Manila, Philippines — The Philippine government is mandated by an automatic appropriations law to pay interests and amortization next year, in the amount of P357.1 billion, considered the biggest in history, the Senate finance committee said on Monday.

‘’It is a drag on our development. We have to move forward. Debts in the past failed to provide development due to corruption,’’ Sen. Franklin M. Drilon, committee chairman.

Drilon a former Senate President, said this after conducting a four-hour hearing with economic planners comprising the Development Budget Coordinating Committee (DBCC) of the Aquino administration on the proposed 2011 P1.645-trillion national budget.

The DBCC said that the proposed budget contains P711.5 billion of automatic appropriations which include debt service and interest payments of P357.1 billion; net lending of P15 billion; IRA (internal revenue allotment) of P286.9 billion; and government contribution for employees’ retirement and life insurance premiums of P22.4 billion.’’

Drilon told Senate reporters that the DBCC testified that there is a direct correlation between corruption and competitiveness but ‘’we are obliged to pay tainted loans because they were contracted.’’

It is for this reason, Drilon said, that he raised the ‘’red flag’’ on the proposed dredging project for the heavily-silted Laguna lake based on a P15-billion loan contracted by the past Arroyo administration.

Since the government has not yet drawn down the loan, it is mandated to pay three fourths of one percent of the total loan in ‘’commitment fees,’’ government planners told the Drilon committee.

Drilon said he finds nothing objectionable to loans as long as they are used where they are intended.

Unfortunately, dredging is difficult to measure if they were done based on specifications and is thus a ‘’potent, rich source of corruption,” he added.

Drilon said his committee would look very closely at the proposed Aquino budget with special emphasis on 14 government-owned and –controlled corporations (GOCCs) which consider themselves as ‘’independent republics.’’

He said that his recent committee hearings on GOCCs showed that officials of these state-owned corporations had salaries and benefits twice more than what is allowed by Memorandum No, 20 of then President Gloria Macapagal Arroyo. The order states that these officials should not receive more than twice the salaries and benefits being received by department secretaries.

The Senate has adopted his resolution asking Malacañang to order the board of directors of 157 GOCCs not to appropriate for themselves fat bonuses and other benefits as they have not remitted to the cash-strapped national government their earnings.

He said even the 14 monitored GOCCs have not remitted their earnings to the national government or have set aside fat bonuses and other benefits to themselves because they are not covered by the Salary Standardization law and that they are not recipients of government subsidies.

‘’Significantly, for the first time since 1993, the DBM did not include the automatic appropriations as among the items that will be the subject of scrutiny and this is because the interest payment was reduced by P64.5 billion and this resulted in the appropriations of the Department of Public Works and Highways (DPWH) and other line agencies so that effectively the budget was increased to P64.5 billion since regardless of the reduction undertaken by Congress on the debt service, the debt service still amounted to P340 billion as originally proposed,’’ he said.