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APPROXIMATELY P1 trillion worth of resources have been
intentionally kept away from the broad economy in 2007
so as not to complicate monetary management and allow
the government to report all was well with the
Philippines.
But
according to Department of Finance ((DOF) data, it was
P1 trillion too many for an economy that should have
approximated China’s gross domestic product (GDP) growth
of 11 percent in the third quarter last year when
Manila’s own output was computed at only 7.1 percent.
Had
those funds been put to good use, the economy would have
quickened by another 3.8 percentage points, and this
would have allowed the government to report GDP
expansion of just under 11 percent for the period
instead.
According to government data, not all of the country’s
savings have been plowed back in the form of
investments—which in the first nine months averaged only
14.7 percent.
The
country’s savings rate stands at only 29.8 percent for
the period, leaving a huge gap of 15.1 percent
representing idle or unused funds.
With an
estimated GDP of P6.646 trillion in 2007, this
translates to unused funds of approximately P1 trillion.
Finance
Undersecretary Gil Beltran said the idle funds are in
the form of deposit reserves mandated by the Bangko
Sentral ng Pilipinas (BSP), funds “siphoned” off the
system and booked as special deposit accounts (SDAs),
even funds that the Bureau of Treasury deliberately
withholds in keeping with its own goals.
SDAs
kept in the vaults of the central bank totaled P489
billion in the first 10 months of 2007, funds
intentionally kept there to stabilize money supply—or
risk inflation that has behaved surprisingly well below
program at only 2.7 percent from January to November.
According to Beltran, the banks contributed to the
relative lack of utilization by taking a risk-averse
stance on lending, which grew by just 7.1 percent over
10 months last year.
He noted
the tendency by banks to invest funds in risk-free
government debt notes rather than all-out lending to the
private sector.
The
aversion had earlier led Monetary Board member and
former National Economic and Development Authority (Neda)
chief Romulo Neri to label Filipino bankers as “lazy.”
Given a
factor of 0.25 percent as the average rate of return on
investments in 2007, the unused funds equal a sinful P1
trillion that does the economy absolutely no good at
all, Beltran said.
“Had
that money been put to good use, we would have generated
3.8 percentage points more output or GDP,” Beltran said.
But in
fairness to the Cabinet economic cluster, Secretaries
Margarito Teves and Rolando Andaya have been pushing for
greater investment activities in each of their
deliberations at the Development and Budget Coordination
Committee.
As it
is, the country’s investment rate inched up to 14.7
percent of GDP in the first nine months of 2007,
slightly higher than year-ago figure of 16.64 percent,
government data show.
This
compares with investment rate averaging only 14.3
percent in 2006.
Such
institutions as the Asian Development Bank and the
International Monetary Fund have pleaded for more
investment activities to happen to help “bring more of
the population out of poverty.” |
