Saturday, August 28, 2004

Death Crisis Anyone?

I went to the press conference held by the economists who made the paper "The Deepening Crisis: the Real Score on the Public Debt" yesterday at the School of Economics in UP. There were a handful of print journalists, I saw channels 2 and 9, but the rest were probably groupies and students of the econ profs. There were seven of them, three of whom I recognized as Winnie Monsod, Benjamin Diokno and Felipe Medalla.

The numbers were indeed alarming. The ones that stood out were the "financial risk indicators" emphasized by Mr. Diokno. Replying to the query, "So how did we get here?" he showed us some figures from 1999 to 2003.

In 1999, 26% of our budget was set aside for debt interest repayment. In 2003, this rose to 46.2%.

Thats right folks, of every P100 of your taxes, half goes to debts neither you and I had incurred. We were never consulted about it, we had no hand in it, we had no choice about it. What a democracy huh?

Another risk indicator was the Debt to GDP ratio. In 1998, 56.1%. In 2003, it was a whopping 77%. The IMF's recommened reasonable level for developing countries is only 30%.

One lady economist (whom I didn't recognize), said capital inflows in the Philippines were considerable lower than our neighbors. Which basically meant investors are shying away from us. Maybe because theres too many transaction costs incurred due tape? Corruption? Under the table pangongotong?

On the IRA (Internal Revenue Allotment), the national government shells out P35 billion pesos annually to local government units. The IRA was instituted in the waning years of the Aquino adminstration and was finally approved in 1992. LGUs might be complaining about having their IRA slashed, or worse abolished in the name of "austerity," but Diokno pointed out there is an escape clause to the IRA, meaning the government has the prerogative not to release it.

On the Congress' pork barrel (sweetly couched as Countrywide Development Fund), Diokno said we should keep an eye on re-election senators because they will clutch their pork barrels to their chests like theres no tomorrow. They will need that extra fat for the 2007 elections.

Queried about the rumors about taxing text messaging, Ms. Monsod, decked out in a lovely orange suit, engagingly said their proposed measures had a sequence. It was careful to firstly, target the executives and the powers that be in the land and so on down the line.

The medium and long-term proposals in the paper are the following:

1. Downsize the bureaucracy. I think this has merit, seeing as there are so many redundant offices, not to mention "ghosts" bureaus which receive budgets even when its doing absolutely nada. (You notice that Visitor's Information building along University Avenue?)

2. Privatization. This proposes selling government owned and operated corporations, especially those where the government has no self-evident role to play. I have reservations about privatization, especially of public services, but the economists were careful to make the above qualification.

3. Rationalization and reduction of tax incentives. An estimated P175 billion is lost due to tax breaks on certain business sectors. Gawd, there is such a thing as "lobbying" (It should be called "lining the pockets" instead) and I'm sure these businesses have set aside cash to add to their powers of persuasion.

4. Politicization of prices and of the regulatory system. Mainly, government-owned operated services shouldn't give in to popular pressure against power rates, the metro train rates and toll fees (among others). Let the invisble hand of the market decide. Personally, I don't believe in this infamous hand.

5. Spending efficiency and the tax revolt. Government should be careful about what they ask of their citizens, especially if tax payers see their money squandered and misappropriated. On escorts like Keanna Reeves maybe? Or on gas-guzzling SUVs?

6. Rationalizing national-local government fiscal relations. Pertaining to the IRA I mentioned above. This basically means local government units should no longer wait for a dole out from national government. LGUs must then try to make money on their own, making mayorship, for example, a lot more...demanding and would require incredible managerial abilities. So people, should IRA be abolished, think twice before you vote for the likes of Jinggoy or Lito.

Angsty you say?

I believe this report is disquieting as it fully reflects our supposed sovereign nation's lack of self-determination. Here is the abstract notion of a "debt crisis" (which really means international creditors, and the World Bank-IMF) hanging over our heads, making us undertake "austerity" measures.

I have no beef against disciplining the bureaucracy and cutting off unnecessary expenses, but the point is, we're doing all of this so we can pay of our debts? Which have ballooned because government officials and their unaccountable technocrats
have continued irresponsibly borrowing througout the years? And because the peso has continued to devalue due to "vagaries" of that nebulous financial world market.

I was born into debt. You, your brothers, your sisters, your cousins, your parents, your children and grandchildren to be. We had no hand in incurring these debts. They just magically appeared in our midst. And we call this country a democracy?

Would that I could do a tax revolt, but sadly, my taxes are automatically taken out of my measly salary. Now you understand why I'm so angsty about the future. It seems the end is near. I'll go watch Marinara now. Or start playing Ragnarok.

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