CCT is another debt burden on our people

Conditional cash transfer (CCT) is
another debt burden on our people

The P21.9-billion conditional cash transfer (CCT) program of the Aquino government should be opposed by Congress and all concerned citizens not only because the program was at the expense of more vital social and economic services for the poor.

The CCT program, administered by Department of Social Welfare and Development secretary Dinky Soliman, is in fact a loan by the Asian Development Bank to the Aquino government to be repaid over a 25-year period. The ADB has loaned the Philippine government $400 million to implement the CCT, also otherwise known as the Pantawid Pamilyang Pilipino program.

While the program aims to benefit many poor families, it is funded by debt that will burden future generations. Our research shows that this is a high interest loan which charges near market interest rates.

We call on the government to renegotiate the loan with the ADB. President Aquino and Secretary Soliman should ask the ADB to provide the government with grant funding instead. We know that the ADB provides loans on concessional rates or even grants – as opposed to loans – to developing countries.

The ADB even admits in the loan document that the “key causes of poverty in the Philippines include high inequality and chronic under-investment in physical and human capital, especially health and education.” This means that the Philippines is lagging on millennium development goal (MDG) targets for universal primary education, maternal mortality, and access to reproductive health services.

International donor agencies are in mild panic over the prospect of countries not being able to achieve even the less than minimum MDGs. This itself provides us an opportunity to negotiate conditions that benefit the country in the short and long run. If President Aquino has political capital in the eyes of the international community, he should use this to extract grants rather than loans.

We also that that the conditional cash transfers are short-term measures with short-term impacts. We need long-term solutions, which include the government’s doubling the national budget on health and education immediately. The Philippines spends only around 6.4% on health as a percentage of total government expenditure, compared to our neighbor Thailand, which spends 11.3%, or China with 9.9%. (UNDP 2009)

A long-term measure is to provide universal health care and education. The problem with the poverty targeting instruments of the ADB and other international financial institutions is that it targets only the “poorest of the poor”, thus effectively excluding large sections of the poor considered as “low-income” and depriving them of their inalienable human right to decent education and healthcare. Several countries in our region provide universal healthcare, such as Vietnam, which is already ahead in its MDG targets, Malaysia, Thailand, and two other countries with the largest populations in the world, India and China. So why not us?

Finally, we once again raise the need to repeal the automatic debt appropriation law. This is fundamental to increasing social investments and addressing structural inequalities that prevent the poor from accessing affordable and quality health care and education.