Lost in translation

Published September 15, 2021, 11:54 AM

by Milwida Guevara

Listening to the economic managers discuss the budget, was at the very least, uncomfortable.  The Department of Finance (DOF) says that the theme to recovery is fiscal discipline.  As explained, this means “keeping our deficit and debt ratios within reasonable levels.”  In the face of major corruption in spending taxpayers’ money, I was tempted to say, “Tell it to the marines.”  If I try to be more decent and poetic, I should quote Ralph Waldo Emerson, “What you do speaks so loudly that I cannot hear what you say.”

The stance of government to control the deficit underpins its economic recovery program.  And for good reasons according to the DOF.  It boasts of a BBB+ rating from Standard and Poor’s, which means our government has adequate capacity  to meet its financial commitments .  We can thus borrow funds at low interest rates. But a high credit rating seems to be a hollow measure, if not an inappropriate indicator of how government should perform.  I had always believed that the primary purpose of government is to serve the citizens, especially the poor—to see to it that everyone has equal access to justice, education, and health.

True to its word, government has been practicing prudent fiscal management.  The Bureau of Treasury reports that government has been under spending in the first semester of 2021.  Actual spending was lower by P233.35 billion   than what was planned.    Revenues were also higher than the target by P68.54 billion.  We cannot therefore but sympathize with our health workers whose benefits remain unpaid despite a reported budgetary surplus of P301.8 billion.   In the face of a budgetary surplus or revenues exceeding expenditures, there can be no reason why our frontliners are denied government’s support that they deserve.  Why are we also scrimping on giving more “ayudas” (help for the marginalized)?  The dots simply do not connect.

Another puzzle is the reported gains from the Tax reform measures of P134.7 billion in 2019.   Although it is a chore to look at the figures on government’s revenue collection from the website, I had to do it to better understand.  Prior to the tax reform, BIR’s collection increased by P205 billion from   2016 to 2017.   After the tax reforms were passed, tax revenues from 2017 to 2018 increased by a smaller amount of P179 billion.   Again, the dots do not connect.  The tax reforms should have resulted to a bigger increase in tax collection. But they did not!

We also need to look at the numbers in the reported growth of the economy. The 11.8% GDP growth in the first quarter of 2021 seems to indicate a dramatic performance of the economy.   But what appears to be a big leap is only a base effect, i.e. we are coming from a very low GDP base.  GDP contracted at a very low level of 17.0% in 2020 and any increase beyond that will appear significant.   But our GDP of P4.6 trillion is still below the 2018 GDP for the same period of P4.72 trillion. Our per capita GDP  of P42, 132 in 2021 is even lower than the per capita income of P46, 638 in 2020.  The outputs of all the other sectors such as exports, imports, private and business consumption are still below the 2020 and 2019 levels. 

With continuous belt tightening and a shoestring budget for vital sectors such as agriculture and health, where will the recovery be coming from?  It was reported that the Department of Agriculture was only given P72 billion compared to its request of 250 billion.  The PGH asked for P36.5 billion and was only allocated P20 billion.  The main testing center for Covid 19 is being given a budget that is P170 million lower that what it needs.

We are indeed lost in translation!

 
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