RP economy sinking under President Estrada<\/p>\n
By Bob McKee<\/p>\n
LONDON: In early April, Philippine armed forces spokesman Col.
\nRomero denied reports that the military was preparing a coup
\nagainst President Joseph Estrada. The military had been on "red
\nalert" all week and security at military camps had been
\nstrengthened. At the time, Col. Romero commented: "It's the
\nbiggest of April Fools Day jokes".<\/p>\n
Despite Col. Romero's dismissal of the story, it at least
\nreflected how low President Estrada's stock had sunk since being
\nelected by a landslide in December 1998.<\/p>\n
The former film actor defeated the status quo candidate of the
\nlast administration because he was seen as a breath of fresh air.<\/p>\n
Voters hoped Estrada would change Philippine society after
\nyears of authoritarian corrupt rule by Ferdinand Marcos and then
\nthe disillusioning experience of the presidencies of Corazon
\nAquino and Ramos, members of the Filipino landowning elite.<\/p>\n
But the sweet taste of success has turned sour. Estrada has
\nnot turned out to be a Ronald Reagan. Instead, his popularity has
\nsunk to an all-time low, from 65 percent net satisfaction back at
\nthe time of the election to just 5 percent now.<\/p>\n
The electorate may have been prepared to forgive Estrada's
\ncolorful personal life -- he has revealed on his weekly
\ntelevision program that he had a daughter who was the product of
\nan affair with a movie star. He did so by pointing out the
\nteenager in the audience.<\/p>\n
The president is believed to have 10 children, three by his
\nwife and the rest with six other women. A top aide was sacked for
\nclaiming that Estrada was drunk at midnight cabinet sessions,
\nobserving that the aide was the only person sober in the room.<\/p>\n
Guards at the presidential palace say that when Estrada's
\npersonal pianist checks in for work, they know there's a long
\nnight ahead.<\/p>\n
What worries Filipinos much more is that the Estrada
\nadministration has reappointed many former Marcos cronies to
\ngovernment agencies, and there seems to be little sign of
\nimprovement in the level of corruption.<\/p>\n
And most of all, the Philippines' economic recovery appears
\nto be foundering, with the currency -- the peso -- coming under
\npressure.<\/p>\n
In 1999, Philippine export growth accelerated. But exports are
\nheavily weighted towards electronics products, such as computer
\nmemory chips.<\/p>\n
And with relatively depressed Dynamic Random Access Memory
\n(DRAM) prices, export growth has begun to slow. At the same time,
\nhigh oil prices are pushing up import costs. So the trade surplus
\nhas peaked and is heading into negative territory.<\/p>\n
And foreign investors are losing confidence in the economy.
\nDirect investment contracts fell sharply last year and, although
\nthe government is planning several privatizations to boost
\ninvestor interest, it doesn't look as though foreign capital
\nflows will rise much this year either.<\/p>\n
Indeed, the economy began to hemorrhage capital towards the
\nend of last year and that has continued this year so far. The
\nscandal of insider trading at the Philippines stock exchange has
\nhardly helped either. Share prices have fallen 25 percent this
\nyear to date. And one foreign investor institution is planning to
\ncut the Philippines weighting in its index in May.<\/p>\n
The central bank's foreign exchange reserves are falling. The
\ngovernment managed to raise US$1.6 billion from a recent
\ngovernment bond issue.<\/p>\n
That will help temporarily, but only by increasing the foreign
\ndebt of the nation, which is already the highest in the region
\nafter Indonesia as a percentage of national output. Indeed,
\nshort-term debt repayments this year are equivalent to all of the
\nPhilippines FX reserves.<\/p>\n
For the moment, the Philippines is still growing (at an annual
\nrate of 4 percent -- slow by Asia's standards) and inflation is
\nbenign. But food prices have been artificially depressed by
\ngovernment controls, the effects of which will last for only a
\ncouple more months. Non-food inflation is running at 6.5 percent
\na year and services inflation at over 11 percent.<\/p>\n
Most worrying of all, the government badly missed its initial
\nbudget plan last year. It expected a deficit of just $1.02
\nbillion or 0.6 percent of Gross Domestic Profit (GDP). It
\nfinished up at $2.67 billion, or 3.7 percent of GDP.<\/p>\n
The 2000 budget deficit is officially expected to narrow to 2
\npercent of GDP. But that assumes government spending will rise
\nonly 6.6 percent this year after a 15 percent hike last year. And
\nthat depends on interest payments on previous debt falling. It is
\nmore likely to be 3.2 percent of GDP.<\/p>\n
With inflation likely to pick up sharply and the peso under
\npressure, the central bank is more likely to be raising rates
\nrather than lowering them over the next few months.<\/p>\n
On the other side of the government's ledger, government
\nrevenues are expected to rise 18.3 percent against 3.5 percent
\nlast year and a long-term average of 12.5 percent. But the
\nPhilippines tax base is too small for such an increase and no
\nmeasures against tax evasion have been introduced.<\/p>\n
If inflation rockets, exports continue to slow and growth
\npeters out, the peso could come under serious pressure. Then the
\nrumors of a coup may gain more substance.<\/p>\n
-- Observer News Service<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rp-economy-sinking-under-president-estrada-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }