'ECONOMIC DEATH' FOR RP IN 2 YEARS WITHOUT NEW TAXES - PRESIDENT ARROYO
MANILA, September 21, 2004 (STAR) (AFP) - The Philippines risks a "painful economic death" within two years unless Congress and the people agree to raise taxes, President Gloria Arroyo warned Tuesday.
In a statement printed in the Philippine Star newspaper, the Filipino leader urged the country to "suffer the pain now and experience the gains two years hence (rather) than postpone the pain and die a painful economic death two years from now."
Popular opposition is posing a key stumbling block to Arroyo's bid to balance the national budget through increased taxes after she warned that the government faced a potential debt default.
Arroyo said the government needed 180 billion pesos (3.2 billion US dollars) more in annual revenues to ease the burden on government debt, which she said stood at 71 percent of gross domestic product -- the third highest in Asia.
She has asked Congress to pass a set of tax laws that would raise at least 80 billion pesos a year.
While the economy grew at a respectable 6.2 percent clip in the first half and the government has not defaulted on its obligations, the situation "can deteriorate as fast as we are building our precious and hard-earned gains," Arroyo said.
Weak revenues and mounting external debt are creating "a widening chasm that would make it nearly impossible for government to provide quality services to our people," she said.
"If we remain in denial and refuse to take our situation seriously, the world may just impose the truth upon us. When that time comes, the Philippines would be the financial pariah of the world," she added.
Fitch Ratings warned on Monday that the Philippines risked a sovereign credit downgrade if Congress failed to pass any of the tax measures by the end of the year. Manila's securities are two notches below investment grade.
A survey by Manila-based Pulse Asia polling organization last week found that 78 percent of Filipinos "see no need to impose new taxes as long as the government strengthens its tax collection efforts."
Arroyo said "the government cannot subsist on borrowed funds all the time," warning: "No one will be spared the pain and the shame of (a) mendicant nation shunned by its creditors."
Reported by: Sol Jose Vanzi
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