We will survive

We are facing today extra challenges in our personal and individual and collective lives as one race and nation. The times are not only changing but very challenging also. But as they say, change is the only constant in life.

As CPAs, we are financial managers, who play a crucial role, whether in private companies or public entities. Particularly nowadays when there is a growing clamor for accountability and transparency in governance. The whole public sector bureaucracy, from the highest official to the lowest government employee.

Government accountants serve as ‘protector and vanguard of financial and material resources of the government.’ And during these times when massive corruption in the government is a primary concern, the role of government accountants becomes even more crucial and important.

Thus, I have a bill pending in the Senate called ‘Magna Carta of Government Accountants’ or Senate Bill 763. Among others, the bill seeks to improve and promote the social and economic status, living and working conditions, terms of employment, profesional growth and career advancement of government accountants.

My proposed ‘Magna Carta for Government Accountants’ pushes for the exemption of government accountants from Section 12 of Republic Act (R.A.) 6758 or the ‘Compensation and Position Classification Act’ by providing them additional compensation and incentives such as subsistence allowance, longevity pay and compensation of injuries. Upon passage of the bill, government CPAs will be granted an automatic five percent increase in basic salary.

The public now demands for accountability and responsibility among private individuals as well as public servants. As CPAs we play a major role in ensuring that.

Filipinos are evaluating the performance of the government. Unlike before when politics and economics were the preoccupation of the movers and shakers in the corporate world only, these days, even the masses are as much interested in current events and transactions of the government as the top honchos of blue-chip companies.

Announcements of improvement in revenue collections or increase in the amount of foreign investments and other statistics do not matter that much to them.

Questions foremost in their minds are: Where would they get their next meal; how would they be able to pay their household bills; how can they continue sending their children to school; when would the increases in gasoline, fare and basic food items come to a stop?; how long can they continue to make both ends meet?

Indeed, like them, we should be more in synch with the realities of life.

We should also be asking these questions also: Has the quality of life of a majority of Filipinos improved at all? How many new jobs or employment opportunities have been created? Has the number of those living below the poverty line decreased at all? How many of those who graduated from high school this year were able to enroll in college? Or how many of those who finished grade school recently managed to start their secondary education?

Whatever happened to the sick, the homeless and the hungry? What is the condition prevailing in government hospitals? How effective and adequate is the low-cost housing programs of the government? When will so many squatter families in urban areas have lots of their own? Who will feed millions of malnourished children?

I raise these pointed questions not as a denunciation of the government that I am a part of. Rather, I pose such questions to emphasize the sense of urgency in addressing them.

Needless to say, the lack of money is a major cause of all our problems, or is it? Even if we should have all the resources available, our troubles will persist unless we have our priorities in place.

At this point, most of us know that our government is in dire financial situation. If it were a private company, it would have gone bankrupt already. Financially, we are not in a position to provide the most basic requirements of the people. One only has to go through the Philippines’ national budget to understand what I’m talking about.

On our national budget this year, 33 percent went straight to debt servicing. Only a negligible one percent was set aside for health services while education cornered 13 percent of our budget only. The same thing will happen in next year’s budget, around one-third of P344.4 billion of the 2006 budget will go straight to interest payments on foreign debts. Meanwhile, key departments of the government would be lucky to have minimal increases on their budget allocations.

Debt servicing continues to corner the bulk of the country’s yearly budget and revenues to the detriment of allotment for social services for the people. The health, education and social welfare sectors have to take a backseat to interest payments. Such a gross disparity in the division of the budgetary pie has become the norm in the design and management of the nation’s budget.

More government borrowings from both the local and international financial markets coupled with the depreciation in the value of the peso will simply mean an increase in the level of the total obligations of the public sector. As the government continues its borrowing spree, we see no reprieve in the near future. Additional borrowings can only make the situation worse.

We have to stop the vicious cycle. We cannot pass on to our children’s children a regime of continuous budgetary deficits and a worsening debt burden. They must be spared from such a bleak future.

We have to put our heads together in coming up with ways and means to improve our financial situation. We also have to look to consider what other countries in similar situations hav done. I refer in particular to Argentina and India.

Not too long ago, Argentina was severely shaken by the full impact of a colossal debt. And yet with a clear vision, a strong sense of purpose and an irrepressible passion to overcome the curse of profligacy, Argentina is now on the road to recovery.

We are too familiar with the typical images of poverty in the India of the recent past. But today, it is a major player not only in Asia’s economy and trade, but also in the global trading game.

Here in the Philippines, we perpetuate the culture of borrowing, of living beyond our means, of spending more than what we earn. To keep on borrowing to cover shortfalls in our earnings is downright suicidal unless there is a commensurate improvement in our overall productivity.

Like a bubble, our debt burden cannot be expanded without stretching the limits of endurance. The point at which the debt bubble will burst is much too close for comfort.

With one third of the budget scheduled for the payment of interests on government loans, what happens now if we include the amortization of the principal? According to the Department of Finance, combining interest payments and amortization would eat up at least 70 percent of the proposed 2006 budget.

We must pursue proactive and creative economic strategies. We must also scrutinize transactons and contracts that our government is entering into, for possible flaws or loopholes.

The perfect example of a highly questionable loan-funded project is the Bataan Nuclear Power Plant which has not been commissioned and, therefore, has not generated a single megawatt of energy for its intended beneficiaries. Unfortunately, we have paid so much in terms of interest costs. The regular interest payments go on to the prejudice of the nation.

Now more than ever, the policy of fiscal prudence must be practiced in every branch and unit of government both at the national and local levels. This requires a life of simplicity and austerity which is made more valid and real through authentic examples and not by means of empty pronouncements.

We also must usher a shift in the mindset of our countrymen.

We must encourage them to be more enterprising and entrepreneurial. We must broaden the base of entrepreneurs.

Early on, our children and students all over the country should pursue or finish their studies with the end-view of starting their own businesses.

This calls for a radical paradigm shift in the mindset of those in government as well. Entrepreneurs should get all the support and encouragement that they can get.

The challenges may be intensifying, the changes may be unceasing, but Filipinos have proven time and again that we are survivors.

(Speech delivered at the 27th annual national convention of the Government Association of Certified Public Accountants at the Rose Memorial Hall, Central Philippine University, Jaro, Iloilo City, on Oct. 19, 2005.)