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On debt forgiveness

It would be difficult to say anything new about the fiscal situation of
the Philippines. After all, this topic has been analyzed fully even
before the current controversy. What I would like to do is consider the
option of debt forgiveness, which in its extreme form is equivalent to
debt repudiation. We deal solely with the pros and cons that surround
this issue. I would consider my arguments a feeble attempt to situate
my remarks in the context of the lectures during the past week which
focused on the inequities in the international financial system.

On the import surcharge: What’s not to like?

At this point, to tax or not to tax is no longer the question.

With all the public discussions stirred up by the UP 11 fiscal alarm,
there has been widespread recognition of the need for new tax measures.
The key issue now is who to tax.

Who should bear the burden of increased taxes? Smokers and drinkers?
Texters? Telecommunications service providers? Foreign investors?
Car-owners? Commuters? Consumers in general? These are just a few of
the sectors that may have to bear the burden of new taxes – that is, if
Congress approves the government’s proposed tax measures.

Get the best out of the crisis debate

The fiscal crisis has generated a wide range of responses. The Gloria
Macapagal Arroyo (GMA) administration initially packaged its revenue
strategy by stringing together eight revenue measures, which the
President outlined in her State of the Nation Address (SONA). In a
paper published by BusinessWorld (Yellow Pad column, Aug. 9 2004), I criticized the revenue package of eight measures for being half-baked and ill-conceived.

This package also served as a backdrop, or a context, of the paper
authored by the 11 faculty members of the University of the Philippines (UP) School of Economics (or the UP 11) titled “The Deepening Crisis: The Real Score and Deficits and the Public Debt.”

The UP 11 paper – notwithstanding its clear critique of government’s
economic, including fiscal, policy – was kind and gentle in its treatment of GMA. This, at first glance, was surprising, considering
that some of the coauthors are known for their outspoken, no-holds-barred criticisms (they call a spade a spade, to borrow Solita C, Monsod’s favorite line). But a constructive paper, with a mild tone,
was meant to get GMA to listen. Call it a benign tactical approach; it
nevertheless paid off in moving GMA to declare a fiscal crisis and in
producing a sustained, vigorous debate on the issue.

Policy of Accommodation in Maynilad Undercuts Fiscal Recovery

From zero deficit in the year 2000, the Metropolitan Waterworks and
Sewerage System (MWSS) began to post deficits of P3.0 billion, P2.6
billion, P3.2 billion, and P4.5 billion for the years 2001, 2002, 2003,
and 2004, respectively. The singular reason for this reversal was
Maynilad’s refusal to pay concession fees beginning March 2001.

Intended for the main part to service MWSS’s mostly dollar-denominated debts, the non-payment of concession fees has constrained the MWSS and the national government to advance the payment for the loans, contributing significantly to the deterioration of the public sector’s
fiscal position.

In Defense of the Pork Barrel

Pork barrel projects would definitely rank among the top of the
Filipino’s list of most despised outputs of the Philippine Congress. It
is therefore not surprising to see that the abolition of the pork
barrel is raised every budget season, during periods of fiscal stress,
and in every crisis where the actions of politicians do not meet public
expectations.

In the current debate on the fiscal crisis, the President has again
called on legislators to reduce their pork barrel allocation to fix the
gargantuan budget deficit (which was approximately P200B in 2003).
Senator Ping Lacson has given up his pork while at least three other
senators promised to give up their pork if their colleagues do the
same. Members of Congress have been cool to the proposal but will find it difficult to resist at least a cut in their current pork barrel
allocation.

The Shortcut to Perdition

I love pork barrel. It keeps the power to spend taxes in the hands of all instead of one. It’s democracy in action.

One hallmark of absolute rule is the possession by one individual of
the exclusive power to tax and spend. Once this awesome power is given to or taken by one individual, a revolution is the only way to take it back so the Constitution, wisely, entrusted this power to Congress, not to the President.