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BALANCING the national budget isn’t everything. Deficits
are not all that bad, either. That’s the considered
opinion of former central bank governor Jose Cuisia Jr.
in response to Finance Secretary Margarito Teves’s
report of a P14-billion deficit in January this year.
Cuisia,
now chief executive officer of Philippine American Life
and General Insurance Co., said balancing the nation’s
budget has its merits but has far more drawbacks than
the government cares to admit.
“I don’t
see any reason for the government to balance its budget
this year except to regain some international stature.
But some countries that are doing very well have
deficits and it’s acceptable,” Cuisia said at a briefing
by the Philamlife Insurance Corp. at the Tower Club in
Makati City Tuesday.
He said
it disturbs him that the government is focusing on
something that, for the moment, is just for show in the
face of the urgent needs facing the country. “We’re
concerned that the government is not spending enough on
infrastructure and on services like education and
health. And there are many more important sectors.”
He
particularly noted that Manila lags behind Bangkok and
Kuala Lumpur, for example, whose budgets for education
are three and five times larger, respectively.
“And
yet, the government comes up with such projects as the
P6-billion cyber-education program when it doesn’t have
enough resources to pay for its teachers or build
classrooms,” he said.
The
government ought to “focus on the more basic things. . .
.Now that we have the funds to finance our priorities,
what is the hurry in balancing the budget this year?” he
asked.
Having
said that, Cuisia spoke with optimism that borrowing
costs going forward will continue to trend down even
though the nation’s output will likely be slower than
last year’s 7.3-percent clip as long as government
remains faithful to its fiscal goals this year. “As long
as the fiscal deficit is controlled, interest rates will
remain low and will further decline based on our
projections.”
Cuisia
also urged government to refrain from selling its IOUs
on negotiated basis, saying the plan raises many issues
on transparency.
“We at
Philamlife prefer the auction process to avoid talks. It
is also more transparent,” he pointedly said.
Finance
Undersecretary Roberto Tan, the chief of the Bureau of
Treasury, insisted on having the flexibility to raise
the funds that government needs to underwrite its
projects and programs without burdening the Filipino
taxpayer too much with unreasonable rates on its
Treasury bills and Treasury bonds sales.
He said
he has been forced to resort to selling government IOUs
on negotiated basis because the market continues to ask
for a very high premium for short-dated funds, and
expressed his determination to continue to do so as long
that market situation exists.
Cuisia
said market participants like themselves in the
insurance business understandably want as much yield as
they can get from government securities. “And they will
always try to bid high.”
But one
factor causing that, he said, is that the market has few
investment alternatives even though there remain areas
where fund managers may still generate the kind of
returns they need to operate profitably.
“And
that is the kind of challenge we throw to our investment
managers,” he said. |
