Checkered legacy

A few minutes after Arroyo delivered her State of the Nation Address, someone on Facebook wrote how he liked what the President said. Almost immediately, friends came back asking if he was joking or simply being sarcastic.

Not having replied back, I assume the poor fellow must have been serious but just did not have the heart to openly defend his “impulsive” comment. Today, publicly praising the country’s chief executive is one of the hardest things to do, even if there is indeed something really worth praising.

It is very hard to begrudge the President for rattling off in almost bullet-point fashion her accomplishments since 2001 when she assumed the position – a time when the economy was reeling from a confidence crisis, and which paved the way for her predecessor’s reign to unceremoniously end.

Bright side

To be fair to the president, there are quite a number of accomplishments that would be difficult to refute. Who would dare ignore the fact that she has – and continues to deliver on the infrastructure projects promised in previous SONAs.

Roll-on, roll-off facilities are now interconnecting many provinces in an invigorated fashion, increasing not only the flow of goods and services but also domestic tourism. The same is true for major roads like the Tarlac-Subic highway and various seaports, tollways and bridges.

The country likewise posted uninterrupted growth for 33 quarters, even if during the first quarter of 2009, gross domestic product growth slowed to 0.4 percent from a year earlier. Correctly too, we are still one of the few countries that did not go into a recession as a result of the global financial crisis.

It is also true that the Philippine economy more than doubled its size from $76 billion to $186 billion during the last eight years, with the average GDP growth from 2001 to the first quarter of 2009 the highest in 43 years.

Moody’s upgrade

Of course, the recent credit rating upgrade given by Moody’s Investors Service on the Philippines did top her list of accomplishments. The rating improvement, the first in 12 years from Moody’s, came amid the slowest economic growth in a decade and what is appearing to be a record high budget deficit.

Moody’s upgrade, citing the country’s resilient financial sector, strong international reserves and a stable exchange rate, is a “realignment” of its rating on the Philippines with Standard & Poor’s. Both now agree on the verdict that we are just three notches below investment grade.

There are other achievements noteworthy of mentioning, including the passage and implementation of the expanded value added tax in 2005 as a painful measure to raise revenue collections. The measure has already yielded more than P70 billion.

Dark side

The opposite side of the checkered regime of GMA also contains a long list, this time of scandals and allegations of humongous corruption on large transactions and deals. Corruption at all levels of government was seen as pervasive so much so that Transparency International last year ranked our beloved country as 141st in a list of 180 countries.

Who can forget the alleged $2-million IMPSA bribe that surfaced at the start of the Arroyo regime which is now the subject of a court case; the Jose Pidal case; the NBN-ZTE deal which was shown as grossly overpriced with a “commission” of over 100 percent; the “fertilizer scam” and many others.

GMA emphasized during her last SONA that there is no proof that she personally profited from these corruption tainted transactions. However, the Filipino public that gave her a 30-percent negative trust rating believes otherwise.

The scandal list, on the other hand, was topped by the “Hello Garci” episode where allegations and charges of presidential interference clouded the 2004 election results. The backlash led to the famous “Hyatt 10” crisis which to the credit of the president and her faithful couturier was successfully defused.

Failing targets

Even in her long list of accomplishments, there is backsliding. For one, the impact of the past tax legislations has waned, if not been totally obliterated, by continued problems of corruption and inefficiency. Even during the early years of the expanded VAT, the Bureau of Internal Revenue continued to miss its targets.

This puts the country at risk of going back to the chronic fiscal shape it was in during the early years of Arroyo’s government, threatening to wipe off the gains that led to the hallmark 2007 performance as the economy expanded by its most in three decades.

The next twelve months

The greatest challenge now for Mrs. Arroyo, in what is expected to be her last year in office, is to make sure that the spending momentum is extended while the global economy recovers and at the same time reining in corruption in the BIR and Customs.

The government must catch up on revenue and spending that missed targets in the first half. In fact, June was the first month that the BIR topped its collections from a year earlier. Unfortunately, Customs continued to earn less than the previous year.

More work

The President has not categorically declared what she plans to do after her six-year term ends, something that is considered by some as crucial in charting the country’s future. Instead Arroyo enumerated another long list of projects that she says she intends to work on for the rest of her term, and which she called on Congress to support.

Among the notables in the list include amending the Commonwealth-era Public Service Law, creating a Department of ICT, extension of the Comprehensive Agrarian Reform Program, amending the Bangko Sentral ng Pilipinas charter, and even a Main Education Highway.

Of course, the toughest target she has committed to within the next 12 months will be imposing new taxes on alcohol and cigarettes to boost government’s revenue collection and generation efforts.

Let’s hope that the President can accomplish what her predecessors have failed to do in the face of continued lobbying by members of the tobacco and liquor industries. Otherwise, we’ll get this feeling that it’s still the same old story: the threat of a shakedown because elections are coming up.

Is the regime with checkered legacies finally coming to an end? Abangan and susunod na yugto.

Should you wish to share any insights, write me at Link Edge, 25^th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.