Last of two parts: Dampers
GENERAL SANTOS CITY (MindaNews/5 January) – Nearing his mid-term, President Benigno Simeon C. Aquino III has brought the Philippines to unprecedented economic growth. This was the meat of yesterday’s part of our COMMENT based on media reports sourced from the President, his spokespersons, and the CEOs (chief executive officers) of domestic and foreign corporations. In this concluding part, we present well-meaning observations and criticisms also from media reports.
Media have also reported what might be called “dampers” on the bright picture of the first half of the Aquino III administration as reflected by the acclaimed “robust” economic growth. These “dampers” prompt the anti-Aquino critics to ask: “What development?” and well-meaning ones to prod, “More must be done.”
From January through November of 2012, the budget deficit was P127.3 billion – 32 percent more than the deficit for the same period in 2011 but less than half (45.61%) of the P279.1 billion deficit ceiling for 2012. Government is happy: “… the risk of … the deficit exceeding the program is nearly eliminated this year”. (Philippine Daily Inquirer, December 27, 2012: “Budget gap dipped by half in November”)
Simple! The high deficit ceiling assures economic managers they would not exceed the programmed deficit even if expenses exceed revenues or revenue collections falls below the target – 10 percent as of November. Question: Is deficit spending, while easily justified, an indicator of true economic growth?
One adverse criticism against President Ferdinand E. Marcos massive borrowing was that Filipinos still unborn were already in debt. This is a fact, not just a perception. Had the four presidents after Marcos rectified this? Is this just a memory under Aquino III?
Two reports (The Philippine Star, December 28, 2012: “Nat’l debt growing by P214 B annually – COA”; Philippine Daily Inquirer, December 30, 2012: “Gov’t borrowings rise, payments decline”) are most relevant to deficit financing. The Aquino III appears to have not extricated the government from the spider web named “borrowing”.
The Inquirer reported, citing the Bureau of Treasury, that the government “in the 11 months to November [had] a net borrowing of P477 billion, or about five times the P99.7 billion registered in the same period last year”. Every year, the Star said, as shown in the report of the Commission on Audit, “The government’s domestic and foreign debts have been increasing at an average rate of P214.19 billion every year”.
The Inquirer explained that from January to November 2012, the government borrowed more at a faster rate – P852.7 billion or 70 percent more than the P501.5 billion it borrowed for the same period in 2011; on the other hand, “the government settled P375.7 billion in obligations (2012), which was 7 percent less than the P401.8 billion paid in the same period last year (2011)”.
The Star explained that “the national debt rose from P4.701 trillion in 2010 to P4.940 trillion in 2011 (the total national debt as of that year), with P2.860 trillion representing domestic debts and P2.080 trillion foreign”. The domestic borrowings, 57.9 percent of the total debt, increased by P156.02 billion; the foreign grew by P83.25 billion.
The Star further said that within a ten-year period – 2002 to 2011 — “domestic debt showed an average growth rate of 6.58 percent or P132.85 billion per year, while the annual growth of foreign debt is 5.38 percent or P81.34 billion”.
COA justified the government borrowings as necessary “for deficit financing as well as to back up expenditures for various development projects, including infrastructure”. It’s a fact that so long as the government cannot avoid deficit financing the borrowings will continue. Otherwise, the economy will not grow. Can Aquino III reverse the trend?
Can Do Better
The President and his economic managers as well as the CEOs have attributed the “unprecedented” economic growth to good government following the daang matuwid or straight path — meaning good planning, wise spending and no corruption. The Palace said, “Through hard work, deft decision-making, and intense political will, the President has laid down the foundations of justice and inclusive growth. Through it all, he continues to clean house, eliminate waste, and put primacy on restoring public trust in our institutions [and] has maintained fiscal discipline, initiated reforms to ramp up quality public spending, and invested heavily in both social and physical infrastructure.”
However, the Inquirer, in its December 10 editorial, “Rampant corruption”, says, “… a corruption-free bureaucracy is still a long way off” – citing the Corruption Percentage Index for 2012 which ranks the Philippines 105th among 176 countries. “Administration officials are dreaming if they think corruption has been addressed with the prosecution of officials of the previous regime… Corruption remains rampant in the lower levels of government.”
As the Inquirer has acknowledge the economic growth in its December 31 editorial, its positive message is that the Aquino III government can achieve more growth if the funds – perhaps amounting to billions of pesos still being lost to corruption – are spent for development projects.
In the article, “Time to act more like President, Aquino urged” (Philippine Daily Inquirer, November 20, 2012), consultant Peter Wallace, head of The Wallace Business Forum, made frank but helpful observations and criticisms:
(1) President Aquino deserves high marks for his administration’s consistent fight against graft and corruption that has enhanced business confidence and made him a highly popular leader. But much more needs to be done if the Philippines is to break through the poverty trap, and unfortunately, Mr. Aquino does not seem committed and enthusiastic enough to see these needed reforms through, putting his considerable political capital to waste.
(2) Referring to Aquino’s high net satisfactory rating: “President Aquino can use that political capital to make tough, unpopular decisions. Why doesn’t he?” Mr. Aquino can exercise his considerable political will to get vital infrastructure built; to spend the money the budget department had disbursed to spur economic growth; to resolve the open-pit mining ban that had put a damper on mining activity; and to upgrade the air safety ranking of the Philippines.
(3) While saying, “Except for a couple of changes, the political will to get things done is lacking,” Wallace admitted “that despite some shortcomings, business confidence and optimism that weren’t there under former President Gloria Macapagal-Arroyo were now present and policy changes had taken place”.
(4) Despite the improvements in several Philippine global rankings, improvements in the business environment have been found wanting. The Philippines does not rank high in ease of starting a business, global perceptions and trade logistics as reflected in part in the trickle of foreign direct investment (FDI). The Philippines so far only recorded $2.3 billion worth of FDI from 2011 to the first half of 2012, compared to $57.4 billion in Singapore, $27.5 billion in Indonesia and $10.6 billion in Thailand.
These substantiated his critical comment: “Mr. Aquino should realize that leadership was a full-time job, not just from 9 a.m. to 5 p.m. It’s time for him to act more like a President and less like P-Noy (President Aquino’s nickname).”
Former President Fidel V. Ramos, who was guest of honor at the meeting to mark the 30th anniversary of the Business Forum, agreed with Wallace. The president should work 25/8 not just 24/7 – meaning, overtime – because of the demand of the job.
Ramos likened the president to the skipper or captain of the ship. He said he would like Mr. Aquino “to act like a skipper and lead by example” as he seemed to be lacking in terms of motivation and commitment.
The Palace and well-meaning critics do not fully agree. But they have evened up the picture. Nearing his mid-term, President Aquino III may have done much; but there is much more that he has to do.
(“Comment” is Mr. Patricio P. Diaz’ column for MindaViews, the opinion section of MindaNews. The Titus Brandsma Media Awards recently honored Mr. Diaz with a “Lifetime Achievement Award” for his “commitment to education and public information to Mindanawons as Journalist, Educator and Peace Advocate.” You can reach him at email@example.com.)