, JULY 3, 2011 (TRIBUNE) By Charlie V. Manalo - The former budget secretary of ex-President Fidel V. Ramos yesterday assessed the first year of the administration of President Aquino as rich in intention but wanting in results.

At the weekly Kapihan sa Annabel’s, former Budget Secretary Salvador “Jun” Enriquez told reporters that if he would rate the Aquino administration, he would give it a passing grade higher than that of the previous three administrations, Ramos, Joseph Estrada and Gloria Arroyo “in terms of intentions” to govern the country successfully.

However, Enriquez clarified that intentions do not translate into a successful leadership.

“These intentions need to bear fruit,” said Enriquez. “Otherwise, these intentions mean nothing,” he said.

Arroyo’s former Justice Secretary Raul Gonzalez, however, gave Aquino a failing grade after one year in office.

“I have been a professor in many universities. As a professor, I would give him a conditional 74 grade,” Gonzalez said.

In the academe, while a grade of 74 is considered conditional, it is still a failing mark.

Gonzalez stressed he is giving Aquino a failing mark as he had virtually accomplished nothing in his one year in office as President.

“All he had done was to attack and blame the previous administration,” Gonzalez said. “Understandably, he has to do this to cover up for his shortcomings as he hasn’t accomplished anything yet after one year in office.”

“He is following the adage, ‘Offense

is the best defense,’” the former Justice Secretary noted.

Lawyer Jess Santos, president of the National Association of Lawyers for Justice and Peace, said that after one year in office, Aquino’s “daang matuwid” has yet to take off.

“Where is this daang matuwid taking us,” said Santos. “After one year in office, all he has done is to rescind and review contracts as all contract entered by the previous administration is anomalous.”

“Up to now, no concrete projects of this administration has taken off,” he added.

All three panelists however agreed that for Aquino to succeed, he should start unloading his excess baggage in his Cabinet.

“He should start sacking some of his men including (Asec Virginia) Torres along wth the others whom Justice Secretary Leila de Lima found culpable for wrongdoings,” said Gonzales.

The Palace continued to trumpet supposed improvements in the economy and the fiscal situation which it said resulted in a string of credit upgrades. Enhanced fundamentals and stronger external payments position has resulted to, among others, four positive ratings action for the Philippines within the first year of the Aquino administration, according to a government news wire service.

However, no one can discount that economic reform initiatives by the current administration has enabled the government to solidify ratings agencies’ and investors’ confidence on the resiliency of the economy, it added.

These upgrades are expected to bring in more foreign investments to the country due to the weak recovery of the US economy and the debt crisis in Europe.

Also, these are very much welcomed by the country’s Finance officials since these will open more funding opportunities for the country.

President Aquino, it said, started his term through a zero-budgeting strategy and implemented measures to improve revenue collection to have the necessary funds for its programs.

Fitch Ratings recently upgraded one notch higher its long-term foreign currency issuer default rating (IDR) on the Philippines to “BB+” from “BB-“, which made the country a notch away from investment grade, after citing the government’s fiscal consolidation and strong external position.

It also upgraded to “BBB-“, an investment grade, from “BB+” the country’s long-term local currency IDR and the country ceiling. Outlook on these ratings is “stable”. IDR on the country’s short-term foreign currency was affirmed at ‘B’.

“The upgrade reflects progress on fiscal consolidation against a track record of macro stability, broadly favorable economic prospects and strengthening external finances,” Fitch’s Asia-Pacific Sovereigns team head Andrew Colquhoun said in a statement.

The ratings agency projects the national government (NG) to post a budget gap of three percent of gross domestic product (GDP) this year from 3.7 percent in 2010 “testifying to broadly disciplined fiscal management by the Aquino administration since it took office at end-June 2010.”

Efforts to improve revenue collection was noted after this expanded by 18 percent year-on-year as of last April against the nominal gross domestic product (GDP) growth of 9.3 percent in the first quarter this year.

