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WE
have been reading reports that the government and
agencies like the Bangko Sentral ng Pilipinas (BSP) have
been paying their debts ahead of maturity.
The
BSP has paid its remaining obligations with the
International Monetary Fund (IMF) amounting to $220
million before the end of 2006, even though the amount
was not due until 2007 and 2008. The national government
has also announced prepayments of foreign debts to take
advantage of the appreciation of the peso.
In
addition, it is also planning to reduce borrowings this
year, especially from foreign creditors. The reduction
of the debt stock also reduces the fiscal deficit.
The
rising value of the peso vis-à-vis the US dollar has
indeed effectively reduced both our interest payments
and our debt stock by hundreds of millions of dollars. I
am confident that this trend will continue because other
Asian currencies are also appreciating. In addition, the
continuing strong flow of investments and the growing
remittances from overseas Filipino workers (OFWs)
provide adequate support to our currency.
OFW
remittances were estimated to have reached $12 billion
in 2006—an average of $1 billion a month—and are
projected to increase to $13 billion this year. These
remittances, plus foreign investments in the equities
market like stocks and in domestic industries, have
pushed the country’s international reserves to
historical highs of more than $22 billion—and still
rising.
And
so, our debt stock is shrinking, our fiscal deficit is
narrowing down, the peso is rising and investments are
flowing in. Are we satisfied with that?
We
can derive more benefits for our people from these
developments. It is very important to come up with
creative methods to directly bring the benefits of
declining debt and narrowing deficit to the people.
Let’s
say we get a concessionary loan of a billion dollars and
use this money to have a one-time refurbishing of our
hospitals and the state universities and colleges. You
know, if you go around the country, you will see that
almost all of the government hospitals, universities and
colleges are badly in disrepair, and it is our people,
particularly the poor, who suffer.
A
billion dollars is about P50 billion. This should be
enough to make the necessary repairs and improvement on
the physical facilities of hospitals and state-owned
universities and colleges.
This
is a one-time expense, and then we go back to our
regular budget. At least we can update basic social
services. And even if we schedule another billion
dollars for education, these would just eat up a portion
of the reduction of our debt stock, not add to it.
What
I am saying is that this may be the only opportunity for
us to update basic facilities and improve social
services without hurting government finances. Upgrading
state universities and hospitals will be a visible
improvement in the lives of our people. In the process,
our government and our country will gain the respect of
the international community.
What
I have cited is only one creative way to maximize the
benefits from our improving financial and fiscal
situation. I am sure there are other creative methods to
harness such improvement, and policy-
makers, including the government’s economic managers,
should let their imagination work and explore other
options, to make sure that our people would be directly
benefited. That way, the people would realize that a
lower government debt and an appreciating peso can make
their lives better.
Otherwise, it would be tragic if this improvement in our
financial condition will just be drowned in statistics.
(This will be the last column of Manny Villar for
February, in compliance with Section 39 of Resolution
7767 of the Commission on Elections. He will resume his
column after the end of the campaign period for the May
14, 2007, elections.—Editor)
You may send your comments/ feedback to: feedbackmanny@yahoo.com.ph. |
