Why economic neglect is criminal

By Winston A. Marbella

Posted on December 28, 2011

Finally, the Aquino administration says it will bid out 16 Public-Private Partnership projects in 2012 the slew of programs it announced 18 months ago in its first State of the Nation address. The delay in the construction projects contributed to the slowing down of economic growth to 3.7% (or thereabouts) over the past four quarters.

In the frenzy to jail Gloria Macapagal-Arroyo and to impeach Chief Justice Renato Corona, equally important matters of governance -- perhaps of even higher priority to the growing number of starving poor -- are being swept under the rug.

The holidays and yearend give us pause -- and time to lift the rug for some vacuum cleaning. These are some of the worrisome things we see:

The Aquino administration submitted to Congress a 2011 budget that targeted a GDP growth prospect of 5%, and a best-scenario growth target of 7 to 8%. For 2012, it submitted a budget that projects a slightly higher growth of 5.5 to 6.5%, with the same best-scenario growth target of 7 to 8%.

With the year about to end, the bad news is certain: The Philippine economy is expected to grow dismally much slower at 3.7% in 2011 and 4.2% in 2012.

What happened? The slow GDP growth in the first three-quarters will drag down the entire year. But why?

The International Monetary Fund earlier predicted a moderate GDP growth of 5% for 2011 and 2012. Now it says that the Philippine economy has slowed because of government underspending and weak exports.

Nearing yearend, the IMF further cut its 2011 GDP forecast to 3.7%, and 4.2% for 2012 -- a full point cut for 2011 and 0.5 in 2012.

The global economy is seen to be approaching recession next year. Philippine exports of goods and labor will suffer. Overseas remittances will plateau, and OFW families will constrict spending, further aggravating a slowing economy.

Social tensions will rise when overseas employment shrinks from a deteriorating world economy and we are not able to create new jobs fast enough at home. We are beginning to see this already, but it is hidden behind the more sensational popularity ratings of the President which grab the headlines.

Ominous rumblings

The November 2011 Pulse Asia survey showed growing disenchantment in the way the government is addressing issues that affect the poor.

The survey showed a sharp decline in approval of the administration on issues that affect the stomach: reducing poverty (approval rating of 47% to 32%, down 15%), controlling inflation (from 45% to 32%, down 13%), increasing the pay of workers (from 56% to 43%, down 13%), creation of jobs (from 59% to 48%, down 11%), and fighting criminality (from 62% to 53%, down 9%).

The disapproval ratings of the administration doubled on issues that affect the poor the most. In October last year, 18% of respondents disapproved of the way the administration was addressing poverty reduction. In November this year, the disapproval rating doubled to 36%.

More people now disapprove (36%) than approve (32%) the way the administration is handling its poverty reduction programs.

Criminal neglect

Poverty reduction is related to other issues like job creation, improving the pay of workers, and moderating inflation. The disapproval rating on the government’s programs to create jobs rose from 11% in October 2010 to 21% in November this year, or nearly double.

On other gut issues the deterioration was equally serious: controlling inflation (from 21% to 37%, an increase of 16 points), raising the pay of workers (from 14% to 25%, or by 11 points) and enforcing the law to all, whether influential or ordinary citizens (from 9% to 18%, or by nine points).

The rumblings of social unrest are growing. Why?

One glaring reason is that just a little over half of the economic stimulus package was spent by the government to spur economic growth, budget department figures show.

In brief, the government fell asleep in implementing programs for which funds were available, aggravating joblessness and poverty. In a country where some 3.41 million children suffer permanent brain damage from hunger, this economic negligence borders on the criminal.

Asian laggard

The Philippines is seen as a laggard compared to its Asian neighbors and needs increased government spending, among others, to catch up.

Periods of growth were not sustained in the absence of strong and persistent economic reforms, says the International Monetary Fund (IMF) Working Paper titled “The Determinants of Economic Growth in the Philippines: A New Look.”

“To catch up with its East Asian counterparts, the Philippines will need to maintain macroeconomic stability, expand its fiscal space and redirect public spending to agriculture, infrastructure, and research and development,” wrote author Willa Boots J. Tolo, who was a former researcher at the IMF Manila office.

Development goals

In 2000, the members of the United Nations (UN) gathered at the Millennium Summit to renew their commitment to battling poverty and other forms of human deprivation. The UN Millennium Declaration set specific targets to combat poverty all around the world. The Millennium Development Goals offer a good yardstick for measuring our performance against targets.

In eradicating extreme poverty and hunger, the Philippines is behind by at least six years and at most eight years in achieving its goals. Prevalence of underweight children is yet to be halved, and incidence of poverty in the population has not improved either, the UN said.

We need to act fast. Sleeping on the economy is tragic. Further neglect is criminal.

(Comments are welcome at mibc2006@gmail.com.)