But let me repeat the question in many minds, how sound is the economy? How sound is our future?
Last week, radio was inundated with sound bytes from the president’s first State of the Nation address before Congress, the last sentences of which consisted of a ringing declaration that “we have assembled the best Filipino minds to help us navigate through this global crisis that we are facing.”
He segues to wide applause that “We will endure. Let our Filipino spirit remain undimmed.
“I know this in my mind, I know it in my heart, I know it in my very soul … THE STATE OF THE NATION IS SOUND” was the final peroration.
One year after that SONA, many are asking, how sound, Mr. President, is the current state of our nation?
In this article, I shall not delve into the specifics of the 19-point legislative program he vowed to pursue with a Congress which at no other time in its history has been as subservient to the executive as now, martial law exempted.
We loved the promise to right size a top-heavy government bureaucracy and the enactment finally of a Land Use Act, yet through the whole year that passed, no progress has happened on these much-needed reforms.
The others still pend in Congress with the HoR having passed some that are still under scrutiny by a Senate that prefers to grandstand on investigations allegedly in aid of legislation.
Maybe in due time, knowing how our economic managers have prioritized the creation of the Maharlika Investment Fund above all else, billing it as some sort of panacea that would reverse our economic stagnation, the 19-point program, parts of which have moved, might bear fruition.
But let me repeat the question in many minds, how sound is the economy? How sound is our future?
For 2023, Congress passed a national budget of P5.2 trillion, and the executive has proposed P5.7 trillion for 2024 (I have purposely rounded off the numbers for easier recall).
In fine, there will be a 10 percent increase in the national government’s appropriation next year, if Congress does not cut, and of course we know it will not cut, just move figures here and there to satisfy legislative pork cravings.
But how do the bloated budget allocations square off with our over-all economic performance this year?
The 2022 budget deficit, in plain and simple terms, the difference between our revenues and expenditure, was “1.6 trillion.
Let us assume that the BIR and BOC will meet their targets, perhaps even marginally surpass the same this year, we will still be down with a P1.5 trillion deficit.
Now how do we finance that? For now, and until Congress passes new revenue enhancement measures, we borrow.
So even our economic managers expect government borrowing to be in the vicinity of P1.5 trillion each year for the next few years, knowing full well that (1) it will not be easy to pass tax enhancement bills while inflation keeps soaring, and (2) our GDP is not expected to grow fast enough, or large enough, what with all the global uncertainties endangering economies all over.
In the first half of this year, our debt has reached P14.1 trillion, of which P3.2 trillion is on account of COVID-related expenditures, from vaccines to ayuda, to other forms of subsidies which had to be resorted to while the economy was on lockdown state.
Truth is, we have been financing our budgets by borrowings all these years, the balloon enlarged in the last five years.
And so we continue to borrow about P1.5 trillion each year, probably more if the bonanza, which others call illusion, of foreign investments failing to come in to the country, despite all the hoopla about the president’s 13 trips, by tomorrow 14, with all the pledges that have yet to materialize.
The GDP, currently at P22 trillion, needs to double to almost P44 trillion by 2028, to be able to finance our expected deficits.
Will Maharlika be the magic wand?
Furthermore, the distribution of the nation’s wealth is what worries non-government economists in the academe and business sectors, on top of persistent inflation that is almost Sisyphean in character.
We reduce the inflation rate by one percentage point and our economic managers cry hallelujah, along with expectations to tame it by year-end to the hoped for 2 to 4 percent level.
Then Russia and OPEC turn on the screws and reduce petroleum exports.
Worse, Russia will interdict shipments of grain from Ukrainian ports as another weapon in the seemingly unending war.
That will push grain prices upwards, even to the point of scarcity, which will impact most food-importing nations like the Philippines, whose staple – rice — it cannot produce enough to satisfy domestic consumption, and whose livestock and other food industries are dependent on feeds and fertilizers from other countries.
I hate to be a jeremiad of doom, but expect inflation to remain in the 6 percent level the rest of this year, and perhaps till next.
On top of the geopolitical externalities is that devilish weather phenomenon called El Nino, which means less water available, and, when the typhoon season visits in the third and even fourth quarter of 2023, will mean stronger than usual cyclone strength as these move across the warm ocean waters of the Pacific into our shores.
In 2021, our per capita income was $3,900, already lower than Vietnam which ended a long war, first against the French, then the mighty US of A only in 1975.
With a sluggish economy bedeviled by high inflation, and a world-wide recession looming, dreams of high growth will remain dreams.
To the poor who have been enduring the unequal distribution of wealth through decades, the only solution is, and will continue to be, to leave the Philippines for back-breaking work abroad, never mind love for the Philippines.
Already we are feeling the effects of this diaspora in the local scene, from a shortage of health and education professionals, to farm labor scarcity which dooms our agriculture to less and less productivity.
Meanwhile, our economic managers fret at the ballooning GAA-funded military pension system, which stand at about 200 billion this year, warning of “fiscal collapse.”
Yet, in the interstices of the national budget, between allocations for personnel salaries of a yet over-sized bureaucracy and wastefully-spent MOOE, are layers upon layers of pork which Congress insiders estimate at higher than P800 billion for 2023 and close to P900 billion.
Juxtaposed against the annual deficit of P1.5 to P1.6 trillion which we finance through more and more borrowings, the pork barrel insertions alone are more than half of the national deficit.
And our military and uniformed personnel, chafing at their being labelled as causes of fiscal collapse, now rightfully ask for an accounting, and beyond the numbers, a drastic reduction of greed from the legislators who will soon decide how to solve the Gordian Knot that is the pension system.
Like Alexander the Great, people ask, why not just cut the greed?
No, Mr. President, the state of the nation is yet unsound, although with bated breath we will look to your words of “inspiration” this afternoon, hoping SONA will not be “Speech Only, No Accomplishments” as a naughty meme circulating in the internet suggests.
What raft of solutions will you be proposing to deal with the numbers that do not lie?