Credit GMA for $1-B loan to IMF, says lawmaker

Former President Gloria Macapagal-Arroyo should get part of the credit for the stable financial condition that enabled the Philippines to grant a $1-billion loan to the International Monetary Fund (IMF), a congressional ally said yesterday.

Quezon Rep. Danilo Suarez said credit should be given where credit is due. “In the case of this loan, credit should go to GMA,” he said.

Suarez heads the minority or opposition bloc in the House of Representatives, but Arroyo is the group’s titular head.

The minority leader said it was during Arroyo’s time in 2006 when the Philippines was able to pay all of its IMF loans and “turned from a net debtor to a net creditor.”

“We were able to stabilize the country’s financial situation because GMA pushed for the enactment of the expanded value added tax,” he said.

“It was EVAT that generated the revenues to pay for the IMF loans.”

Suarez said he and his minority colleagues agree with the administration’s decision to lend $1 billion to the IMF.

“I may sound like (presidential spokesman Edwin) Lacierda, but in behalf of my opposition colleagues, I would like to express our support for that decision,” he said.

“The loan is a wise investment in the IMF and in global efforts to help struggling European economies, whose collapse will surely have an adverse contagion effort on Asia, including the Philippines.”

Suarez disagreed with critics of the loan who suggested that the $ 1 billion could better be used for building roads and other infrastructure, or for lending to small entre- preneurs.

“The government is not authorized to use those reserves to reduce our national debt or in public infrastructure,” he said.

Under the law, the country’s foreign exchange reserves, now estimated to be over $76 billion, could only be invested in “foreign-denominated assets,” he added.

Earlier, congressional- allies of President Aquino, including Representatives Ben Evardone of Eastern Samar, Roilo Golez of Parañaque and Teodorico Haresco of the Kasangga, supported the $ 1- billion loan to the IMF.

Golez even filed Resolution 2522, which asks the House of Representatives to express its collective support for the decision to extend the loan.

He said the Aquino administration must be commended since the “singular act” of extending the loan boosted the “country’s image and stature as an emerging tiger economy.”

“With the historic and unprecedented act of lending $ 1 billion to the IMF, the Philippines stands proud and tall in the community of nations, thus, enhancing our standing as an investment haven and one of the emerging tiger economies of the world,” he said.

The loan “is not an expenditure but an investment that adds to the coffers of the government and is a sound way of utilizing the country’s huge foreign exchange reserves, now over $75 billion,” Golez said.

He noted that the country has been receiving accolades from economists and economic publications on its healthy economy.

He quoted economist Ruchir Sharma as saying in his book Breakout Nations: In Pursuit of the Next Economic Miracles: “At long last, the Philippines is on the road to becoming part of the elite group of ‘tiger economies’ primarily due to the leadership of its new President, Benigno Aquino III.”

Sharma predicts that Turkey, Indonesia and the Philippines are among the next breakout nations in terms of economic growth after Brazil, India, Russia, and China.

Golez said the Wall Street Journal recently projected that only three Asian economies (China, Indonesia and the Philippines) and Australia would have the strength to weather a European economic and financial crisis.

He quoted the publication: “The Philippines is better prepared than in the past to withstand a downturn with a stronger government balance sheet and a robust domestic economy. Foreign reserves are high enough to fight capital flight.”

At the Senate, Sen. Miriam Defensor-Santiago said yesterday Aquino cannot anymore take back the government’s commitment to grant the IMF a $1-billion loan out of the country’s reserves.

“Since the President already made the announcement about granting a loan of $ 1B dollars, it will totally be unacceptable for our President to take back what he has already told the international community,” she said.

Santiago said she is not keen on proposals to amend the BSP charter to enable Congress to look into any loans that it might enter into regarding its reserves.