While as of last May, revenues rose by 16.30 percent after this totalled to P 581.51 billion from year-ago’s P500 billion.

“(This) may point to some early success in the authorities’ efforts to improve tax compliance, a long-standing credit weakness,” the ratings agency said, citing that revenues account to 14.2 percent of GDP in 2010.

In the first four months of this year, the government achieved a P61 million budget surplus, a reversal from the P131.8 billion deficit in the same period in 2010. Surplus for last April alone reached P26.3 billion, 910.3 percent higher than the P2.6 billion last year and, so far, the highest that the NG posted in the last 25 years.

On the other hand, as of last May, expenditures posted a lower drop after it registered at 10.73 percent year-on-year to P 591.04 over the P662.12 billion same period last year, thus, deficit in the first five months this year stood at P9.54 billion, 94.11 percent lower than year-ago’s P162.11 billion.

Relatively, Fitch said continued rise in the country’s current account surplus since 2003 “underpins steady strengthening in the Philippines’ external finances.”

The Bangko Sentral ng Pilipinas (BSP) recently reported that the country’s current account surplus in the first three months of this year totalled to $933 million, lower year-on-year but still accounts to 1.8 percent of GDP.

Also, the country’s gross international reserves (GIR) rose to another record-high of $68.8 billion in the first five months of this year on back of central bank’s foreign exchange operations and income from investments abroad.

At this level, the dollar reserves is enough to cover 10.6 months worth of imports of goods and payments of services and income and is also equivalent to 10.9 times the country’s short-term external debt based on original maturity and six times based on residual maturity, with the latter defined by the central bank as the “outstanding external debt with original maturity of one year or less, plus principal payments on medium- and long-term loans of the public and private sectors falling due within the next 12 months.”

The country’s dollar reserves, which is the total foreign exchange inflows into a country last May grew by 44.2 percent against year-ago’s $47.7 billion, boosted by the 49.9 percent jump in central bank’s income from investments abroad as well as the 13.8 percent rise in gold holdings.

In the first five months of this year, central bank’s earnings from investments abroad totalled to $59.2 billion while its gold holdings reached $7.59 billion.

Its income from foreign exchange operations rose by 23.4 percent to US$ 374.72 million during the same period compared to the $303.71 million same period last year.

Monetary officials expect GIR to hit another record level of $70 billion this year and $75 billion in 2012.

The dollar reserves continues to boost the country’s balance of payments (BOP) position, which as of last May registered a $4.8 billion surplus, a 78 percent expansion against year-ago’s $2.7 billion surplus.

The BSP attributed the continued accumulation of surplus in the BOP, which is the difference of foreign exchange inflows and outflows of a country in a certain period, to the foreign exchange inflows from foreign portfolio investments, merchandise exports and OFW (Overseas Filipino Workers’) remittances.

Central bank officials project a $6.7 billion BOP surplus for the country this year and US$ 4.4 billion in 2012. Last year, the BOP surplus amounted to US$ 14.4 billion on account of the robust remittances, high earnings of the business process outsourcing (BPO) sector, sustained export growth and strong capital flows.

Remittances is expected to grow by seven percent this year from last year’s US$ 18.76 billion. The projection was lowered from eight percent after monetary officials took into account the political tensions in the Middle East and North African (MENA) states as well as the disasters in Japan.

The improvement in fundamentals has also positively resulted in the capital inflows with the foreign portfolio investments posting a US$ 2.3 billion net inflow as of last June 18.

The net inflow of hot money, dubbed on account of the speed it comes in and out of the economy, at the end of the third week of June, is more than thrice the US$ 696.52 million in the same period in 2010.

Total inflows as of last June 18 amounted to US$ 8.57 billion, more than twice the US$ 4.08 billion in the same period last year while total outflows is also higher year-on-year after it reached US$ 6.28 billion from the US$ 3.38 billion in 2010.

