There are a number of items in the BBL (Bangsamoro Basic Law) bill that made me gasp when I first read them, but one item made me gasp more than any other. That was the provision granting the Bangsamoro Administration authority to incur external approval of foreign indebtedness without the knowledge and prior approval of the BSP (Bangko Sentral ng Pilipinas).
Of two things I am certain. One is that the BSP’s comments on and support for the provision were not sought by the members of the OPAPP (Office of the Presidential Assistant on the Peace Process). The other is that the OPAPP folk and their friends in Congress didn’t—and probably still don’t—know the sad and tortured story of the provision in the Bangko Sentral ng Pilipinas Act requiring BSP approval of external borrowing by all government institutions and private business enterprises in this country.
If the proponents of the BBL had bothered to do the research on the matter, they would have learned about the role that uncoordinated and unregulated external borrowing played in the economic debacle of 1969-1970 and about the rationale for the government’s decision to review the entire external-borrowing situation and install a system where there had been none.
After the ruinous presidential campaign of 1969—Ferdinand Marcos wanted at all cost to become the first president to be reelected—the Philippines had no choice but to run to the IMF (International Monetary Fund) for a financial rescue package. Then-newly appointed Secretary of Finance Cesar Virata and Central Bank of the Philippines Governor Gregorio Licaros had to fly to Washington, in representation of a humbled and contrite Philippine government, to request the IMF to immediately provide a financial lifeline and, thereafter, to provide the Philippines with technical assistance for the reform of its financial and banking systems. For the latter purpose the Marcos administration proposed the creation of a Joint CBP-IMF Banking Survey Commission, which would be housed in the CBP.
The Commission had two co-chairmen, namely Cesar Virata for the Philippine government and S. Kanesa Thasan, a Sri Lankan national, for the IMF. Two other members for the Philippine side were Dr. Armand Fabella, the renowned Harvard-trained economist, and Jose Fernandez Jr., president of Far East Bank & Trust Co. and the Bankers Association of the Philippines (who would, two decades later, become CBP Governor himself).
After the needed emergency measures were decided—chiefly the approval of a standby loan and the freeing of the peso to seek its market value—the Commission went to work. The Virata-Thasan group were at work right through 1970, poring over official records and interviewing everybody who was worth interviewing. By the beginning of 1971 it was ready to release the Joint Commission’s Report.
One of the salient conclusions of the Joint Commission was that because of the non-reporting and no-prior-approval of pre-1970 external fund raisings, the Philippines’ external debt was far higher than had been thought—even by the CBP itself—and that the resulting debt-service explosion had been one of the principal causes of the 1969-1970 economic debacle. The Virata-Thasan group resolved that that situation would not be allowed to recur.
Accordingly, the Report of the Joint Commission, as one of its key recommendations, stated that henceforth all seekers of foreign financing, private as well as government, would have to seek the prior approval of the CBP, which would evaluate the foreign-loan application from the standpoint of a number of criteria, chiefly the magnitude, maturity and interest profile of the loan and the probable debt-service capacity of the borrower. Subsequently, the CBP set up a special office, MEDIAD (Management of External Debt and Investments Accounts Department) to undertake the evaluation and according of external-borrowing applications.
With the passage of time, the basic target of the external-borrowing reform—the reversal of the Philippine external debt profile in favor of borrowings with longer maturities—was gradually attained, so that today, long-term and medium-term foreign borrowings account for the most of this country’s external debt. Barring the occurrence of a really serious foreign exchange market crisis, the Philippines is not going to find itself in a 1969-1970 hole again.
With the inclusion of the no-prior-BSP-approval provision in the BBL bill, all of that hard and patient work stands in danger of being thrown away. If the BBL becomes law in its present configuration—God forbid—any Bangsamoro entity, governmental or private, will be able to run up all manner and magnitude of external borrowings, with the BSP, the DOF and the National Economic and Development Authority as mere observers.
Which begs the quintessential questions. Why should a group of Mindanaoans, which neither represents all Mindanaoans nor all our Muslim brothers, enjoy a right denied to the rest to the Filipino people? And why should a small group of Filipinos be allowed to again place in jeopardy a financial-security structure as painstakingly erected and dedicatedly maintained during the last few decades, with highly felicitous results?
Am I in favor of the BBL bill in its present form? The answer is obvious.