July 30 - Amrsp-men Presentation

The Immorality of Debt Prepared by the FaithFaith-based Congress Against Immoral Debts (FCAID) Presented at the AMRSPAMRSP-Men Convention July 30, 2008 – Mornese Ctr. of Spirituality

“Every seventh year we will forgo working the land and will cancel all debts.” – Nehemiah 10:31

Agrarian Reform & Food Crisis

Power & Oil Crisis

“The policy of relying on foreign financing rendered our country vulnerable to damaging conditionalities. In fact, the oil, power, food, and agrarian reform crises we are experiencing now are direct results of these conditionalities. These conditionalities were attached from loans meant to rescue the government from fiscal quagmires which lenders took advantage of to make the government swallow painful, industry-wide “reforms” acquiescent with the paradigm of neoliberal globalization – that of liberalization, deregulation, and privatization.” - Freedom from Debt Coalition (FDC)

OIL CRISIS

Loan Details: •

• • •

Loan: The 1994 IMF Extended Arrangement (Exit Program) Lender: International Monetary Fund Amount: $650 Million Conditionality: The Oil Deregulation Law (RA Nos.: 8180 and 8479)

Aside from the fact that the country has no control over the global market prices of imported oil, the passage of the Oil Deregulation Law by the Ramos Administration exacerbates this vulnerability. The Filipino consumer lost all protections from the irrational increases in the world market prices of oil, which recently rose from around $50 per barrel at the end of 2005 to June 2008’s $135 per barrel. The average price per liter from 1972 to 1995 of premium gasoline and Diesel was pegged at P5.99 and P3.98. On April 1996 when RA 8180 was passed, the price per liter jumped to P9.50 for premium gasoline, P7.03 for diesel. A decade later shows a picture much much worse. As of January 2007, premium gasoline was priced at P37.33 per liter while diesel is 32.62 per liter.

POWER CRISIS

To rescue the NAPOCOR, the ADB in 1998 approved a US$300-million loan for the PSRP. Another $300 million was approved by JBIC as counterpart. PSRP actually gave a big push for the enactment of the Electric Power Industry Reform Act (EPIRA) that will privatize the debt-ridden NPC and restructure the power industry.

Loan Details: •

•

•

•

Loan: The Power Sector Restructuring Program (PSRP)/The Power Sector Development Program (PSDP) Lender: Asian Development Bank (ADB), Japan Bank for International Cooperation (JBIC) Amount: $600 M ($300 M from JBIC, $300 M from ADB), another $450 M from ADB Conditionality: The Electric Power Industry Reform Act (EPIRA) of 2001 (RA 9136)

The deteriorating financial position of PSALM (Power Sector Assets and Liabilities Management Corp.), the agency created by EPIRA to privatize the power industry, led ADB to lend another US $450 Million under the PSDP, which is basically a loan to pay past loans. After seven years, EPIRA has brought about a transition from government monopoly to an enhanced private monopoly—worse, a hundred percent increase in power rates. Under EPIRA, we ended up having the second highest electricity rates in Asia.

FOOD CRISIS Loan Details: • Loan: The Grain Sector Development Project (GSDP) • Lender: Asian Development Bank (ADB) • Amount: $175 Million • Conditionality: Agricultural Liberalization, the Decrease of NFA Subsidy leading to NFA Privatization

The GSDP Policy Loan sought to redefine the role of the state-owned NFA, liberalize grain trading and encourage greater private investment in the sector.

The result of conditionalities and debtdependence brought about by agricultural loans like the GSDP only contributed to reduce the Philippine agriculture from being an exporter in the early 1970s to an importer. The policy conditionalities simply pushed us to import more and more, jumping from 192,020 metric tons in 1984 to 2.1 million metric tons in 2008.

