Philippines: Doing Better Than The Neighbours?


Dr Mark Turner

While the Philippine economy has been badly hit by the Asian financial crisis it is at least still on track to grow in 1998. The government is sticking to its target of between 2 and 3 per cent growth of GNP but the IMF is urging a more 'realistic' figure of 1 per cent largely due to falls in agricultural production because of the El Nino. A marginal slowing of the inflation rate has also given government some heart - the annual rate down to 10.5 per cent in August from 10.7 per cent in July. Even second quarter contraction of the GNP by 0.7 per cent was played down by the government and translated into a 'World Bank bullish on RP' headline in a leading Manila daily. But with bad loans rising, more workers being retrenched and the possibility of recession the government will need to do a lot more than simply 'talk up' the economy. Meanwhile President Estrada has been settling into his new post. In Congress, desertions from the opposition have given Estrada's party, the Lapian ng Masang Pilipino (LAMP - Party of the Filipino Masses), a substantial majority. The loyalty of this majority will be severely tested if the President pushes through with his plans to scrap 'pork barrel' funding. These are the funds allocated to the individual Congressional representatives for projects in their municipalities. President Ramos actually increased the quantity of pork in the barrel to ensure the passage of his legislation. President Estrada could risk policy-making gridlock from an obstructive Congress if he attempts to remove these funds from the personal control of Congressional recipients. The President has attracted criticism for his perceived rehabilitation of former Marcos cronies and the promotion of their interests. Eduardo Cojuangco, one of Estrada's principal financial backers, is the most obvious case. He has begun to recoup wealth confiscated by the Presidential Commission on Good Government (PCGG) on the grounds that it had been obtained illegally during the Marcos time. His return to the giant San Miguel Corporation as Chair of the Board is the most dramatic example of this process. Meanwhile it is reported that the President is set to ask Congress to abolish the PGCC which had been established by President Aquino to recover the ill-gotten gains of the Marcoses and their cronies. Some appointments have also raised eyebrows and led to allegations of 'rampant political patronage'. For example, the 31-year old daughter of the President's electoral strategist and fund-raiser has been appointed to the Executive Board of the Asian Development Bank. The position has normally been reserved for respected technocrats, with vastly more experience and superior qualifications. Disquiet and tragedy have come from the President's populist gesture of the weekly, Saturday 'people's day' at the presidential palace. The poor have flocked to the palace to petition for Presidential favours - for medical bills, minibuses, housing, legal assistance and small business. On Saturday 22 August the queuing thousands stampeded after the gates were opened. Two people were killed and many injured. Critics say that this occurred because the President is trying to run the country in the same way that he ran the municipality of San Juan when he was mayor. A President, they say, should not be dispensing such personalised patronage. The overall effect may be minimal, but it raises false hopes which might eventually turn to anger if the masses who voted for Estrada feel that they are not receiving what was promised to them.

WATCHPOINT: How will the President balance liberalisation and pro-poor initiatives?


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