Dominguez rejects Imee Marcos' proposal to pause foreign debt payments during COVID-19 crisis

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Finance Secretary Carlos Dominguez III (L) and Senator Imee Marcos (R)

Metro Manila (CNN Philippines, April 15) — Finance Secretary Carlos Dominguez III has rejected a proposal for government to halt payments for maturing foreign debts to free up cash for COVID-19 response, calling it a "narrow-sighted" measure.

Dominguez shot down the call made by Senator Imee Marcos to temporarily suspend loan payments to foreign lenders — a tactic used by her father, the late strongman Ferdinand Marcos — so that government can extend more subsidies to struggling families and companies forced out of business due to lockdowns.

Marcos, chairman of the Senate Committee on Economic Affairs, said this would unlock some ₱451 billion under the 2020 national budget. That amount covers interest payments on both domestic and foreign loans, a check with the General Appropriations Act showed.

"Debt moratorium has not crossed our mind. It was never entertained or will ever be a part of our crisis response measures," Dominguez said in a statement sent Tuesday evening, adding that doing this would put the country's track record in peril.

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The Philippines has been regularly paying its loans to both local and foreign debtors as they are due. The debt burden is a mix of short-term and long-term borrowings, which have piled up as the government invests for development.

The country's debt burden is at 44.2 percent relative to the economy, lower than a peak of 78.3 percent in 1986, the DOF said. That was the year former President Marcos was booted out from power by a popular revolt that installed Corazon Aquino as the country's leader.

"We have built a 34-year track record, beginning with the Cory Aquino administration, of honoring our country’s obligations. Honoring our word has allowed us to remain as one of the most attractive investment destinations and one of the world’s favorite bond issuers," the Finance chief added.

He said the Philippines' regular debt payments made it trustworthy in the eyes of global banks and financial institutions.

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Marcos told Dominguez on Tuesday night to "have a heart," saying that postponing debt payments would be a better option to shore up funds compared to President Rodrigo Duterte's suggestion for the economic team to sell assets and steal if they have to. She also cited a debt relief program granted by the International Monetary Fund to 25 poor nations — mostly from Africa — that will restructure their loans for the next six months.

On Wednesday morning, Marcos appealed for Dominguez "not to take things personally" as he rejected the senator's proposal.

"COVID-19 is the enemy, not me," the senator said in a statement.

"While Secretary Dominguez and I are still lucky to have three square meals a day, hundreds of thousands if not millions of Filipinos with no access to the media are going hungry, unseen Filipinos whose patience and belief in government are being tested every single day that promised aid does not arrive," she added.

Dominguez earlier said that the government would be borrowing about $5.6 billion (around ₱280 billion) from the Asian Development Bank, the World Bank, and the Asian Infrastructure Investment Bank for additional funding, on top of cash generated from identified savings and budget realignments to finance subsidies as well as other interventions to contain the spread of the disease.