AGRARIAN REFORM CRISIS Loan Details: •

• • •

Loan: The CommunityLoan Managed Agrarian Reform and Poverty Reduction Project (CMARPRP) Lender: Japan Social Development Fund (WB) Amount: $175 Million Conditionality: MarketAssisted Land Reform (MALR) via Voluntary Land Transfer – Direct Payment Scheme (VLT/DPS)

The CMARPRP “promoted the strategy for effecting land transfer to agrarian reform beneficiaries based on farmer landowner negotiations (Voluntary Land Transfer – Direct Payment Scheme [VLT/DPS]) and community state partnership in the planning, provision and management of productive investments and critical support services.” CMARPRP ignored the core social and political principles embodied in the CARP. It emasculates the government’s inherent expropriatory powers. Moreover, the market approach failed to facilitate genuine land transfer. Due to intense poverty, credit will likely be used for basic consumption. As for the landowners, the high cost of maintaining the land would drive them further to hasten land conversion, and, having the land itself as leverage, sell the land at higher prices to farmers.

Currently, our debt figure states TOTAL Php 5.144 T US$ 111.51 B

Domestic Debt Php 3.335 T US$ 72.30 B

As of end-Q3, 2007 in trillion pesos, billion dollars

Foreign Debt Php 1.809 T US$ 39.21 B

Public Debt

PhP 2.540 T

PhP 1.679 T

Php 4.219 T US$ 91.47 B

US$ 55.07 B

US$ 36.40 B

PhP 0.795 T

PhP 0.13

Private Debt Php 0.925 T US$ 20.04 B • • • •

US$ 17.23 B

T

US$ 2.81 B

Public Debt taken from DoF’s Consolidated Public Sector Debt Private Foreign Debt was taken from BSP’s Private External Debt Private Domestic Debt was taken from BSP’s FCDU loans of private residents Foreign Exchange Rate was pegged at BSP’s end-September 2007 rate: US$1=PhP46.1315

Debts claimed by ADB (highest multilateral lender) in percentage

Debts claimed by Japan (highest bilateral lender) in percentage, end year 2007

Debt claimed by Deutsche Bank (highest Commercial Bank) lender, in percentage

The Burden of Debt


National Government Debt per Filipino (using 2007 NG Debt and NSCB projected 2007 population)




Debt Servicing per minute (using data on Interest

P 42,819.42

P 1,165,898.02

and Principal payments on 2007)




External Debt as % of GDP (using NSCB 2007GDP data and external debt data as of Sep 2007 from BSP)

34.51%

Another “indirect” debt burden: THE TAX CRUNCH

Source: Bangko Sentral ng Pilipinas

Heightened Privatization its proceeds is one of the forms of non-tax revenues.

Beefing-up Revenues to Survive

Source: Bangko Sentral ng Pilipinas

On the contrary, the Church says that… (Compendium, p. 219)

•

•

Public spending (mostly coming from tax revenues), is directed to the common good when certain fundamental principles are observed: the payment of taxes as part of the duty of solidarity: a reasonable and fair application of taxes; precision and integrity in administering and distributing public resources. In the redistribution of resources, public spending must observe the principles of solidarity, equality and making use of talents. It must also pay greater attention to families, designating an adequate amount of resources for this purpose (219-220). DO WE FOLLOW THESE BASED ON THE DATA PRESENTED?

Debt Service and Borrowings Drop notice the drop in previous tables

• •

The debt to tax ratio became almost 1:1 in 2006. But there was a drop of debt payments and borrowings from 2006 to 2007 due to the ff:

1.

Less Debts to Pay:


Pre-payment of Debts: Last 2006, our Government pre-paid $220 million worth of obligations to the IMF - Note spike in debt service in 2006

2.

The further weakening of the US Dollar.

3.

More Revenues to Burn




Implementation of the 2% increase in RVAT Privatization of Assets GDP increase leading to increase in taxes

• However, figures show that the drop in debt payments from 2006 to 2007 did not translate into a proportional increase in social spending.

As Church leaders, why is there a need to engage on the issue of debt?

