News / 28 November 2013

Philippines don’t need more debt with ABD

The Asian Development Bank (ADB) and the World Bank will donate $23 million to the Philippines, but will also provide a loan of $500 million to this country for the reconstruction of the areas damaged by the storm. According to ‘NGO Forum on ADB,’ Both ENDS’ partner organisation, these banks abuse this crisis. The debt will have to be repaid with interest and Philippine society will end up paying the price.


Footing the bill

"The Philippines already have a large external debt," Both ENDS colleague Pieter Jansen explains. "Part of this debt still dates from the days of Dictator Marcos, who received support from multilateral banks because of the fear of communism during the Vietnam War. From 1972 to 1983, the Philippines received $ 5.5 billion for aid. Philippine society had to start paying back these loans after the fall of the dictator and still has not finished.



The dictator used to ‘buy’ political support with the borrowed money, for example by letting certain construction companies carry out major projects, so the banks were, in fact, supporting the dictatorship. Current President Aquino seems to really aim to tackle corruption in the country, but even today a system of patronage still exists. The $ 500 million loan for the reconstruction of houses and roads could even facilitate this system, because after a natural disaster it’s easy to give away vacant plots of land to friendly developers and evict the local population.


No new debt

According to the Philippine Ministry of Finance the new loan is not even necessary, as the Philippines can bear the costs of the current crisis itself. However, a relief of the old debts would be of great help to the Philippines in the long term. "In the past, the Netherlands was a strong supporter of debt relief for poor countries in the past,” says Jansen. "It would be good if the Netherlands would put this  back on the agenda and again take the lead."


The ADB has been investing in coal power plants and highways for forty years. Projects like these only fuel climate change and certainly do not reduce poverty in this country. The poorest people are often the first victims of climate change, for example in an emergency like a super-typhoon. The ADB should therefore invest in measures to protect the poor against climate change. "Such a super-typhoon doesn’t have to result in the death of so many,” says Jansen. "The houses and buildings can be built much safer and the water absorption of the soil and rivers can be improved. By planting more trees and shrubs you create screens against the wind and make the soil water-permeable, and so on."


Behind the fence

The best protection against climate change is an equal distribution of wealth in a country, as the government of such a country can invest in social services for, and the protection of vulnerable groups. But in order to do so, the government must of course be aware of these vulnerable groups, and this often doesn’t seem to be the case. Jansen remembers what he saw two years ago. During the annual meeting of the ADB on his way from the airport to the conference center he saw a fence between the road and the slums. "It was placed there especially for the annual meeting in order to hide the poverty for the delegates of the member states.”


Read more about this subject