By Milwida M. Guevara
Withdrawal is a common defense mechanism. A person escapes from reality to spare himself from experiencing pain. Through withdrawal, one avoids confronting what is real although he does not deny or distort it.
I have had the withdrawal syndrome for quite some time. I have stopped watching local TV stations to avoid listening to the news. I have likewise stopped reading newspapers. My affliction turned worse after the US elections. I ceased watching CNN and BBC.
But one cannot escape reality and sooner or later, it must be confronted. What jolted me was the possibility that we may lose our foreign funding. It became imperative for us to conduct a strategic planning on how to confront the worst scenario.
And what could go wrong? GDP grew beyond the most optimistic forecast. So what should we worry about? Government even reported a decline in the crime rate which is a big boost to peace and order. And surprise, government also brandished an improvement in the traffic situation.
But all is not well. Inflation started to rise to 2.3% in October compared to 1.4% last year. Expenditures outpaced revenues resulting to a budgetary deficit of P121.6 billion in September. While this may be in keeping with the pursuit of the “golden age of infrastructure”, it worries me that our revenues may not take us there. Despite the 7.1% GDP growth, revenues only grew by 1.12%. This means that government is not able to capture increases in income and prices in terms of revenue collection. The growth of BIR revenues was less than one percent, or a pale 0.62%. BOC collection increased by 2.06%. If we take away the tax expenditures or taxes that what would have been collected from purchases of government, the growth of BOC collection would be less than one percent as well, or 0.66%.
In contrast, expenditures in September, 2016 grew by 22.81% compared to the same period in 2015. If expenditures continue to outpace revenues, government will have little recourse but to do debt financing. This path is perilous and rocky.
There are more worrisome signals. Business optimism dipped as shown by the Grant Thornton International Business report. Economic uncertainty slipped by 14 points as 38% of businesses surveyed opined that economic uncertainty is considered a major constraint. BSP reported that overall confidence index declined to 39.8 % compared to 45.4% during the last quarter. The less than optimistic outlook of business was influenced by the direction of foreign policies and economic reforms, weakening global demand, and the depreciation of the peso.
Another slip was reported by the World Competitiveness Report by the World Economic Forum. The Philippines dropped from 47th to 57th place in the ranking of 138 countries .We seemed to retrogress in terms of technological readiness, institutions, innovations, and goods market efficiency.
Everyday, we watch the continuous slide of the peso against the dollar with anticipation. Exporters and overseas contract workers are elated but manufacturers with a significant import component in their products anticipate rising costs. This does not augur well for a smooth sailing of government’s proposal to increase excise tax rates on petroleum products.
We used to have the best performing equities market in the region but last weekend, local share prices plunged in contrast to the buoyant growth of stock markets in the region and in the United States.
My DOF boss Bobby de Ocampo used to rally us to turn downturns and downswings into opportunities. Perhaps, these should nudge government to realize that nation building means more than fighting the drug problem. Many things are not right. The honeymoon period is over. It is time to rise above parochial mentality, boorish behavior, and diplomatic bullying. Since sleeves are already rolled and our officials are dressed with work clothes, government should now confront the many challenges that face the nation.
And on our part, It is never too late to get on the bus. We should get fully informed, stand and advocate for what is right. This is our country and our stake is as important as any.