Biblical/Christian Perspectives on the Issue of Debt

References: • Catholic Women’s Devotional Bible (New Revised Standard Version Catholic Edition) • Compendium of the Social Doctrine of the Church (Pontifical Council for Justice and Peace) • The Relevance of the Old Testament Law for Christian Ethics (Chris Wright – International Director, Langham Partnership International) • Immorality of Debt Presentation (Fr. Percy J. Bacani, MJ)

What the Bible has to say about DEBT? • On Creditor Responsibilities o Deut 24: 6, 10-13 Miscellaneous Law - “No one shall take a mill or an upper millstone in pledge, for that would be taking a life in pledge…10When you make your neighbor a loan of any kind, you shall not go into the house to take the pledge…If the person is poor, you shall not sleep in the garment given you as the pledge. You shall give the pledge back by sunset so that your neighbor may sleep in the cloak and bless you; and it will be to your credit before the Lord your God.” o Neh 5, Nehemiah Deals with Oppression - a story of oppression done through exacting interest from lent money

• Responding to Poverty – Sabbath and Jubilee Year o Deut 15, Laws concerning the Sabbatical Year “Every seventh year, you shall grant a remission of debt…11Since there will never cease to be some in need on the earth, I therefore command you, ‘Open your hand to the poor and needy neighbor in your land.’” o Lev 25 – The Jubilee Year

• Ban on Interests o Lev 25:36 – “Do not take interest in advance or otherwise make a profit from them, but fear your God; let them live with you.” o Deut 23:19 – “You shall not charge interest on loans to another Israelite, interest on money, interest on provisions, interest on anything that is lent…”

What faithfaith-based leaders and institutions worldwide have to say about debt? (Bacani) • •

•

A society's worth, said Mahatma Gandhi, is to be measured by the value it places on its weakest members. A Methodist bishop from Argentina today urged "dependent countries" to confront the global economic system "in which we are becoming the property of those who hold our debt"- creditor nations. Ngoyi Misenga of the Church of Christ in Congo said that "economic collapse" in her country meant that "boys are having to go into the army or police, girls are going into prostitution, and young children are winding up on the street -- all places of bad violence.“

• Archbishop Desmond Tutu: “I've called for a long time for the cancellation of the crippling debt which we have had to bear for so long... this is the new moral crusade: to have the debt cancelled, following the Biblical principle of Jubilee. Basically this principle says that everything belongs to God; all debts must be cancelled … to give debtors a chance to make a new beginning.”

• Francisco de Assis da Silva, a priest from the Episcopal

Anglican Church of Brazil, was more direct. “Declaring that debtor nations have been "forced to accept the perverse logic and morality of International Monetary Fund policies that raise taxes, cut social spending and freeze wages," and that "the churches must have the moral commitment to persuade governments to stop the payment of interest "so we can have justice and self-determination.“ • Pope John Paul II affirms that “In his Providence God had given the earth to humanity, that meant that he had given it to everyone. Therefore the riches of Creation were to be considered as a common good of the whole of humanity. Those who possessed these goods as personal property were really only stewards...The jubilee year was meant to restore this social justice”.

• Pope John Paul II – “Debt relief is urgent .... and a precondition for the poorest countries to make progress in their fight against poverty. This is something which is now widely recognized. We have to ask, however, why progress in resolving the debt problem is still so slow. Why so many hesitations?”

The Social Doctrine of the Church says: (Compendium of the Social Doctrine)


Wealth exists to be shared – Goods, even when legitimately owned,

always have a universal destination; any type of improper accumulation is immoral, because it openly contradicts the universal destination assigned to all goods by the Creator (p.104).


Although the quest for equitable profit is acceptable in economic and

financial activity, recourse to USURY is to be morally condemned: Those whose usurious and avaricious dealings lead to the hunger and death of their brethren in the human family indirectly commit homicide, which is imputable to them”. From the Magisterium’s own words – usury is tragically widespread; “a scourge that is also a reality in our time and that has a stranglehold on many peoples’ lives (p. 212).

Other Church document sources that show how debts become immoral.
(Tertio Millennio Adveniente # 51) JP II, Vatican,





November 10, 1994 (Sollicitudo Rei Socialis # 19) JP II, St. Peter’s Basilica, Rome, December 30, 1987 (Ecclesia in Asia # 40) JP II, New Delhi, India, November 6, 1999 (Ecclesia in America # 22) JP II, Mexico City, January 22, 1999 (Ecclesia in America # 59) JP II, Mexico City, January 22, 1999

7/21/2008

The Immorality of Debt - Prepared by FCAID

31


Catechism of the Catholic Church
John Paul II, Catechesis at General Audience (4

February 2004), 3: L’ Osservatore Romano, English edition, 11 February 2004, p.11.
Cf. John XXIII Encyclical Letter Mater et Magistra: AAS53 (1961), 433-434, 438.
Cf. Pius XI Encyclical Letter Divini Redemptoris: AAS29 (1966), 103-104.
CBCP Statement on the Foreign Debt Problem, 1990

When there’s greed?

