by JAILEEN F. JIMENO and KAROL ANNE M. ILAGAN

IF THIS country were a family, it is unhealthy, lacking in education and employment opportunities, is deep in debt and spends its limited budget on the wrong things.

	[photo by Karol Ilagan]

This is despite the fact that the head of this household called the Philippines is someone whose expertise is economics.

Top financial experts also say things are bound to get worse before they get better. They warn of a "perfect economic storm" in the horizon. Much like a house built on shaky ground, the country’s economy is bound to “collapse come a typhoon,” says University of the Philippines economics professor Ernesto Pernia.

For sure, the Arroyo administration has pointed to the global recession as a major reason for the country’s own economic slowdown. But Rosario Bella Guzman, executive editor of the non-profit group IBON Foundation Inc., notes, “The oil price hike, rice crisis, and power rates increase — these are not new. What is new is that these are happening all at the same time in the context of record joblessness, worsening poverty, and political killings.”

Pernia, meanwhile, comments, “To be objective, the global crisis is affecting everybody, but the adverse effects vary according to the strength of the economy of the country. Countries like Thailand, Malaysia, Indonesia, and Vietnam — because their economies have grown strong — are less adversely affected. They are able to cushion the impacts better. But the case is different in a country that has a weak economy such as that of the Philippines.”

Even former economic planning secretary Solita ‘Winnie’ Monsod, who is known to sometimes offer kind words about President Gloria Macapagal-Arroyo’s economic policies, says, "If there's anything I have against her (Arroyo), aside from her political moves, is that from 1997 to 2006, poverty went up, and she was president for six of those nine years."

Indeed, the number of poor Filipinos has increased from 30 out of 100 in 2003, to 33 per 100 in 2006. This translates to 27.6 million poor Filipinos who have little or no resources to ride out the turbulence ahead. The real number may even be much higher, since the homeless — among them the pushcart-dwelling masses — are not counted in the government's poverty mapping.

Other experts also say that while the coming economic storm has long been anticipated and not just arising from current conditions, it has been made more potent by the Arroyo government’s wrong priorities in the last seven years.

ARROYO SPENDS LESS FOR SOCIAL SERVICES

Mapping the spending habits of five administrations since that of Ferdinand Marcos, former budget secretary Benjamin Diokno reveals the Arroyo administration has been spending less for social services as a percentage of the gross national product (GDP) compared to its predecessors. Social services include education, health, land distribution, housing, and subsidy to local government units (LGUs), and other social services.

Recently, Diokno, who has gone back to teaching economics at UP, notes that while the share of social services against total government has been increasing, support for this sector as percentage of GDP spending has dropped to 5.3 percent under the Arroyo administration, from an all-time high of 6.4 percent during the Estrada presidency.

Under the Aquino government, says Diokno, education received a high of 65 percent share of social services. But he says the figure has shrunk, and points out, “In fact, under Arroyo’s watch, from 2001 to 2007, it slumped to a historic low of 53 percent.”

	[photo by Isa Lorenzo]

By contrast, the Arroyo government’s spending has seen an increase on debt payments, wages and salaries of its employees, and subsidies to local government units. This means the budget has become so lopsided that it no longer supports the development of the nation's human capital, says Diokno.

Arroyo's own economic adviser, Albay Gov. Jose Ma. Salceda, recently admitted in an interview with local cable channel ANC that the current budget is non-responsive to the fiscal problems that have emerged. "The budget is really behind,” he said, “and it will be tough to adjust."

Monsod explains that in absolute number, the Arroyo administration has been increasing its budget for health and education and other social services. It's just that when computed on a per capita or per person basis, the amount becomes too small to decently support the growing number of Filipinos.

"The population, that's a big problem," says Monsod. "It makes it more difficult for us because the number of people sharing the pie is getting larger and larger.” She laments that the government's population policy has been mired in debate between the Roman Catholic Church and various groups.

Yet in her most recent State of the Nation Address, President Arroyo said that the population growth rate had slowed to 2.04 percent from 2.36 percent, which she credited to her promotion of family planning and “female education” referring to reproductive health.

She also assured the nation that rice production since 2000 has gone up 4.07 percent a year, "twice the population growth rate."

This begs the question why the Philippines has degenerated into one of the world’s biggest net rice importers.