Press Release
October 15, 2009

Loren urges judicious, transparent use of P50-B reconstruction bonds

Senator Loren Legarda said today that the P50-billion proceeds of the reconstruction bonds to be issued by the government must be used judiciously and transparently to ensure they are not diverted for purposes other than to rebuild storm-battered cities and provinces.

"The use of this P50 billion, as well as the foreign grants being sought by the government, must be closely scrutinized to ensure their proper utilization," said Loren, chair of the Senate Oversight Committee on Climate Change which has started a series of public hearings on the devastations caused by Typhoons Ondoy and Pepeng.

"It is us, the taxpayers, who will pay for these bonds when they mature in five to 10 years, thus we must be vigilant and clamor for full transparency in the use of these billions of pesos," she stressed.

Loren added that the Senate had instituted several safeguards in the use of a P12-billion supplementary budget for typhoon-reconstruction and relief activities for this very reason.

Typhoon Ondoy had devastated many areas in Metro Manila and nearby provinces like Rizal while Typhoon Pepeng had inundated Northern Luzon, with the province of Pangasinan among the hardest hit.

The estimated cost of infrastructure damages due to Ondoy is P3.6 billion while for Pepeng, damage to infrastructures was estimated at P1.14 billion.

"There is a need to reconcile actual damages to infrastructures or even total actual damages arising from Typhoons Ondoy and Pepeng, with the big amount of money that the administration wants to raise," she said.

"We cannot have a repeat of the so-called fertilizer fund scam in which money allocated for the purchase of fertilizers had been used questionably."

Nonetheless, Loren conceded that offering bonds to multilateral agencies like the World Bank and the Asian Development Bank, instead of resorting to commercial borrowings, is the correct first option that should be taken by government in raising funds externally. She said that the high interest rates of commercial loans will be an added burden to taxpayers.

"We must not go into a borrowing spree, especially since no less than the Department of Trade and Industry (DTI) had admitted that specific reconstruction projects have yet to be identified. Normally, you identify the projects first and then look for funding later," she said.

"There is, of course, the danger of having access to funds without any clear cut idea on how they can be used to be best advantage of the people, in this case the cities and provinces devastated by the recent typhoons."

President Arroyo and Trade Secretary Peter Favila revealed the plan to raise P50 billion through the issuance of bonds Wednesday, during the Mid-Year Philippine Economic Briefing at the Shangri-la Hotel in Makati.

The P50-B bonds had been initially planned for use by the National Development Company (NDC) for new infrastructures under Executive Order 824. But Secretary Favila, who chairs the NDC, said the funds' purpose would be shifted to reconstruction.

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