When it becomes a source of conflict?

When it creates war?

When does DEBT become IMMORAL? When it becomes burdensome?

When it enslaves people?

When there’s fraud?

Today, there’s an existing system of Global Poverty • In a world that is richer than ever before, where satellites can beam images across continents in seconds, where human beings made probes can land on the surface of Mars, and where scientists can map our entire genetic make up. • Why is it that in the last 24 hours another 35,000 people have died from curable disease? • Why millions more go malnourished and more than a billion people live on less than a dollar a day? • Why can we not give everyone three meals a day, clean water, an income that makes a decent life possible? • In short, why can’t we end poverty?

7/21/2008

Historically, debt becomes immoral because there’s…

Unequal power relations!

Concretely speaking, in the Philippines, this means…

Dilapidated and overcrowded classrooms; poor quality of education.

Lack of support & prioritization given to the Agricultural sector puts pressure on rice production.

Loss of lives due to undelivered services.

Poor health services.

Loan: Second Social Expenditure Management Program (SEMP 2) Owed to: IBRD Amt: $40 M for textbooks

Loan: Maritime Comm’n Proj. Phase 1 (dubbed as the Global Maritime Proj. in the Reports) Owed to: JAPAN (ODA) Amt: ¥2,633 M .

Debt Servicing over Social Services;; the Health sector Services suffered a lot having the smallest budget amongst the Social Services.

Loan: Grains Sector & Dev’t Program (GSDP) Owed to: ADB (ODA) Amt: GSDP Policy Loan ($100 M); GSDP Investment Loan ($75 M)

The Philippine Government depends heavily on foreign lending for the improvement and delivery of its basic Social Services.

1st point: The immorality of the debt burden is seen in its social costs.
For the Philippines, many Asian countries and

the rest of the Third World, annual debt payments grab the largest share in national revenue allocations leaving pittance for health, education, food production, and job creation.

The graph shows that our gross borrowings and our total debt servicing (interest plus principal) are almost at par with each other while the entire Php 3.71 B that we supposedly owe as profit of the lending institutions.

NG: Total Expenditures vs Interest Payments vs Total Social Services vs Health vs Education

Neglecting Education

Source: NSCB Philippine Statistical Yearbook 2005

Neglecting Health

Source: NSCB Philippine Statistical Yearbook 2005


The government is borrowing more than its deficit because it has to cover for the principal amortization of debts which is an off-budget expenditure.

National Government Borrowings, Debt Service, Budget Deficit, in billion pesos, nominal

Source: Bangko Sentral ng Pilipinas

The Suffering Continues DBM Proposed Spending for 2008 (in billion pesos) Debt Service

624.09

Education

181.86

Interest Payments

295.75

Health

22.90

Principal Amortization

328.34

Agriculture and Agrarian Reform

41.18

Environment

10.06

Military

61.42

Note: Breakdown of totals may not sum up due to rounding of digits.

2nd point: Immorality of debt = SOCIAL SIN (POST-SYNODAL APOSTOLIC EXHORTATION RECONCILIATION AND PENANCE OF JOHN PAUL II TO THE BISHOPS CLERGY AND FAITHFUL ON RECONCILIATION AND PENANCE IN THE MISSION OF THE CHURCH TODAY, 1984)


As a personal act, sin has its first and most

important consequences in the sinner himself: that is, in his relationship with God, who is the very foundation of human life; and also in his spirit, weakening his will and clouding his intellect.

7/21/2008

The Immorality of Debt - Prepared by FCAID

48

Social sin
Some sins, however, by their very matter constitute a direct attack on one's neighbor and more exactly, in the language of the Gospel, against one's brother or sister. They are an offense against God because they are offenses against one's neighbor. These sins are usually called social sins..


Also social is every sin against the common good and its exigencies in relation to the whole broad spectrum of the rights and duties of citizens. The term social can be applied to sins of commission or omission-on the part of political, economic or trade union leaders, who though in a position to do so, do not work diligently and wisely for the improvement and transformation of society according to the requirements and potential of the given historic moment..


