A debate has been raging over the causes and extent of the fiscal crisis gripping the Philippines. It began when eleven professors from the University of the Philippines School of Economics released the report, “The Deepening Crisis: The Real Score on Deficits and the Public Debt”. It drew attention to the declining state of the economy in the wake of the growing public sector deficit and rising debt. The public debate that ensued touched on critical questions: Is the crisis real? Is it looming or is the country already in the middle of it? And if so, what caused the crisis and how can we get ourselves out of it?
The UP paper attributed the crisis to falling government revenue including tax collection and huge losses incurred by government owned and controlled corporations (GOCC). A number of proposals from government, under the advice of the newly created Economic Managers Group, have been put on the table. These include earning revenues through improved tax laws, belt tightening measures and “slicing the pork” from legislators’ budgets.
In response, Walden Bello of Focus on the Global South and Lidy Nacpil, and Ana Maria Nemenzo of the Freedom from Debt Coalition published their critique to the much talked about UPSE report in the Philippine Daily Inquirer. (available at http://www.focusweb.org/philippines/html/Article284.html). This article called the UP report overdue, selective and not daring enough. “This report should have come out before the election campaign,” argue the authors, “Then it could probably have acted as a brake on the administration spending its way to victory in the May 10 elections—a fact underlined by the sharp P7.8 billion rise in government expenditure in April compared to the figure for April 2003.”
Bello et al assert that the UPSE report is biased and selective: “It fails to point out that the unilateral liberalization program initiated by Ramos’ technocrats made it more difficult for succeeding administrations to balance the budget. Why is such a major cause of significantly reduced revenue completely ignored by the UPSE report? Can it be that the reason lies in the ideological bias of some of the authors, who were uncritical supporters of the program of unilateral trade liberalization?” Finally the critique also pointed out a lack of courage in addressing the issue of public debt: “The truth of the matter is that the main item that has busted and will always bust any attempt at fiscal alleviation, much less balance, is the never ending and rising payments to foreign creditors.”
The September 19, 2004 issue of the Philippine Daily Inquirer featured a response to the critique of Walden Bello, Lidy Nacpil, and Ana Maria Nemenzo on the UPSE report. The response, entitled “The Bello, et al critique: Biased and Economically Unsound”, was penned by six Phd students of the UP School of Economics (available at http://news.inq7.net/opinion/index.php?index=1&col=&story_id=11939). Their critique questioned the assertion made by Bello et al that the unilateral tariff reduction program is partly to blame for the decline in government revenues.
Continuing the debate, Bello, Nacpil, and Nemenzo came out with their own response. Entitled “Contra Factum non esse disputandum : Reply to the UP School of Economics on the Fiscal Crisis” (available at http://www.focusweb.org/philippines/html/Article286.html), it was again published in the Philippine Daily Inquirer .
The debate has not been limited to these exchanges. The UP 11 paper (as the report has been called) has triggered a number of public forums and discussions organized by various groups from political parties to trade unions and reinvigorated the debate not just on the fiscal crisis but on a whole range of economic policies particularly on trade and debt.
