructure development.
World Bank Oslo 2002 Protests were organized by Oslo 2002, an umbrella organization for about 50 participating organizations includinglabour unions, political parties,environmental organizations,church organizations andATTACfrom Norway, Sweden and Denmark.While each participant had its own reasons, here were the Oslo 2002 network mottos:"Our world is not for sale--stop the World Banks undemocratic market policies!""CancelThird World debt--release the choke hold!!""Free tradepollutes!""Yes to women andwomens rights--no to the World Bank!""Stop the World Banks attack onlabour rights!"The network claimed that the World Bank is an undemocratic institution used by rich nations to control poor countries.EinarBraathen and ReidunHeiene of ATTAC Norway and the Oslo 2002 network also criticized the bank for believing too much inmarket-basedsolutions.ISSUES
Asian Development Bank (ADB)TheAsian Development Bank(ADB) is aregional development bankestablished on 22 August 1966 to facilitate economic development of countries in Asia.The bank admits the members of theUnited Nations Economic and Social Commission for Asia and the Pacific(UNESCAP, formerly known as the United Nations Economic Commission for Asia and the Far East) and non-regionaldeveloped countries.
From 31 members at its establishment, ADB now has 67 members - of which 48 are from within Asia and the Pacif