Whenever the church speaks of situations

of sin or when the condemns as social sins certain situations or the collective behavior of certain social groups, big or small, or even of whole nations and blocs of nations, she knows and she proclaims that such cases of social sin are the result of the accumulation and concentration of many personal sins.

Albert Nolan, in his book God in South Africa: The Challenge of the Gospel, offers us an alternative perspective on the nature of sins:

“The personal and the social are two dimensions that are present in every sin. All sin is both personal and social at the same time… All sin is personal in the sense that only individuals can commit sin, only individuals can be guilty, only individuals can be sinners. However, all sins also have a social dimension because sins have Sins become social consequences… institutionalised and systematised in the structures, laws and customs of a society.”

Examples of social structural sins (sins of the whole society):

Apartheid, slavery & so is DEBT “Accumulation and concentration of many personal sins”

NO FISHING!!! “Structural sin”

• “Give a man a fish”, the saying goes, “and he will eat for a day; teach a man to fish and he will always eat”. The problem with this saying is that even when you teach a man to fish, there are still signs that say, “NO FISHING”. So, in addition to teaching a man to fish, we also need to take down the “NO FISHING” signs! There are systems in place that prevent people from fishing, whether they know how to fish or not.

3rd point: Immorality of debt is the COMMODIFICATION of the human being and nature.

The dominant religion of our time is Economism: The God is endless growth; its priests are economists; its evangelizers are advertisements; its laity are consumers; and its church is the shopping mall. Its virtue is competition; its vice inefficiency. Salvation is through shopping alone. - John B. Cobb, Jr (1991)-

• But Jesus presents and entirely different kind of economy, one infused with the mystery of abundance and a cruciform kind of generosity. Five thousand are fed and 12 baskets of food are left over. (Mk 6:31-44; Lk. 9:12-17; Mt. 14:15-21) • Jesus transforms the economy by blessing it and breaking it beyond self-interest.

Debt crisis is finally a spiritual crisis. • The market ideology wants us to believe that the world is profane--life consists of buying and selling, weighing, measuring and trading, and then finally sinking down into death and nothingness. • Priority to having and not being.

In summary, the premise of debts being declared as immoral are: • Wealth exists to be shared. If your neighbor is in need, you don’t tell them, “I can lend you money.” But instead you share what you have without expecting anything in return. • In case of lent money, do not charge usurious interest rates. In fact, there should be no charging of interest rates at all. • Luring your neighbor to lend money for false needs and when there’s fraud involved.

Institutionally this would mean… • The government “legitimately” prioritizes debt service over social services and other crucial industries and sectors. • The government can lend money on behalf of the 94 million Filipinos and therefore, negotiates and accepts terms and agreements of • With this, the lenders can “legitimately” creditor agencies “legitimately”. imposed conditionalities (e.g. structural adjustment programs, SAPs). • Lenders can intervene and “legitimately” violate Philippine sovereignty as a nation using the treaties and agreements entered into by the Philippine government. In short, not all “legitimately-passed” laws, agreements, orders & resolutions are fair, humane & just.

Faith as Praxis
Respect for Nature
Economic and Social

Justice
Cancelation of debts
Culture of Peace

Debt Campaign Efforts NATIONAL ARENA: The Freedom from Debt Coalition (FDC) leads in the debt campaign efforts. Some of the efforts done by FDC are: • Repeal of the Automatic Appropriations Law (PD 1177) • Joint Congressional Debt Audit • Creation of the Citizen’s Debt Audit Commission • Campaign on the Illegitimate Debt Cases (e.g. Austrian Incinerator Loans) • Working on the advocacy on public utilities (power and water) and highlighting their link on the issue of debt; conditionalities imposed in the loan agreements particularly in the power and water sectors are heavy and which involves in the legislative intervention of lender/creditor countries and banks. • Building constituencies in different sectors mostly affected by illegitimate debt cases (e.g. PEOPLE AGAINST ILLEGITIMATE DEBT – P.A.I.D., Stop Toxic Debt for the Incinerator Loan, Task Force Diskaril for the North and South Rail Projects, Youth Against Debt for the Textbook Loan, etc.) • Budget Initiatives – Special Provisions on the Debt (Repeal PD1177) and prioritization of social services through higher budget allocations for health, education, agriculture and agrarian reform and environment.


