Columban Center for Advocacy and Outreach

The Philippines: How Pre-existing Debt Leads to Systemic Poverty

July 18, 2014

  By Jake Fox

Jake Fox

Since 1929, the Columban Fathers have worked in the Philippines, standing in solidarity with the extremely poor and sharing the gift of faith. In recent history, the Philippines has struggled with high unemployment and has one of the highest levels of poverty in the region, with 28% of the population living in poverty.

Impoverished Filipinos often flock to cities like Manila to find manufacturing jobs. There, they become trapped in a cycle of poverty, earning low wages while living in overcrowded slums with little access to basic education, health care or economic advancement.

In November 2013, these overburdened communities were disrupted even further when the deadliest typhoon in Filipino history, Typhoon Haiyan, struck the archipelago. One group helping the slum dwellers of Manila is the Columban Fathers, who provide spiritual guidance while strengthening the communities in which they live.

The best course of action to improve the economic prospects of the poor in the Philippines is to cancel a percentage of the national debt.

“More than a month after Typhoon Haiyan devastated the Philippines, the country has paid approximately $900 million in debt repayments – more than twice as much as it’s received in pledged aid from countries around the world to support the recovery effort.”
– Eric Le Compte, Executive Director, Jubilee USA Network, December 20, 2013

Currently the government of the Philippines owes foreign entities 59.1 billion dollars. This debt is overwhelming. Minimum payments on the debt consume 35% of total tax revenue. By gradually alleviating foreign debt payments, the country could invest in infrastructure and social programs that would improve education, health care, access to markets and participation in civil society.

For example, 98% of the children in Tanzania enrolled in primary school when the government allocated funds previously used for debt payments to pay for school fees. Similarly, if the government of the Philippines could redirect debt payments to invest in education, especially in impoverished communities, the country would experience benefits in employment, health, crime, and civic and political participation.

Responsible lending and borrowing, coupled with a fair and transparent debt arbitration process, reform of international financial institutions and trade policies that promote the common good, begins with debt relief. To learn more about these initiatives, visit Jubilee USA Network.