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TOXIC incinerators sold to the Philippines - a clear case of illegitimate debt

Release Date: 09-Nov-2007

One of the primary bases on which we declare debt to be illegitimate is when the debt is incurred to finance an ill-conceived development project. The citizens of poor countries suffer twice. They miss out on receiving any ‘development’ benefits from the loaned money in the first place, and they continue to miss out because their governments’ spend enormous proportions of their budget servicing the illegitimate debt.

One clear example of such illegitimate debt is the incinerator loan by the Austrian government to the Philippines. This debt was incurred to finance an ill-conceived development project which posed harm to the Filipino people, and severe harm to the environment.

In 1996 the Austrian government provided as a loan to the Philippines government medical waste incinerators for 26 public hospitals to “help” in the proper disposal of medical waste. But the incinerators were clearly obsolete and in fact had been banned in Austria because they were highly pollutive.

The incinerators were brought to the Philippines in 1997 by the Austrian supplier. An emission test conducted by the Philippine Department of Health and World Health Organisation showed that the incinerators emitted unconscionable amounts of pollutants, in one case exceeding the Philippine environmental standards by 870 times.

In 2003, all 26 incinerators were put out of use to comply with the provision of the Philippines Clean Air Act of 1999 banning the use of medical waste incinerators.

Despite this, the Philippine government continues to pay over US$2 million a year to the Austrian government for the medical waste project. Payments in 2007 equal the amount that will be spent by the Department of Health on all local health programs and the prevention of emerging diseases.

Two to three poor Filipino patients share one hospital bed in many government hospitals, and seven out of ten Filipinos die especially in rural areas without seeing a doctor or health worker. The annual US$2 million debt service could have been used to reduce child mortality, avert maternal deaths, combat TB, malaria and other diseases, expand health, purchase medicines and hospital beds, hire additional health workers, and so on.

This toxic debt is unacceptable. Campaigners in the Philippines have initiated a petition to urge the Philippine and Austrian Governments to invalidate the loan. Jubilee Australia has signed the petition.