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Books on The Philippines
REPUBLICAN REFERENCE
Area (sq.km)
300,000
Population
84,619,974
Capital
Manila
Currency
Philippine peso (PHP)
President
Gloria
Macapagal-Arroyo
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Update No: 035 - (04/12/06)
Constitutional change continues to dominate the political
agenda despite a Supreme Court ruling denying "with finality" the
proposal to change the constitution by means of a people's initiative (this
issue was dealt with at length in our last report).
The Supreme Court ruling was handed down on October 25 and, as
expected the Sigaw ng Bayan (Clamour of the Nation) alliance and the Union of
Local Authorities of the Philippines asked the Supreme Court to reconsider its
decision. Again as expected this application was rejected by the Court. Perhaps,
the surprising aspect in the rejection was the speed with which the justices
deliberated. But with the vote being just 8-7 in favour of rejection (and with
the same ratio maintained in the final decision), time was of the essence. The
present Chief Justice is due to retire on December 6. Had the court ruled after
the event and with a new Chief appointed by the president, the vote could have
gone the other way.
Also surprising was the acrimonious response of House Speaker Mr. Jose de
Venecia to the decision. Basically Mr. de Venecia accused the justices of
forgetting that they "owed him" favours and asking why they did not
repay past favours by voting the way the government wanted. In one short breath,
that vent of spleen displayed the transactional nature of the debate. It is not
about consideration of issues on their merits. Rather it is all about calling in
favours to achieve political ends.
One has to worry about the future direction the Supreme Court may take. So far,
it is the one arm of government that has remained relatively untainted. That
could easily change.
The debate is far from over. Still the pro-administration
members of the lower chamber of Congress claim the "clamour of charter
change" and President Arroyo appears only too ready to accommodate them.
With the Senate by and large opposed to the idea of a unicameral assembly that
would result in its own abolition, the members of the lower house now appear to
be keen to go it alone and turn itself into a constituent assembly that would
deliberate and approve proposals to amend the Constitution to bring about a
unicameral parliamentary system in the Philippines after President Arroyo steps
down in 2010.
December 6, the same date as the opening of the ASEAN Summit meetings in Cebu,
has been targeted as the date for the assembly to convene. This may have been
done deliberately as a means of drawing attention away from the debate.
Part of the tactic of Malacañang Palace appears to be the
postponement, if not the outright abolition of the nationwide mid-term polls
scheduled for May 10 next year. Ostensibly this is to give legislators ample
time to complete the process of charter change although most people believe
President Arroyo to fear the poll result. Even with an announced Php1.27 billion
war chest most pundits believe that President Arroyo would be hard pressed to
win a decisive victory for her supporters and that a poor showing by her
supporters in the polls would almost certainly rebound on her presidency. The
other reason is probably that she wants to save her war chest for her to win the
campaign on charter change.
There things stand. The bulk of the people of the Philippines remain opposed to
changing the constitution - at least in the manner proposed which will only
serve to perpetuate the present power elite but in this vibrant democracy that
does not faze anyone. According to a recent poll, more than two-thirds of the
people would vote "no" if a plebiscite on charter change was held
tomorrow. But why should the will of the people stand in the way of the wants of
the political class? One thing is for sure, the debate next year will be long
and acrimonious and will do nothing to help grow the economy and bring in the
foreign investment needed.
Is the economy moving sideways?
Both the World Bank and the IMF have recently upgraded their outlook for the
economic performance of the Philippines.
Citing the country's improved fiscal performance, the recovery of agriculture
and exports and the slowing inflation because of softening world crude prices,
the bank projected a gross domestic product growth of 5.5 percent for the
country in 2006, up from its original forecast of 5.3 percent. Likewise, the
World Bank revised upward its 2007 growth estimate for the Philippines to 5.7
percent from 5.6 percent, despite the expected growth slowdown in major
economies such as China and Japan. This is in line with its regional forecast
for East Asian economies, which are expected to register their fifth consecutive
year of strong growth in 2006, back up by a substantial decline in poverty.
The International Monetary Fund (IMF) has taken the same tack
in raising its growth estimate for the Philippines for this year and next.
"The growth outlook has become more favourable," the IMF said in a
statement.
"The Philippines' growth prospects have improved and sentiment on the
Philippines is quite bullish. Exports are doing better and agriculture is
better," IMF head of mission Gordon James said.
The IMF now predicts that the Philippine economy would grow by 5.5 percent in
2006 and by 5.8 percent in 2007. "Exports are growing faster than expected
and the outlook for investment has improved. Raising growth further over the
medium term is key to substantially raising living standards and decisively
reducing poverty," it said. It also said it expected inflation to slow to
6.3 percent in 2006 and 4 percent in 2007, lower than its earlier forecasts of
6.7 percent for this year and 5 percent for next year. The IMF said inflation
continued to ease due to a stronger peso and lower oil prices.
On fiscal reforms, the IMF said while the government was
likely to beat this year's budget deficit goal of PhP125 billion (US$2.5
billion), or 2.1 percent of gross domestic product, authorities had to
accelerate tax administration reforms. This may prove to be a conservative call.
The Philippines incurred a budget deficit of PhP5.8 billion in October, which
was lower than expected, and the government now expects the full-year budget
shortfall to come well below the original forecast. With the latest monthly
deficit figure, Finance Secretary Margarito Teves said that he was confident
that the 2006 budget gap will hit a range of PhP105 billion to PhP115 billion,
or 1.7 percent of gross domestic product, significantly lower than the original
ceiling of PhP125 billion, or 2.1 percent of GDP.
Despite all of this positive news, the economy is sending out mixed signals.
According to the latest data manufacturing output in volume terms continues to
decline and in September 2006 was 8.3 percent below the level of a year ago.
This was well below the level for the second quarter, the figures for which were
updated yielding higher growth rates of 5.8% for GDP and 6.7% for GNP.
Gross domestic product or GDP rose by only 4.8 percent in the 3rd quarter, a
rate similar to that of a year ago. On the other hand, gross national product
rose by 5.8 percent as net factor income from abroad remained strong, up by
17.1%.
Despite the optimism of the business sector (business
confidence is at a five-year high according to reports) investments are failing
to keep pace with GDP growth. According to the National Economic and Development
Agency (NEDA) further reform aimed at improving the country's business climate
is needed if the contribution of investments to overall economic growth is to
improve. According to NED Director General, Romulo Neri, the investment to GDP
ratio has fallen to 14.5 percent from 19.5 percent recorded five years ago. The
GDP in 2005 stood roughly at Php5.3 trillion at current prices.
So has the Philippines turned the corner in 2006? At this stage the answer has
to be "probably not", the country's politicians are playing the same
old game and the economy is left playing second fiddle and never quite making
centre stage. "Muddling through" continues to be the best we can hope
for.
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