Over the past two and a half months, the international aid and development community has been very active extending post-typhoon assistance to the Philippines — but a substantial amount of the aid pledges has yet to fully materialize.
Typhoon Haiyan, considered to be one of the strongest storms ever recorded, left thousands of people dead and billions in damaged properties in one of the most impoverished regions in the country, a disaster so massive the international community had to step in and assist. As of posting time, over $567 million in foreign aid has been pledged for recovery operations, with 11 percent or $63.56 million in cash.
However, according to the Philippines’ Foreign Aid Transparency Hub, only about 19.4 percent or $12.3 million of these cash pledges have so far been received by the government.
What happened to the rest of the money? Are the pledges false promises? For one of the senior cabinet officials, the discrepancy explains the dynamics of international aid, especially in times of disasters.
“That’s the dynamics of international aid coming in [times of disasters]. Are we concerned? Well, we can’t do anything about it,” Richard Bon Moya, budget undersecretary and chief information officer, told Devex. “When someone promises to give us money, it’s a promise to help. If they do not deliver, we cannot actually go out and sue them.”
He added that the discrepancy can also be caused by the countries and aid groups’ bureaucratic processes, fiscal cycles — and, yes, empty promises.
“There are groups that only [send] press releases without the intention of fulfilling the pledges. Some of them will say ‘we will send money’ but some of them also have fiscal cycles that’s why it may take some time. So to some degree, it is expected that even if they pledge, it may take a while for the money to be delivered because not every country and aid group have money ‘parked’ or ready to disburse at a moment’s notice. It goes through an approval process.”
Accountability in post-disaster financing has lately been a hot topic in the Philippines, following several instances of scandals involving several of the country’s top lawmakers allegedly embezzling public funds. This pushed the government to roll out FAiTH so the public can monitor aid coming into the country.
Moya explained the online hub works in such a way that it aggregates data — in this case, pledges from countries and aid groups — from reports provided by different government agencies, including the foreign affairs and finance departments as well as the overseas Filipinos commission. FAiTH opens a whole new avenue in transparency and accountability in disaster financing and development charity.
“[Through FAiTH] countries who made pledges are now on the spot to deliver. If they don’t deliver, it will reflect on them as the one who pledged, not ours. That’s the beauty of publishing all of the pledges, it makes accountability relevant in times of disaster, he said, adding that although the government can ask these countries for a follow up on their pledges, the ones who should demand should be the citizens of the countries who pledged, NGOs and the media.
Loans: A debt foretold?
Aside from the cash and in-kind pledges announced to assist post-Haiyan operations in the Philippines, the World Bank and the Asian Development Bank have also earmarked over $1 billion in emergency loans for the country to fast-track relief and rehabilitation process in the hardest-hit areas.
Dishing out emergency loans have been a standard operating procedure for multilateral groups to extend aid in disaster-hit countries, but there is a growing concern these loans may drown the country in mountains of debt in the long run, just like what happened in Haiti after the 2010 earthquake.
“The concern is that we might be drowned in too much debt. That’s a fair assumption but also unfounded. It’s unfounded, at least at this stage, because we are actually in a very good fiscal position now,” he explained, adding that borrowing is typical in the country every year, so it’s no different with the event of Haiyan because of the country’s growing financial and fiscal structure.
Moya noted that the World Bank and ADB loans are classified as “preferential,” with an interest rate lower than the market average. Looking at the country’s outstanding debt from the treasury bureau’s data, the interest rate for loans as of October 2013 (a month before Haiyan) was at 1.68 percent, lower than the previous 2 percent average for the past four years.
This is on top of the Philippines gaining for the first time in its history an investment grade rating from the top three credit rating institutions in the world in 2013: Fitch, Moody’s and Standard & Poors, which the government official highlighted as a seal of approval of the country’s fiscal, financial and economic improvements.
“Is borrowing money bad? Not necessarily because we borrow money every year, anyway. It’s just that now, because of Haiyan, we’re borrowing more but at a preferential rate. If we’re borrowing more than usual but interest rates are low, we’re in a good position,” Moya said, adding that the government still has responsibility on how the loans will be spent effectively and efficiently.
For the NGO community and civil society, in general, the wariness regarding loans as a double-edged sword will and should remain, especially in a country like the Philippines, where natural calamities are frequent all year round and corruption and misappropriation is about as predictable.
Whether the government’s statements are true regarding loans not equal to debt holes when used properly remains to be seen.
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