In denial
In denial
Updated 02:01am (Mla time) Dec 16, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the December 16, 2004 issue of the Philippine Daily Inquirer
MALACAÑANG is raising the bogey of a credit downgrade to push Congress into enacting several tax measures, said Sen. Joker Arroyo. The administration of President Gloria Macapagal-Arroyo has resorted to this "sickening" tactic of using foreign institutions in order to "achieve what it wants to achieve," he said. "Enough already of the much ballyhooed rating agencies and the impending downgrade ... its effects have been and are already being felt."
Certainly everyone hopes the senator is right. If the recent upsurge in prices, the scaling down of government services and the fall of investments are all we have to endure, we should be grateful already. The 11 professors of the University of the Philippines School of Economics, followed by other financial analysts both in and outside of government, warned of worse -- much worse -- things to come if government didn't act quickly enough to control the budget deficit and reduce its P5.4 trillion debt. They saw an Argentina-type financial meltdown, marked by bank runs, runaway inflation, food riots and widespread unrest and violence. And the government had two-at most three-years to act, they said.
Have we headed off the predicted economic disaster in just four months? Senator Arroyo apparently thinks so. That is why he wants Congress to pay no heed to the advice of credit-rating agencies, the importuning of Malacañang on the tax measures and, of course, the dire warnings of economists. And the miracle is that the threat has passed with hardly anyone lifting a finger to fix the huge budget deficit and the colossal debt yet.
But Senator Arroyo is not the first to arrive at the conclusion that the worst is over. The President beat him to it. After publicly admitting in August that her government was in the midst of a "fiscal crisis," she announced last month that the problem was behind us. And to repeat, nothing had been done yet to address the crisis.
Except talk. There were plenty of proposals to tame the deficit and reduce the debt. The administration sent Congress eight new tax measures to raise added revenues and said it would trim down the bureaucracy, impose limits on the salaries and allowances of executives in government corporations and adopt a number of austerity measures. A number of Filipinos responded by chipping in several millions to a Bayanihan Fund or supporting a fund-raising campaign launched by Catholic Church leaders.
Only the citizens put their money where their mouths were. While a few senators promised to give up their pork barrel, the House of Representatives voted to keep all of the pork Malacañang had tucked into the budget for 2005. When local officials protested that they would be forced to cut back on vital services, the administration quietly dropped the proposal to cut the internal revenue allotments of provincial and municipal governments. In the meantime, Ms Arroyo continued to appoint her staunchest political allies to newly created positions and offices as if the bureaucracy were not already bloated and top-heavy.
As the administration and its allies in Congress went back to business as usual, the citizens gradually found out that they have to bear the whole burden of dealing with the looming financial crisis. Power rates have been raised, along with water rates. The specific taxes on gasoline and other products are being increased. And then there are the eight new taxes Congress is working on, all of which will ultimately be taken from the citizens' pockets. It seems that the idea of sharing the burden, put forward by the 11 UP economists, has been conveniently dropped. Everything is being dumped on the citizenry.
With the President talking and acting as if there was no crisis, should we now believe Senator Arroyo when he dismisses those warnings about a ratings downgrade and its consequences as part of Malacañang's scare tactics? We wish we could. But not even he or the President swearing that no crisis exists or even looms can make that mountain of debt vanish. Neither would it persuade the ratings agencies to change their analyses of the situation nor make foreign investors rush in with their money.
The wide budget deficit and mounting debt need fixing and they cannot be fixed by wishing them away. Revenues have to be raised, fat has to be trimmed, waste has to be cut and corruption has to be checked. That is a tall order for any administration, of course, but the Arroyo administration must do all that to deal with a mountain of a problem.
Updated 02:01am (Mla time) Dec 16, 2004
Inquirer News Service
Editor's Note: Published on page A14 of the December 16, 2004 issue of the Philippine Daily Inquirer
MALACAÑANG is raising the bogey of a credit downgrade to push Congress into enacting several tax measures, said Sen. Joker Arroyo. The administration of President Gloria Macapagal-Arroyo has resorted to this "sickening" tactic of using foreign institutions in order to "achieve what it wants to achieve," he said. "Enough already of the much ballyhooed rating agencies and the impending downgrade ... its effects have been and are already being felt."
Certainly everyone hopes the senator is right. If the recent upsurge in prices, the scaling down of government services and the fall of investments are all we have to endure, we should be grateful already. The 11 professors of the University of the Philippines School of Economics, followed by other financial analysts both in and outside of government, warned of worse -- much worse -- things to come if government didn't act quickly enough to control the budget deficit and reduce its P5.4 trillion debt. They saw an Argentina-type financial meltdown, marked by bank runs, runaway inflation, food riots and widespread unrest and violence. And the government had two-at most three-years to act, they said.
Have we headed off the predicted economic disaster in just four months? Senator Arroyo apparently thinks so. That is why he wants Congress to pay no heed to the advice of credit-rating agencies, the importuning of Malacañang on the tax measures and, of course, the dire warnings of economists. And the miracle is that the threat has passed with hardly anyone lifting a finger to fix the huge budget deficit and the colossal debt yet.
But Senator Arroyo is not the first to arrive at the conclusion that the worst is over. The President beat him to it. After publicly admitting in August that her government was in the midst of a "fiscal crisis," she announced last month that the problem was behind us. And to repeat, nothing had been done yet to address the crisis.
Except talk. There were plenty of proposals to tame the deficit and reduce the debt. The administration sent Congress eight new tax measures to raise added revenues and said it would trim down the bureaucracy, impose limits on the salaries and allowances of executives in government corporations and adopt a number of austerity measures. A number of Filipinos responded by chipping in several millions to a Bayanihan Fund or supporting a fund-raising campaign launched by Catholic Church leaders.
Only the citizens put their money where their mouths were. While a few senators promised to give up their pork barrel, the House of Representatives voted to keep all of the pork Malacañang had tucked into the budget for 2005. When local officials protested that they would be forced to cut back on vital services, the administration quietly dropped the proposal to cut the internal revenue allotments of provincial and municipal governments. In the meantime, Ms Arroyo continued to appoint her staunchest political allies to newly created positions and offices as if the bureaucracy were not already bloated and top-heavy.
As the administration and its allies in Congress went back to business as usual, the citizens gradually found out that they have to bear the whole burden of dealing with the looming financial crisis. Power rates have been raised, along with water rates. The specific taxes on gasoline and other products are being increased. And then there are the eight new taxes Congress is working on, all of which will ultimately be taken from the citizens' pockets. It seems that the idea of sharing the burden, put forward by the 11 UP economists, has been conveniently dropped. Everything is being dumped on the citizenry.
With the President talking and acting as if there was no crisis, should we now believe Senator Arroyo when he dismisses those warnings about a ratings downgrade and its consequences as part of Malacañang's scare tactics? We wish we could. But not even he or the President swearing that no crisis exists or even looms can make that mountain of debt vanish. Neither would it persuade the ratings agencies to change their analyses of the situation nor make foreign investors rush in with their money.
The wide budget deficit and mounting debt need fixing and they cannot be fixed by wishing them away. Revenues have to be raised, fat has to be trimmed, waste has to be cut and corruption has to be checked. That is a tall order for any administration, of course, but the Arroyo administration must do all that to deal with a mountain of a problem.
posted by Dante at 12:24 PM
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