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Structural adjustment is a set of policies created and imposed by the misguided free-market economists of the IMF-World Bank on debtor countries in order to access concessional loans. This policy usually comes in the form of trade liberalization, privatization, devaluation, tax reform, deficit spending and floating-rate exchange.


Relatedly, a free-market economy is an IMF-World Bank economic and political doctrine intended to regulate a freely competitive market of goods and services with a minimum of governmental intervention and regulation.


Congress (both the Senate and the House) cannot escape responsibility for the country's economic debacle, particularly on the issue of debt servicing, by deliberately abdicating its power over the purse in two specific instances.


In fact, it is in this area of public responsibility and accountability that betrayal appeared to have been flagrantly committed by most of the country's politicians over the past 30 years.


Under the 1987 Aquino Constitution, Congress is the only branch in the government empowered to authorize and appropriate funds, two distinct congressional functions, to service debts and spur economic growth. 


First, it failed to amend or repeal <a href="https://goo.gl/YPxQSj" class="news_link" target="_blank" title="PD 1177">Presidential Decree (PD) 1177</a>, the Marcos budget law that automatically services the country's foreign and domestic debts on the sole discretion of the finance secretary and the governor of the central bank.


Second, it failed to abrogate the Aquino-issued <a href="https://www.officialgazette.gov.ph/1986/12/08/proclamation-no-50-s-1986/" class="news_link" title="50" target="_blank">Proclamation 50</a> and <a href="https://www.officialgazette.gov.ph/1986/12/15/proclamation-no-50-a-s-1986/" class="news_link" title="50-A" target="_blank">50-A</a>, which dovetailed PD 1177 and authorized President Aquino, without interference from Congress, to assume all the foreign and domestic liabilities incurred by the Ferdinand E. Marcos regime and unjustly dumped them on the shoulders of the Filipino people.


Proclamation 50 and 50-A, signed respectively by President Aquino on December 15, 1986, and June 8, 1987, legitimized her economic policy of privatization, which initially mandated the rehabilitation of debt-ridden government financial institutions (GFIs), such as the Philippine National Bank and the Development Bank of the Philippines.


The idea of rehabilitating the GFIs was the brainchild of then-Finance Secretary Jaime V. Ongpin and Central Bank Governor Jose Fernandez (both deceased, the former committed suicide and the latter died of cancer) who reasoned that "it will not be a good picture for the government if the GFIs were closed due to unpaid debts." 


In other words, they were more concerned about the country's image abroad than the poverty-stricken people.


Later, then-Justice Secretary and now Sen. Franklin M. Drilon upheld the proclamations when some lawmakers questioned their use, stating that the "law vests upon the Chief Executive the discretion whether to undertake such assumption [of debts]"…even in a situation where the "value of assets transferred is less than the amount of liabilities assumed."


Curiously, Drilon issued this legal opinion after the Aquino Constitution took effect in 1987, explicitly mandating Congress to assume full control over the disposition of budgetary liabilities. Congress should have asserted on this mandate and called the attention of the Executive department or brought the issue to the Supreme Court for resolution or decision.


From 1965, the beginning of the Marcos regime, the country's foreign debt rose from $599 million to $26.3 billion when Aquino assumed the presidency. But because of this inaction or culpable violation of the Constitution, the foreign debt swelled from Marcos's $26.3 billion in 1985, to Aquino's $34.8 billion in 1992.


Between 1986 and 1992, the end of the Aquino era, the government spent $23 billion in debt servicing, representing an average of 52.8 percent of the yearly national budget and leaving less than half for social and economic services. The same period when the government paid $23 billion, the country gained only $14 billion in new money, leading to a total net-resource outflow of $9 billion.


Consequently, the Aquino administration resorted to domestic borrowings at high-interest rates to fill up the gap and, thus, sank the country deeper in debt, all because Aquino had continuously adhered to the IMF-World Bank's structural adjustment prescription and monitoring (for good housekeeping) policy.


According to Freedom from Debt Coalition (FDC), a credible private research and think-tank organization, borrowing at high-interest rates from domestic lenders during Aquino's term meant the government gave the Filipino elite, at a time of severe economic crisis, an easy way of earning profits through short-term portfolio investments in Treasury bills.


This cozy investment, said FDC, ensured the high incomes of the elites, who did not have to risk capital in productive ventures for as long as the government, was there to pay them excessively high interest.


As a result, the lack of medium- and long-term capital investments for manufacturing and infrastructure development, the usual source of revenue and employment, brought down the economy.



Sources: 

<ol class="article-sources">
<li>
Greed and wrong economic policies by Cecilio T. Arillo, September 10, 2016 (<a href="https://goo.gl/0a0zU2" class="news_link" target="_blank" title="Source">Business Mirror</a>)
</li>
</ol>


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Cory Aquino's greed and wrong economic policies