Instead of reaping the so-called harvest from her programs, Pres. Arroyo’s successor faces empty government coffers as her administration desperately sells off the few remaining state assets in a bid to maintain the illusion of fiscal stability, according to independent think-tank IBON Foundation.
The Arroyo government is clearly running out of major assets to dispose to make up for revenue shortfalls, according to IBON research head Sonny Africa. After government’s planned disposals this year of its stakes in San Miguel Corp., the Philippine National Oil Corp.-Energy Development Corporation and the Manila Electric Company, among the only remaining major assets for disposal are its stakes in TV stations RPN-9 and IBC-13 and the Al-Amanah Islamic Investment Bank of the Philippines as well as the rights and equity in the Philippine Postal Corporation, he said. What would be left after big-ticket items are sold would be mainly minor assets such as various parcels of land, buildings and various pieces of equipment.
Although government revenues increased by an average of 14% since 2003, if the added income boost from the fire sale of assets and the implementation of the reformed value-added tax in 2006 is not taken into account, revenues would have increased by an annual average of only 11.7 percent. This means that instead of showing any real growth, such revenue gains have only tracked the annual average gross domestic product growth over the same period as measured in current prices.
The situation has even taken a turn for the worse in 2007, Africa said. In the first half of the year, revenues without privatization income grew a scant 2.9% compared to the same period last year. This compares very unfavorably with GNP growth of 11.6%, again measured at current prices, in the first quarter of 2007.
This has significant implications for the Arroyo administration, Africa noted. For one, Arroyo will likely be unable to fund the ambitious infrastructure program outlined in her SONA. This will undermine her support with foreign investors and the local business elite who are the main beneficiaries of the infrastructure projects. A bankrupt government will also be unable to buy the support of political allies. And, most significantly, Arroyo will most likely be forced to resort to new taxes and cuts in social services spending to win back the support of the economic elites. This will heighten the widespread dissatisfaction of Filipinos who are already suffering from worsening joblessness and poverty, he said.
Although Arroyo at least admitted her widespread popularity in her SONA, she continues to mislead the people about the true state of the nation. “The harvest her successor will reap will be bitter: a faltering local economy, pervasive poverty and a bankrupt government,” Africa said.