Fitch said “the economy (Philippines) became a net external creditor in 2009 while the sovereign’s net foreign asset position of 11 percent of GDP at end-2010 is another strength, compared with a ‘BB’ median net debt position of about 3 percent of GDP.”

It also cited monetary officials’ efforts to ensure that monetary policy would remain supportive of growth, which, in turn, was another factor in attaining the ratings upgrade.

BSP Governor Amando Tetangco Jr. said the country’s “strengthening credit profile continues to be internationally recognized by both markets and the rating agencies” with the recent Fitch action “a clear acknowledgement of the country’s improving macroeconomic fundamentals.”

He stressed that BSP would “continue to adopt appropriate monetary policy that will keep prices stable while remaining supportive of the country’s growth targets.”

“The BSP will also remain resolute in effectively managing the country’s external position, which has been providing the economy a healthy buffer against external shocks, to ensure continuing macroeconomic stability,” he added.

Also, BSP Deputy Governor Diwa Guinigundo said further improvement in the country’s fiscal position will bring in more advantages like another ratings upgrade.

“If the fiscal position will continue to improve and the macroeconomy, particularly the external payments position, remains strong, I think we can expect a further upgrade,” he said.

Before this ratings action, Standard and Poor’s (S&P) upgraded by a notch higher last November its long-term foreign currency sovereign credit rating to “BB”, two notches below investment grade, with stable outlook from “BB-/stable outlook” due mainly to the increasing dollar reserves of the country as well as the improving growth prospects.

Also, Moody’s Investors Service changed its rating outlook on the Philippines to positive from stable last January on back of the domestic economy’s resiliency.

This month, Moody’s also upgraded a notch higher to “Ba2” with “Stable” outlook its credit rating on the country.

Finance Secretary Cesar Purisima said the ratings upgrade made the country “one notch away from our goal of investment grade and we will strive to attain that at the soonest possible time.”

He stressed that “it is encouraging to see the rating agencies acknowledge the improvements we have initiated to strengthen our fiscal position.”

“The Aquino administration will continue to push for more reforms that promote fiscal sustainability and translate this to inclusive growth toward the fulfillment of President Aquino’s Social Contract to the Filipino people,” he said.

“This is also our commitment to our investors – local and foreign alike – who have chosen to partner with us in making the lives of each and every Filipino better. We shall not waver in our commitment and shall work hard to make this country “the investment site of choice,” he added.

Also, Budget and Management Secretary Florencio Abad said prudent expenditure along with better revenue collection measures paved the way for the Aquino administration to bring the country to where it is right now.

He admitted that spending is lower year-on-year even as they have frontloaded the funds in the first quarter this year because of, among others, better management of resources, unlike before when funds are disbursed even without being sure that the money is really being used to where it is intended to.

He said the President is really focused on achieving his goals as stated in his Social Contract to the people.


'Instant gratification' BABE'S EYE VIEW By Babe Romualdez (The Philippine Star) Updated July 03, 2011 12:00 AM

After one year in office, opinion is diverse over the performance of President Noynoy Aquino with the majority still supportive and hopeful that things will get better. Of course, as expected, the opposition and the left gave P-Noy a failing mark. Most people who expressed dissatisfaction are more often than not looking for “instant gratification.” The fact of the matter is, there is no immediate solution to a lot of convoluted (or in Tagalog, “buhol-buhol”) decades-old problems we have. There is no such thing as a quick fix, so we all have to exercise “patience” which in fact is a virtue.

During our private lunch last Thursday at Malacañang with the President together with Finance Secretary Cesar Purisima, Trade Secretary Greg Domingo and selected businessmen, President Noy seemed more confident about his first year in office and not concerned too much about some people’s assessment that nothing, or not enough, has been done by his administration over the past year. He seemed a bit frustrated however with the slow pace on some of his administration’s priority projects.

