ON
Monday, two State of the Nation Addresses (Sonas) were delivered
in the same geographical area in Quezon City.
The formal Sona was delivered by President
Arroyo inside the tightly guarded House of Congress, surrounded
and slavishly applauded by a glittering crowd of bare backs,
overflowing bosoms, thick makeup, wigs of all colors and lengths,
flashy jewelry, false eyelashes and hypocritic smiles. At
3 p.m., the ladies were dressed in evening ternos and gowns
of all colors. The festive atmosphere was akin to a garish
mardi gras held in broad daylight.
Congress was heavily guarded like a fortress
under siege, with security officers wearing gauze masks while
cradling menacing guns. Guard dogs roamed the grounds to keep
out the hoi polloi.
The President painted a picture of a country
with a strong economy, “exorcised” foreign debt
and overflowing streams of foreign investment.
The counter-Sona was delivered outside Congress
on a makeshift stage. The crowd outside was also colorful
with T-shirts, banners, tarpaulins and caps. Speakers representing
different sectors of society took turns lambasting the present
administration.
The counter-Sona described a country with
a “teetering” economy, plagued by high levels
of unemployment and increasing levels of poverty, threatened
by pandemics and environmental disasters, and shaken by political
instability.
Were they describing the same country? Let
us compare the economic data cited by the President in her
Sona with official data from government agencies and multilaterals.
Sona: ‘We have a strong economy in a
strong fiscal position to withstand political shocks….’
Government data on economic growth. The government
itself recognizes that the economy is decelerating. Gross
domestic proruct (GDP) growth was originally projected at
6.5 percent to 7.3 percent for 2009. The latest and fifth
projection by the government is now down to 0.8 percent to
1.8 percent.
The forecasts of multilateral institutions
and rating agencies are much, much lower. The World Bank forecasts
2009 GDP at -0.5 percent, the International Monetary Fund
at -1.0 percent, Moody’s at -0.6 percent and Fitch Ratings
at 0.1 percent .Other rating agencies are just as pessimistic.
The President boasted that we are better off
than our neighbors. Bangko Sentral ng Pilipinas (BSP) data
show that in 2008, while Thailand grew at 6.4 percent, Indonesia
at 6.3 percent and Malaysia at 6.3 percent, the Philippines
grew at 3.8 percent. During the first quarter of 2009, Indonesia
grew at 10.8 percent and Malaysia at 0.8 percent. The Philippines
grew at 0.4 percent.
Where is the strong fiscal position? In May
2008, the target was zero deficit by 2009. Since then, the
deficit target has been revised six times. The latest official
projection is now at P250 billion. Is this rapid deterioration
indicative of a strong fiscal position?
Sona: ‘We exorcised it (foreign debt)…’
To exorcise means to expel by prayers and
incantations. It also means to purge or eliminate. Official
statistics from the Treasury show that in spite of GMA’s
prayers and incantations, foreign debt is alive and well.
At the end of 2000, total debt stood at P2.166
trillion. By the end of 2008, it had grown to P4.221 trillion.
As of April 2009, total debt further ballooned to P4.259 trillion.
Of this, P1.857 trillion is foreign debt.
Obviously, it has not been expelled, purged or eliminated.
One worrisome aspect about current foreign
debt is that P1.063 trillion is in foreign bonds. These are
fixed-term indebtedness which have to be paid when due and
cannot be subject to negotiations, unlike bilateral debt.
Recently, the government borrowed an additional
$750 million, which will surely increase the foreign debt.
At the end of 2008, the Treasury paid out
P101 billion for interest and P80.1 billion for principal
on foreign debt. For the first half of 2009, P61.344 billion
was paid for interest and P71.652 billion for principal on
foreign debt.
Foreign direct investments. The Sona boasted
about larger streams of foreign direct investment inflows.
The Unescap Statistical Yearbook for Asia and the Pacific
reports that in 2007, five Asean countries received net inflows
ranging from Vietnam’s $6.739 billion to Singapore’s
$24.137 billion. The Philippines received $2.928 billion.
During the third quarter of 2008, the BSP
reported that while the Philippines received $555 million,
Indonesia received $1.517 billion, Thailand $2.436 billion
and Singapore $1.701 billion.
In the mood for Moody’s. The Sona was
ecstatic about Moody’s upgrade of the Philippines’
credit rating. This is not something to be euphoric about.
According to Moody’s, “Obligations rated B are
considered speculative and are subject to high credit risk,”
while “obligations rated Ba are judged to have speculative
elements and are subject to substantial credit risk.”
Since this is a rating on creditworthiness and the government’s
ability to pay, it is concerned with the financial system,
particularly gross international reserves, which are sustained
by overseas Filipino workers (OFW) remittances.
Sona: ‘The economy is more fair to the
poor than ever before’
How can the economy be fair when the burden
of revenues is largely borne by the low-income groups? This
is because the value-added tax, which was increased to 12
percent remorselessly hits everyone, majority of whom are
poor.
Sona: ‘Lumikha tayo ng walong milyong
trabaho, an average of a million per year’
The boast of 1 million jobs a year has to
be taken with a grain of salt. First, there is the possibility
of double counting. Often, those employed under the emergency
employment program are given temporary jobs. When they are
reemployed, they are counted once more. Second, there is a
mismatch between available jobs and the skills of job seekers.
Hundreds of thousands of college graduates can’t find
jobs commensurate to their training. It is not surprising
to find college graduates working as street cleaners. Third,
earnings from emergency jobs created by the government are
hardly enough to sustain workers and their families.
Tomas Africa, former head of the National
Statistics Office, noted that in the April 2009 Labor Force
Survey, “the additional 1.5 million jobs [created] were
net of the increase of 2.6 million workers who worked for
less than 40 hours a week and of the decrease of about 1.1
million workers who worked for 40 hours or more.” In
other words, among those classified as “employed,”
there is an increase in the number of underemployed and a
decrease in those who worked 40 hours or more.
A worker can work for one day and be listed
as employed even if he will be jobless and hungry for the
next 364 days.
Africa further notes that “the target
of 1 million jobs will no longer stimulate growth and elicit
applause in a Sona….” The Philippines needs more
than one million new jobs to overtake the loss of jobs, the
rise in underemployment and the increase in new job seekers.
The Social Weather Stations Unemployment Survey
shows the current unemployment rate of 34.2 percent as of
February 2009 is the highest since 1993. Is this cause for
celebration?
Sona: ‘Bumaba ang bilang ng nagsasabing
mahihirap sila, mula 59 percent sa 47 percent...’
Is a 47-percent level of self-rated poverty
an earth-shaking achievement? Should a President be proud
to report that after nine years, nearly one-half of her people
consider themselves poor?
Official poverty statistics report that as
of 2006, poverty incidence had increased to 26.9 percent of
families and 32.9 percent of the population. This translates
to 4.7 million families and 27.6 million people. Is this cause
for the fragrant crowd in Congress to applaud wildly?
Two Sonas, two countries
On Monday, two Sonas were presented. One Sona
was applauded more than 100 times by an overdressed and overjewelled
crowd. Outside, thousands of rain-soaked, bedraggled Filipinos
raised their fists, sang their despair and told the story
of another country—their country.
