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TOO much
of a risk, fiscal-wise, without the reasonable certainty
that it will indeed benefit as many deserving people in
the ways envisioned.
This is
the initial damning verdict passed upon the vaunted
P75-billion economic-stimulus package being pushed in
the Cabinet by presidential adviser and Albay Gov. Joey
Salceda.
To be
fair, when Mr. Salceda made his presentation to the
President and his peers on Tuesday, he laid down a very
articulate and impassioned argument for doing it, in a
year when everybody else expects the Philippines to keep
its vow of a fiscal balance. With a
US
recession looming, he says, our people must be helped in
advance with a plan to weather the spillover storm.
It is
thus not surprising that after his dramatic
presentation, the President was reported to have
“approved in principle” the one-shot package.
In the
same breath, however, the President sent the signal that
she was determined to keep the goal of a balanced budget
this year. There, in the constant struggle to achieve
the best of both worlds, may lie the problem.
Already,
a senior member of the Cabinet, Budget Secretary Rolando
Andaya Jr., has balked at the package, precisely because
it would upset the fiscal cart—a prospect against which
the Asian Development Bank warned on that same day that
Mr. Salceda made his case in the Palace.
But the
problem of “sending wrong signals to investors” isn’t
exactly the kind of argument that will find a
sympathetic ear with a public burdened by higher prices
of oil and most other basic commodities and utilities,
not to mention transportation. Juan de la Cruz would
rather want to hear how the government will set out to
help him first before obsessing itself with pleasing
foreigners and credit-rating institutions. Toward this
end, Governor Salceda isn’t sparing with his arguments:
“The
Cabinet presided by the President approved a P75-billion
economic-stimulus package that will enable the
Philippine economy to stave off the threat of a US
recession by putting more money in the pockets of
ordinary people so that they can pay their monthly
bills in water, electricity and even their tuition,” he
declared in a news briefing in Malacañang.
He said
the President directed Finance Secretary Margarito Teves
to seek funding sources for the package and “at the same
time, to minimize as far as possible the impact on the
deficit.”
Highlights of his proposed package: P16 billion in tax
rebates for middle-class working families and P8 billion
in power-rate discounts for those consuming a maximum of
200 kilowatt-hours per month; and increased spending for
agriculture (P15 billion), food-for-school projects
(P6), education (P6 billion), health (P4 billion),
housing (P4 billion) and infrastructure (P16 billion).
To
arguments the government is cash-strapped, he listed the
possible funding sources: the privatization of remaining
shares of the government in San Miguel Corp., Food
Terminal Inc. and other government assets; and, for the
power-rate discounts, the government royalties from
Malampaya.
“I think
we will be very creative in funding this one in order to
minimize the impact on the deficit,” he said.
One
wishes he and the rest of the government could, indeed,
be that creative enough to meet the twin goals of fiscal
balance and keeping the economy robust by helping the
consumers’ bottom line. Yet, from experience, as
Secretary Andaya mentioned, proposals like the stimulus
package tend to rack up huge deficits for the
government, the best intentions notwithstanding.
Per
Secretary Andaya, the moves taken by then-President
Estrada to prime the economy in order to cushion the
impact of the Asian crisis on the country, by releasing
P40 billion for such purpose in 1999; and by Mrs.
Arroyo, who later released P60 billion for the same
purpose to help the Philippines cope with a US slowdown,
swelled the budget deficit to difficult levels—in 1999,
to P114 billion from the target deficit of only P17
billion; in 2002, to a whopping P150 billion, when the
target was P40 billion.
Mr.
Salceda seems to be saying there’s no danger of any such
funding for a stimulus getting to unwieldy levels
because the proposed package, to start in March, is
tailored to a “sharp but short” US recession.
Still,
the risks are there, and while Mr. Salceda deserves
credit for thinking of the common man, his proposal
should be examined thoroughly when it goes back to the
table at a meeting Thursday. It’s not only the concerns
of Mr. Andaya that deserve focus; the apprehension
raised by other parties deserves hearing as well.
For
instance, Party-list Rep. Crispin Beltran of Anakpawis
said that for all its huge drain on resources, the
package could still fall short of providing economic
relief to people. He thinks a better tack is to certify
as urgent proposed legislation calling for the removal
of the 12-percent expanded value-added tax (E-VAT) on
oil products. Removing VAT on oil would “directly
benefit thousands of poor families burdened by high oil
prices,” said Rep. Beltran.
The
debate brings to mind the recent Senate debates on the
proposal of Sen. Mar Roxas II to suspend the E-VAT on
oil products, saying it’s payback time for the ordinary
folks who helped the government attain fiscal stability
when it was in trouble in 2003. After years of paying
the higher VAT rate, the public deserves some respite
now that “they’re the ones in trouble,” explained Roxas.
To the
options offered by Palace advisers on ways to ease the
impact of high oil prices on the public, Roxas had
stressed that the best way is still the direct one—i.e.,
leave the money in the people’s hands in terms of
savings from tax, which they can use to buy things they
need, VAT-able things at that, hence mitigating the
government’s revenue loss while still keeping the
economy afloat.
In his
view, all the creative ideas advanced could only be more
costly because once the money is put in the bureaucracy
with the supposed mandate to spend for all sorts of
subsidies, the danger of corruption and waste seeps in.
Such
arguments are valid, and while Governor Salceda may
genuinely wish to help ordinary people, his plan merits
a second look. |