Developing solidarity efforts especially on the side of creditor countries (e.g. Austrian groups for the Incinerator Loans)
Led the Parliamentarians’ petition which also includes our own Senators & Representatives (e.g. Sen. Aquilino Pimentel, etc.)
Highlight the concept of illegitimate debts through participation and conducting of seminars in various international (official & parallel action) conferences.

International Arena led by FDC, Jubilee South and other allied international partners

• Developing solidarity efforts especially on the side of creditor countries (e.g. Austrian groups for the Incinerator Loans) • Led the Parliamentarians’ petition which also includes our own Senators & Representatives (e.g. Sen. Aquilino Pimentel, etc.) • Highlight the concept of illegitimate debts through participation and conducting of seminars in various international (official & parallel action) conferences.

Faith--based Efforts Faith National and International

After the JUBILEE 2000 DEBT CAMPAIGN comes the PHILIPPINE SABBATH YEAR CAMPAIGN General Thrusts of the Campaign • Building a strong network of constituents among faith-based groups. • Promoting and popularizing the moral dimension of the debt issue to the public. • Pushing for concrete policy reforms on the debt.

Main Tasks of the Campaign • Education – train the faith-based constituency • Organization – building of consensus • Mobilization – act together & build solidarity actions

Where are we in the campaign?
A

loose network of faith-based groups and individuals who are willing to pursue the call of Jubilee after seven years was created. In preparation for its broadening, a Coordinating Committee which will lead the implementation of the Philippine Sabbath Year Campaign Project was formed .
Named as the Faith-based Congress Against Immoral Debts (FCAID), the network/alliance focuses on the relationship of debt and morality/faith and how the relationship is intertwined with the concept of illegitimacy of debt.

Where are we in the campaign?...
Touch-based with important faith-based organization

and individuals (CBCP, NASSA, AMRSP, PCEC and other Evangelical organizations) .
Secured a commitment from NASSA re the campaign’s education program.

Major engagements for this year: • Development of the Training Module, Resource Book & Bible • •

• • • • • •

Study Guides on Immoral Debts (Aug-Oct 2008). Production of campaign materials (e.g. pins, video, flyers). Conduct a pilot Trainers’ Training that will help in the identification and development of champions, spokesperson and allies who are capable of training, organizing and mobilizing faith-based constituents on the issue of debt. Massive education sessions in churches and communities. Mobilizing constituents to help in the lobbying efforts in our government & in the lender side for the repudiation and cancellation of the Austrian Incinerator Loan and other cases. POSTCARD CAMPAIGN targeted to parliamentarians. Develop relationship with faith-based media which will help popularized the campaign. Preparations and discussions with other faith-based denomination on the issue of immoral debts. Hold an “Inter-faith Unity Congress” on January 2009.

AS FAITH-BASED LEADERS,

WHAT CAN YOU CONTRIBUTE TO THESE EFFORTS?

For AMRSP, FCAID suggests the following: • Creation of a debt desk within the AMRSP structure or a similar arrangement (e.g. coordination of future trainings and seminars on immoral debts per congregation/order/schools). • Help in linking up with other key faith-based organization like CEAP/MAPSA. • Appoint a spokesperson in contribution to the FCAID pool of speakers. • Actively help in the lobbying efforts through the POSTCARD campaign & organizing of constituents to talk to Representatives of Congress.

Faith-based Congress Against FaithImmoral Debts (FCAID)
For more information & request for materials & dialogues,

please see contact details below: o Project Name: The Philippine Sabbath Year Campaign o Contact Person: Ms. Jofti A. Villena, Project Coordinator o Office Address: c/o Kaalagad Katipunang Kristiyano Office

(KKK), Rm. 230 St. Anthony’s Building (between Cambridge and Oxford Sts.), Aurora blvd., Cubao, Q.C. o Telefax No.: +632-4381322; Mobile No.: +639217941407 o Email Address: [email protected] / [email protected]

May all Churches and faithfaithbased groups work for the repudiation and cancelation of all immoral debts! Thank You! 7/21/2008

The Immorality of Debt - Prepared by FCAID

73