Latest News

Jubilee Statements

Monitoring the impacts of government and corporate behaviour in communities overseas.

Toxic debt in the Philippines

Release Date: 14-Sep-2008

The Health Care without Harm coalition (HCWH) in South-East Asia is urging the Philippine Department of Health (DOH) to take a strong stance in pushing for the cancellation of a P504 million (AU$12,699,255) loan that the government received from Austria.

Labelled as “The Austrian project for the establishment of waste disposal facilities: an upgrading of the medical equipment standard in DOH hospitals” the project was approved by the Philippine National Economic Development Authority (NEDA) in 1996. The loan, with an interest rate of 4% per year, is scheduled to be paid off by the government until 2014 in 24 semi-annual payments.

The Austrian project had a goal of increasing the quality of life for Filipinos by improving access to quality health service. However, the goal of the project was never realised because the environmental safety claims made by the promoters of the incinerators turned out to be false, as proven by tests by DOH and the World Health Organisation (WHO).

Researchers at DOH have revealed that the incinerators produce high levels of dioxins, which are over 800 times the acceptable standard. The Clean Air Act has banned all incineration of medical waste in the Philippines since 2003. The incinerators were operational for a little over 4 years. “For the harmful and useless incinerators, we now have to pay roughly US$2 million dollars (annually) in principal amortization and interest payments until 2014" said Lim from HCWH.

This loan is a compelling example of illegitimate debt. The Filipino people must endure excessive loan repayments for a service that has done far more harm than good. This was reinforced by the Executive Director of HCWH Merci Ferrer who said “an erroneous loan agreement like the one we have with Austria must be scrapped off the health [department's] budget".

The Austrian loan is a huge drain in the Philippine Government’s budget for health when compared to DOH budget allocations. The incinerator loan payments for 2007 were roughly equal to the DOH budget for local health programs and the prevention of emerging diseases combined.

Ferrer added that in the 2008 national budget, US$2 million is equivalent to the combined budget for:

- the formulation and development of national health policies and plans, including essential national research (P41 million);
- health systems development (P21 million);
- provision for a group of 60 resident physicians (P11 million); and
- provision for a group of 136 part-time and 10 full-time medical specialists (P19 million).

Not only is this Austrian debt burden another example of the abhorrent and unjust resource drains for Filipinos, the above calculations illustrate the severity of human costs associated with illegitimate debt. In a country where 45% of the population lives on less than $2 per day, it is unjust and immoral that Filipinos have their healthcare and other human rights neglected so their government can service bad, and in this case damaging, loans.

Controversial past examples of illegitimate debt in the Philippines include the part US funded Bataan Nuclear Power Plant and the Chinese funded ZTE-National Broadband Network Project (aborted), the South Luzon Railway Project and the Cyber Education Project. These cases of illegitimate debt reveal the economic mismanagement, by creditors and debtors alike, that has exacerbated the poverty of the Filipino people. As Emmanuel Hizon from the Freedom from Debt Coalition (FDC) remarked "We all need to take a much closer look into all these anomalous loans incurred in the past in the name of the Filipino people”.