Year-ender II: Economic-political bondage

CONSUMERS DEMAND!
Herman Tiu Laurel
12/26/2011-1/1/2012



In part one of our year-ender, we discussed the role of the oligarchy in dragging our economy down. We pointed out how various Big Business oligarchs engage in the piracy of the nation’s public utilities and infrastructure assets or projects, then later use these to plunder the nation. We also touched on the way they are doing this in cahoots with elements of the international financial mafia. Just think of the MRT deal between the Ayalas-Sobrepeñas-Agustines with Goldman Sachs that cost $800 million of government bank money to repurchase--only to be privatized again. And that’s just one of the many examples.

In this “Year-ender II,” we will focus on the conspiracy between the local ruling elite with the Western financial overlords to swindle our economy through perpetual debt bondage. First, let us underscore the fact that despite $76 billion in Gross International Reserves (GIR) sitting in the Bangko Sentral ng Pilipinas (BSP), enough to pay off our entire $60-billion foreign debt, annual debt service still eats up P800 million of our budget. Besides this, another anomaly lies in the dormant Special Deposit Account (SDA) of government, amounting to at least P1.7 trillion, which is supposed to fund domestic development.

However, despite all the financial resources now available to us, the BSP has even scheduled $4 billion in new borrowings for 2012. The situation is so distressing that even conservative business and academic sectors have now called for the wipe-out of our debt to finance our own development.

On the subject of the SDA, Marvin Fausto, president of the Trust Officers Association of the Philippines, said on Nov. 3, “(The money parked in SDA facilities) should instead be channeled to funding needs, like in infrastructure projects. We need investments. (The money in SDAs) is enough to spur (further) growth.” Victor Abola, senior economist at the University of Asia and the Pacific, whom I seldom agree with but do in this case, also said that SDAs are a “waste of resources” and the “BSP should lower interest rates for SDAs to free up more funds, from the present 4 percent to 3 percent.”

As for the country’s international reserves, we have an Oct. 12 report from Abigail Ho about what one of our more enlightened political leaders said: “Binay urges gov’t to use gross int’l reserves for dev’t projects…" Vice president Jejomar Binay is urging the national government to tap its $75-billion gross international reserves to fund development projects and open the door to more local public borrowing. In a speech before members of the Philippine Chamber of Commerce and Industry on Wednesday, he said the country’s large GIR would be a viable source of funds for projects that would promote social and economic development. ‘If the national government could be persuaded to utilize its large gross international reserves… for its development projects, the (public-private partnership) could open up in various areas, giving a big boost to business activity nationwide… This could also shift the source of public borrowing from foreign financial institutions to the central bank, which could save the government from the rise and fall of the US dollar.’

“’I will ask (PCCI) to join me in asking the President to consider using our large dollar reserve for development, and to confine public borrowing to local sources… According to the Bureau of the Treasury, 58 percent, or P2.736 trillion, of the country’s total outstanding debt was secured from domestic lenders… The country’s foreign currency debt, which accounted for 42 percent of the total, stood at P2.01 trillion, booked in US dollar, euro, and yen.’”

You see, while we seek to get rid of our foreign debt, the domestic debt we can live with for a while--one problem at a time. Ultimately, I am for nationalizing all banking functions as all credit is backed up by the people’s taxes anyway; but Vice-President Binay’s position is already the maximum that one can hope for under the present situation, which would be a game changer for the Philippine economy. With an immediate medium-term turnaround that can be expected from such an action, the Philippines will surge ahead in Asean within five years.

How important is it to break free of debt? Argentina experienced a dramatic reversal of fortunes since its debt default in 2001 to become one of the most dynamic economies in Latin America, with growth rates that have averaged 8.5% from 2003 to 2010 (way above the –14% it sustained after defaulting in 2002).

Although we don’t need to default, we just have to substantially pay off our debt and invest in our own development projects without borrowing any further. For sure, this will push Philippine growth rates beyond what Argentina had achieved.

It is thus imperative that we begin pump priming our economy as export and OFW markets dwindle in the crisis-stricken world. Already, projection for the Philippines’ 2012 GDP (Gross Domestic Product) is a dismal 5%, a far cry from the rosy projection of 7% and above, while World Bank estimate of 4.2% for 2011 varies from government’s projection of 7 to 8%.

Sadly, we are kept at this worse-than-expected level of economic growth due to the total lack of economic and financial independence (or imagination) of Malacañang and its finance managers.

As 2011 ends and 2012 begins, we call on our readers to join our nationalist economic movement in clamoring for a militant national financial and economic policy that junks economic bondage to regain our financial sovereignty and independence. Let us free our nation so that we can plan our own economy according to the needs of the people, as well as our collective vision of prosperity and stability.

Keep following Dyaryo OpinYon and it economic section to keep abreast of this struggle, in order to bring about the glory of the Philippine economy as it had in the 1950s--when the Filipino First Policy guided the nation toward the beginning of industrialization and economic sovereignty.

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