Analysis

Bearing the Brunt of the Fiscal Crisis

Technically speaking, every Filipino now owes the country’s international creditors some P41,000 ($731) and this amount is expected to increase further due to the President’s so-called “austerity measures.” This amount is outrageously bigger than the budget government is supposed to earmark for social services: only P0.43 per person in health, for instance, or P10 per schoolchild each year.

By Bobby Tuazon
Bulatlat  

In the face of a major fiscal crisis, the Macapagal-Arroyo government along with the reactionary Congress is to impose new tax measures that are bound to hurt the poor even more.

The government is now working desperately to ease its financial burden by negotiating for a new binge of foreign loans with the International Monetary Fund-World Bank. Foreign borrowings Macapagal-Arroyo may be able to acquire but only on condition – as the IMF monitoring mission had warned last June – that new tax measures are put in place, the privatization of GOCCs and deregulation plans accelerated and public spending drastically cut.

Technically speaking, every Filipino now owes the country’s international creditors some P41,000 ($731) and this amount is expected to increase further due to the President’s so-called “austerity measures.” This amount is outrageously bigger than the budget government is supposed to earmark for social services: only P0.43 per person in health, for instance, or P10 per schoolchild each year. Every amount taken away from every taxpayer for social service – a right that is guaranteed in the constitution - is added to the money that is used to pay foreign borrowings and other debts.

Aside from new and increased taxes slapped on every Filipino and drastic cuts in public spending (health, education and housing), higher inflationary trends are expected to develop as seen in current unmitigated hikes in the prices of fuel products, power and water rates that, in turn, have resulted in constant increases in the prices of basic commodities, transportation fares, and the like.

It is under Macapagal-Arroyo that saw unemployment figures soar – the highest in 50 years – yet the measures that government are now undertaking partly to pay its public debts will aggravate this labor condition. The privatization and commercialization of GOCCs along with public health institutions and state colleges and universities are being undertaken alongside the so-called “streamlining” of government bureaucracy which aims to cut the number of employees immediately by 30 percent. Again, it is the low-paid public employees who have become the sacrificial lambs while the “fat cats” in government and GOCCs are allowed to plunder the public coffers through scandalously big salaries and perks as well as graft and corruption.

Graft incidentally drains away 20 percent of the yearly budget and is one of the main culprits behind the monumental public debt.

Not new

The current fiscal crisis is not new as the country had suffered similar periods – in more recent history, during the Marcos and Ramos presidencies. The fiscal crisis, marked by a government’s inability to pay its public debts, is a symptom of the country’s economic crisis under a regime of semi-feudal and neo-colonial economy. Long subjected to and dependent on U.S. domination, the country’s economy has remained stagnant and is in chronic crisis, with every regime adopting onerous policies and monopoly-capitalist prescriptions only to bring the country deeper into the debt trap, worsening trade deficits, low production, unemployment, the immiserization of the peasant and working classes, the destruction of local productions and the downgrading of significant segments of the middle class.

What makes the current crisis qualitatively different however is that the government is now ruled by a president whose election has remained in question and whose attempts at reconciliation with the opposition elite have in the main proven to be futile. The Macapagal-Arroyo regime is skirting from its accountability by, in the first place, acknowledging that it is only the fiscal crisis that is problematic while insisting that the economy’s fundamentals are intact. It asserts that because of this, the solution therefore is more taxes and more economic reforms that are sure to be rammed through by the monopoly capitalists through the IMF-WB. But it cannot forever evade from its own responsibility in placing the fiscal crisis at its worse through the accumulation of big loans, cronyism as well as graft and corruption.

The business elite – who always passes on new economic burdens to the poor – will find their own interests affected especially with the worsening unavailability or scarcity dollars and foreign investment. With the Philippines increasingly a risk for foreign investment, the country’s international creditors ceasing to extend loans remains a threat to the local elite.

The poor are being asked to share even more their meager earnings through new taxes and increased prices even as government continues to deprive them of basic social services that are, in the first place, rightfully theirs. It is not the aggravation alone of the economic crisis that will bear heavily on the poor but also the grave political decisions that are being carried out that will hurt them even more. As the basic masses are aroused by the brutality of the economic conditions all forms of militancy that will rise from their ranks will be met with state repression and terrorism. It is no coincidence that the aggravation of the country’s economic woes has also seen the increasing use of coercive force against the people – as seen recently in the violent dispersal of protests by militant groups and at last week’s rally at the GSIS – and mounting human rights violations.

All these are taking place at the time when U.S. armed interventionism in the Philippines is heightening – underscoring once more the larger stakes that the United States has in the country. Certainly, a nation in turmoil that is expected to ensue within the next two years – assuming that the fiscal crisis worsens - is something that will alert the political radars of the United States. The role that the U.S. government will play in this so-called “crucial juncture” – to use Macapagal-Arroyo’s own term in aping the IMF mission – is something that will be worth watching. Bulatlat

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