While there is perception that the administration might have been sidetracked by a number of so-called missteps at the onset, P-Noy thinks that for the coming year, things will move faster with the lower sector of society feeling the positive effects on a wider scale. No doubt he sees his campaign slogan of “kung walang corrupt, walang mahirap” coming into fruition, reiterating that he will not stop going after corrupt government officials past and present.

P-Noy talked about the crooked system that has spawned corruption and exacerbated the people’s problems like housing, security, poverty. One thing is clear the system really needs to be overhauled.

In fact, I asked P-Noy if he had any intention of amending some of the economic provisions in the Constitution in order to make the Philippines more investment friendly, but he did not seem to be too keen about it.

He said that he is “not convinced” that something like this is a priority, feeling that it’s just a matter of giving the right incentives and minimizing, if not eradicating corruption for business to flourish.

With due respect to the President, I don’t agree.

Admittedly, the economy is doing relatively better than normal in the past couple of years, with credit ratings firms like Standard & Poor’s, Fitch and Moody’s upgrading the Philippines’ ratings. All these gains could turn to nothing if the Philippines develops an unfavorable reputation as an unreliable business destination, with rules getting changed suddenly.

And as I pointed out to the President, the recent ruling of the Supreme Court directing the SEC to investigate PLDT shareholders’ possible violation of the Constitution is a clear indication on the Charter’s vagueness and/or its over protectionist provisions.

As PLDT chairman Manny Pangilinan pointed out the sudden change in determining the 60-40 ownership provision is tantamount to “economic suicide,” and could cause a selling frenzy, not to mention capital flight from foreign investors.

If we really want to have lasting and meaningful change, then a systems check is necessary. It’s like an old car that’s beginning to sputter, and the time has probably come to see if an overhaul is needed. And even then, an overhaul may not even be the right solution because what we may eventually need is a “new car” that will run well and follow the “straight path.” In the case of P-Noy and this country, it is evident that a new car with a much bigger engine is necessary considering that the baggage load is now running at 101,833,938 Filipinos, according to CIA World Factbook population figures.

No one will argue that there are so many things that are not working well with the present system, like Constitutional provisions and Republic Acts that virtually allow anyone to file frivolous and whimsical cases against public officials, in effect discouraging good and competent people from joining government. My brother who was Erap Estrada’s former Health Secretary fought for cheaper medicines to be made available to Filipinos, only to end up having to fight big lobby groups who filed frivolous administrative cases against him.

There is currently this controversy regarding Justice Secretary Leila de Lima’s revelations about so-called new witnesses in the Vizconde murders which many people believe undermines the Supreme Court decision acquitting Hubert Webb and his co-accused. Raul Rabe, who was our Ambassador to the US when the case was ongoing, said he himself was one of those who got confirmation that Hubert Webb was in fact really in the US when the Vizconde murders happened. So now the public is confused.

No one questions the genuine desire of P-Noy to improve the lives of Filipinos and his sincerity in stamping out corruption in government, and he believes he can reach this goal by treading the straight and narrow path.

But even straight roads can sometimes be littered with potholes, humps and bumps that could cause an old car to break down along the way and derail the driver from reaching his destination much like the old system with its infirmities that often derail our country’s progress.

We should all know by now that there is no such thing as a quick fix to solve our country’s problems but we sure as hell have to start somewhere.

For as long as P-Noy continues along the “straight path” then by all means we should be supportive of his administration. After all is said and done, and no matter what our political leanings are, there is only one Philippines and it’s the only country we’ve got.


CHICO IBARRA WROTE: No doubt we have to tread the straight and narrow path as envisioned by our fearless leader. After a year in office however we found nothing in this deuced rut, and we are approaching the bend I am afraid where the best option is to make a sharp U- turn to get back to the main road. Mr. Pnoy is bent in bringing this nation to Valhalla with his blinders on with a confused people in tow. All night we have been lost. Please show me the next midnight train to EDSA.

Chief News Editor: Sol Jose Vanzi

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