THE government will face severe financial repercussions if it implements a moratorium for its foreign debt payments to free more funds for its response to the novel coronavirus disease (Covid-19), Malacañang Palace said on Thursday.
Sen. Imee Marcos made the proposal earlier this week to allow the government to tap P451 billion of the 2020 national budget which is being used for loan payments.
In an online press briefing on Thursday, Presidential Spokesperson Harry Roque said the government is not considering the option since all the country’s foreign loans have a “cross default provision.”
“If we default [with] one of the creditors, we will default with all of our creditors . . . what will happen then is all our creditors will demand payment at the same time,” Roque said.
If it needs more resources, the government will more likely sell first its properties, as earlier announced by President Duterte, to generate more funds before it even considers a default on its loan obligation, Roque said.
Among the other top options of the government to get more funding for its Covid-related initiatives is to realign allocated budgets, as well as to borrow from international financial institutions.
On Wednesday, Finance Secretary Carlos Dominguez III rejected Marcos’s “narrow-minded proposal,” which he said will taint the Philippines’s 34-year track record of honoring its loan obligations.
Dominguez earlier said the government is eyeing to borrow $5.6 billion from the World Bank and the Asian Development Bank (ADB) to help finance government interventions for the Covid pandemic.
Image credits: AP/Wong Maye-E