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$1.5 Billion in Aid to Philippines Unspent

Times Staff Writer

The Philippine government of President Corazon Aquino has amassed $1.5 billion in international aid that it has not yet spent, State and Defense department officials told Congress on Wednesday.

The money includes $271 million in U.S. economic aid that is “clogged in the pipeline” in Manila, the officials said, as well as even larger sums from Japan and the World Bank. They said that Under Secretary of State Michael H. Armacost recently talked with Aquino about the Philippine government’s seeming inability to get this aid from abroad out to projects in the countryside more quickly.

The disclosure, made at a hearing of the House subcommittee on Asia and the Pacific, indicated an unenthusiastic reaction by the Reagan Administration to proposals made by Sen. Alan Cranston (D-Calif.) and three other congressmen for a “Marshall plan"--a massive infusion of new aid--for the economically troubled nation.

Deputy Assistant Secretary of State David Lambertson took no official position on the congressional proposal and said that it is being “studied carefully.” But he went on to note that the measure would raise budgetary problems for the United States and that the Aquino government has been having problems spending the money that it already has received.

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The Aquino government’s handling of international aid “has run much more slowly than it should have,” Lambertson said. " . . . There’s a learning curve to be overcome.”

Reacting to the testimony, Aquino’s cabinet secretary for management and budget, Guillermo Carague, confirmed today that the Philippine government has been slow in using the foreign aid, but he disputed the amount of money that has been backlogged.

Sum Disputed

Carague told The Times that only $65 million in aid has been allocated by foreign donors for 1987 development projects. He speculated that the $1.5-billion figure may represent promised aid that will not be delivered for several years.

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But he conceded that more than half of the aid money already allocated for key projects this year has not been spent. Carague attributed the delay to inefficiency in several governmental departments.

The U.S. officials made clear that in the face of the huge U.S. budget deficits, the American strategy for aiding the Philippine economy increasingly relies on getting help from Japan. Two high-level officials, Armacost and Assistant Secretary of State Gaston Sigur, were recently said to have discussed with Japanese officials the possibility of new financial aid for Manila.

The State Department estimate of aid not yet spent in the Philippines includes $642 million from Japan, $446 million from the World Bank and $187 million from the Asian Development Bank. An estimate on the amount of aid that has been spent was not immediately available.

“There has definitely been a slowdown,” said an official working for one international aid organization, who asked not to be named. “They’ve been unable to put the projects together. . . . Part of the problem is that they are legitimately being more careful (than the regime of former President Ferdinand E. Marcos). There are new audit procedures.”

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The proposal for a “Marshall plan” for the Philippines was unveiled last week by Reps. Stephen J. Solarz (D-N.Y.) and Jack Kemp (R-N.Y.), Sen. Richard G. Lugar (R-Ind.), and Cranston. It called for new international aid for the Philippines of $1 billion per year over a five-year period.

Although U.S. officials predicted a 5% growth rate for the Philippine economy this year, it remains one of the poorest in the region, and the government owes an estimated $29 billion to foreign creditors.

At Wednesday’s hearing, Deputy Assistant Secretary of Defense Karl D. Jackson said the United States plans to deliver $41 million in military equipment to the armed forces of the Philippines in the final three months of 1987.


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