Among foreign diplomats I talked to at a recent function at Speaker JDV’s house in honor of the Iranian Foreign Minister, they were amazed with the announcement of the President.
A diplomat (from a poor country) said but the Philippines is "rich", how can it be in a fiscal crisis? NEDA chief Romy Neri said it is partly true and partly false. The diplomat is right to be surprised why the President made the statement at all if the audience is the world because there are more countries in deep financial trouble than we are. A good example is the surprised diplomat, coming as he does, from a country not only economically troubled but with serious security problems after 9/11. Indeed, what country is not economically troubled given the world recession? It is a matter of degree.
I hope that the fourth annual international roadshow next month can address the ambivalence of the President’s statement when they talk to the bankers. Or will it be another junket? Its task is to spread the message that the country may have fiscal problems but it is striving to address them. HSBC PLC will be the global coordinator for Asia and Europe, and Citigroup and JP Morgan as coordinators for the US. The roadshow will cover Singapore, Hong Kong, London, Frankfurt, Zurich and Geneva and finally to Boston and New York.
On the other hand, the statement is true insofar as the mechanisms in the Philippines are not in place if we were to continue our lifestyle despite the threat of a more serious turn of events. We are already in fiscal crisis because of the huge deficit between what we earn and what we spend, there are still those who would not hear of spending less or earning more. Unfortunately words from the economists that the country might suffer an Argentina-type of debt crisis within the next three years was lifted out of context.
In a way ‘a fiscal crisis’ is what we need to jolt us out of our complacency so the President should not regret having made the warning. The Arroyo statement was meant for a Philippine audience. The trouble is it is no longer possible given instant communications to speak one language to Filipinos and another to the world. That is the reason for the confusion. As my daughter, CNN anchor Veronica told me from Hong Kong, "it got front page coverage in London’s Financial Times which is the bible for the investment community. That was the reaction from the outside world. We still have to know what its effect will be for the Filipino public that has become so cynical it will be interpreted as ‘politics as usual."
To her critics, she is just crying wolf, that she does not really mean what she says but is saying it to justify her actions in the coming days for new taxes, austerity measures for the politicians in the House and the Senate, whittling down the bureaucracy and so forth. It remains to be seen whether her statement will have any effect on the audience she wants to address seriously. All eyes are on politicians and government bureaucrats whether they will make the sacrifices they want ordinary people to make. Newspaper financial pages are not helping any with their own dire predictions without any thought that it can be self-fulfilling.
It remember what former Singapore Prime Minister Lee Kuan Yew said about his long conversations with Marcos in his biography. Lee said that he (Marcos) believed that having said something is the same as doing it. I know President Arroyo said it also in her state of the nation speech in the 13th Congress – "let’s just do it". Fine. But are we, as a nation, capable of moving from thought to action. That, I am afraid, is a fundamental problem that cannot be addressed by any roadshow.