With the worsening crisis of the US and global economy expected to further aggravate poverty in the country, independent think-tank IBON Foundation today said that it has become more crucial for government to ensure enough resources are spent for the poor.
IBON said that the Arroyo administration must start by increasing the allocation for social services in the 2009 national budget. The group criticized the allocation of 2.5% of the total budget for health; 13% for education; and 0.4% for housing as atrociously low especially in today’s environment of rapidly rising prices and greater economic uncertainty.
IBON said that the perennially low budget allocation for social services will have a deeper repercussion on the poor and vulnerable sectors as the deteriorating global economic crisis destroys more jobs and livelihood and inflates the cost of living.
Experts count slowdown in export demand, tighter flows in foreign investments and increased speculation in food and fuel prices as among the consequences of the US financial crisis and overall slump in the world economy.
With increased poverty, it becomes more urgent for government to provide sufficient social services such as health, education and housing. But the proposed budget levels obviously could not cover the expected increased demand for public schools and hospitals among others.
For the past ten years, government has been spending an amount equivalent to 2.1% of the gross domestic product (GDP) for education, way below the international standards of 5% to 6%. For health, it has been spending only 3.2% of the GDP, lower than the norm set by the World Health Organization (WHO).
IBON said that the government should at least meet these levels to alleviate the present condition in the country seen to worsen with the global crisis. To increase spending for social services, government should put a stop to burdensome payments and cut back on military spending. The proposed budget for 2008 allocates P683 billion for debt principal and interest payment, while it allocates P5 billion for AFP modernization. In contrast, government allots only P30 million for health care asssitance.
The group added the removal of regressive taxes such as the reformed value-added tax (RVAT) on oil is equally urgent to lessen the inflationary impact of the financial crisis.
The Arroyo government should also abandon its proposal for new taxes because these will further burden the Filipinos already suffering from low incomes and spiraling cost of living. IBON also urged the administration not to use the global crisis as an excuse to impose more taxes in its effort to achieve a balanced budget.
Donor governments have failed not only to improve the quality of aid but also even to make progress towards delivering committed amounts, according to independent think-tank IBON Foundation.
As it is, donors avoided addressing key development issues in the Accra Action Agenda (AAA) adopted at the 3rd High Level Forum on Aid Effectiveness organized by the Organization for Economic Cooperation and Development (OECD). But they are also US$30 billion short of meeting aggregate programmed commitments for 2010. These underscore the limits of the global aid regime in addressing underdevelopment in the Third World .
Over two billion people worldwide live in deep poverty. A billion lack even just access to safe drinking waterand more than two billion lack access to proper sanitation. Some 800 million adults can neither read nor write. This situation is because people by and large have no sovereignty and control over their socioeconomic policies. The “free market” policy conditionalities attached to aid for instance have greatly contributed to the problem, the think-tank said.
At the same time, OECD Development Assistance Committee (DAC) statistics even show that donors are off track to meet declared commitments to scale up aid and that targets set for 2010 will not be met unless dramatic increases are forthcoming. Net ODA flows from the 22 member countries of the OECD-DAC, the world’s major donors, fell for the second straight year in 2007 when they provided just US$104 billion in aid.
This amount is only 0.28% of their collective gross national income (GNI) compared to the US$104.4 billion or 0.31% of their GNI in 2006. It is also an 8.4% drop in real terms from the year before. This is just 56% of the total ODA commitment of 0.50% of their GNI by 2010. Donor countries will have to double their effort in the next three years to make up the shortfall– or an unprecedented 25% increase in ODA yearly in order to reach their commitment by 2010.
The character of the global aid system will remain questionable as long as aid is of poor and even destructive quality and as long as the amounts provided are so limited. Fundamental reforms are needed if aid and the global aid regime are to cease being instruments of big power intervention and control, and if they are to deliver on the development promises so often made
The number of Filipinos who see themselves as poor increased in the first four months of the year, according to the results of the latest IBON nationwide survey.
The IBON April 2008 survey showed that 79.3% of 1,495 respondents thought of themselves as poor, an increase from 71.7% in January 2008.
The latest IBON survey was conducted across various sectors nationwide from April 7 to 16, 2008 using a multi-stage probability sampling scheme with a margin of error of plus or minus three percent.
Below is the tabulation of results of the respondents’ self-rated poverty
When you look at your situation today, do you think of yourself as poor?
|January 2008||April 2008|
The full results of the IBON April 2008 Survey may be viewed at www.ibon.org .
Since the oil deregulation law was first implemented, much of the of the oil price increases happened under the Arroyo administration, and this is not only because of the length of the president’s term but because of her continued implementation of the oil deregulation law amid public outcry, and her imposition of the reformed value-added tax (RVAT) on oil.
Oil price increases under Pres. Arroyo’s term comprise almost 42% of total increases since the first oil deregulation law in 1996.
The Arroyo administration has done little to avert rising prices of petroleum products. Since Pres. Arroyo became president, the price of premium gasoline has increased by 147%, while that of unleaded gasoline has jumped by 151 percent. Regular gasoline has increased its price by 150 percent.
Socially-sensitive oil products, meanwhile, have posted sharper increases. The price of diesel grew by 168% while that of kerosene jumped by 196 percent.
With the unrelenting oil price increases, independent think-tank IBON calls for the immediate removal of the 12% VAT on oil to mitigate the effects of skyrocketing prices on poor Filipinos.
From 2005 when the Arroyo government imposed the value-added tax on petroleum products, gasoline products have increased their price by 20 percent. Diesel and kerosene prices have increased by 17% and 19%, respectively. LPG posted the sharpest increase in price since the VAT was imposed with a 36%-hike. Fuel oil, on the other hand, has increased its price by 31 percent.
“Removing the 12% VAT on oil is urgent because of falling incomes of Filipino families, and rising prices of basic goods like rice and utility rates such as electricity,” said IBON executive editor Rosario Bella Guzman.
Removing the VAT on oil, she added, would stimulate economic activity through savings by consumers on their fuel bills, while lowering operating costs of fuel-intensive business establishments.
However, a long-term solution to the uncontainable price increases of oil is the repeal of Republic Act (RA) 8479 or the Downstream Oil Industry Deregulation Act of 1998.
“Unfortunately the Arroyo government, under whose watch oil price hikes soared tremendously, continues to implement this flawed law,” Guzman said.
The National Statistical Coordination Board (NSCB) this week claimed that the country’s rich-poor gap was narrowing, citing the thinning ratio between the incomes of the top 30% and the bottom 30% of Filipino families. But independent think-tank IBON Foundation says that this does not mean that the Philippines ‘ broad income inequalities are improving.
Data from the government’s 2006 This barely changed from 2003, when the bottom 30% had an 8.5% share and the top 30%, 64.7 percent. Survey show that the bottom 30% of families had 8.6% of total in 2006 while the top 30% Filipino families accounted for 64.7 percent.
In fact, the data used by the NSCB itself indicates that the top 30% Filipino families earned P7.53 for every P1 earned by the bottom 30 percent.
Thus, the gap between rich and poor in the country remains wide, and in fact, may even grow further as the Arroyo government continues to pursue its globalization policies. Such policies have resulted in an unparalleled decline in the people’s welfare and the further escalation of widespread poverty in the Philippines