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THE
Philippine Development Forum (PDF) held in Clark,
Pampanga, on March 26 and 27 proved to be more
productive and insightful than the usual economic
talkfests we see in this country.
For one
thing, it moved us beyond the sterile debate over the
reality of the 7.3-percent growth achieved by the
economy last year, which some sectors seem bent on
denying. For another, it has helped focus our attention
on real problems and real issues that must be addressed
in the face of an imminent global economic slowdown and
continuing challenges in the economy.
The PDF
brought President Gloria Macapagal-Arroyo, her top
economic managers and Philippine business executives in
dialogue with the representatives of international
financial institutions that included the World Bank
(WB), the International Monetary Fund, the European
Union (EU), various foreign embassies and nongovernment
organizations. And the conference agenda was
specifically on how to improve and increase the flow of
official development assistance to the economy,
particularly for infrastructure projects.
The
forum format was conducive for plain speaking and
truth-telling. For every presentation made by government
officials, there was a counterpart presentation by the
foreign delegates. Every claimed achievement in the
economy was counterpoised by looming problems that must
be faced or targets that remain to be achieved. Every
plan or program presented by our economic managers was
weighed against the challenges emerging in the global
economy today. This had the effect of grounding the
conference on core concerns and challenges of the times.
To be
sure, the foreign representatives, particularly the EU
and the WB, commended the Arroyo administration for the
high economic growth achieved in recent years and its
success in turning the fiscal crisis to near budget
balance. “We recognize that this is the best
macroeconomic performance in some 50 years, and we
wanted to acknowledge that, noting, as well, that this
was accompanied by controlled inflation, a balanced
budget and an improved balance of payments,” said EU
Ambassador Alastair Macdonald.
But
after the commendations, there followed some pointed
qualifiers and warnings about the current situation:
1.
The
recent growth still has to be felt by the 33 percent of
our population who are on the poverty line.
2.
The
economic slowdown of the developed economies makes
problematic the country’s ability to match last year’s
record growth.
3.
The goal
of a balanced budget this year may have to be deferred
because of the necessity for more government spending to
boost growth.
4.
Revenue
generation has to be ramped up and new tax measures may
need to be passed by Congress.
5.
RP
agriculture will be hard put to maintain its recent
growth because of climate change.
6.
The
country’s trade balance will be pressured by the surging
prices of oil and imported food, and the slowdown of
exports to the
United States.
The
government’s response to these challenges was
commendably confident and resolute. The President
herself said the country is well-placed to weather a
global economic downturn. “As a result of our total
economic overhaul,” she declared, “we are
well-positioned to weather a global economic slowdown
which, unfortunately, will affect all of us.”
High on
the government’s calculus is increased government
spending in the economy. The 2008 General Appropriations
Act sets a P1.226-trillion budget for the government.
The key priorities of the budget are what GMA calls the
three essential building blocks of the nation: the
economy, education and the environment. Infrastructure
development, finally, is getting a major boost in
spending.
But with
equal emphasis, the government is cognizant of the need
to improve revenue collections and keep the fiscal
deficit low. The competing objectives of spending more
on public investment and social programs and of keeping
the fiscal position under control will be kept in
balance. Although the country may not be able to balance
the budget this year, the drive to boost revenue
collections will not let up.
Collections are up 17 percent over last year’s level,
but much more may have to be done. The
Philippines’
tax efficiency stood at 14 percent in 2007, as compared
with the 16 percent to 17 percent achieved by our
Southeast Asian neighbors. “We need to continue working
on the revenue front,” Finance Secretary Margarito Teves
acknowledged.
On the
trade and investment front, the government intends to
improve the country’s position. It is pushing hard for
the approval of the Japan-Philippines Economic
Partnership Agreement within the month, so the
Philippines can start reaping the benefits of freer
trade with
Japan
like its neighbors in Southeast Asia. It is also taking
pains to strengthen ties with China (recently battered
as a result of the ZTE and JMSU controversies) and
India. These countries loom large as trading partners
during a global slowdown.
Finally,
the government acknowledges the need for new and more
investments in the economy in order to sustain growth
and momentum. Soon after the PDF, the President was off
to Hong Kong last weekend to address the 11th Credit
Suisse Asian Investment Conference. There, she made the
case that our country is “one of the best values in
Asia” for foreign investors.
I think
what was most encouraging about the PDF was its twin
messages: the readiness of foreign institutions to help
the Philippines, and our government’s readiness to lead
and get on top of the situation. It’s been lately
fashionable to say that the role of national governments
has declined in the new economy. But, in truth, the
government is more important than ever in the
achievement of economic goals. What is needed is a
strong, effective government.
At the
end of the day, national modernization has to be an act
of will of the entire nation. But the government must
lead the way. |
