Taking stock of the budget deficit

In a recent press conference at the Central Bank headquarters, Finance Secretary Margarito B. Teves, along with the government’s fiscal planners, discussed the nation’s current financial situation. According to Secretary Teves’ statistics, the government’s budget deficit widened to P53.4 billion as of September, due to the government’s increased social and infrastructure expenditures. While the deficit can be seen in a positive context (since majority of spending went to the government’s various projects), there is, nonetheless, a growing urgency to resolve the insufficiency.

One of the prominent moves to augment the budget is the sale of the government’s 40 percent stake in Petron Corporation, valued at $538.8 million. Critics insist that while the sale will produce a considerable profit, the Philippine National Oil Company valued its stake at P6.85 per share — right before shares closed at P5.90 — the more appropriate action would be to wait for an even greater stock appreciation. Taking stock (pun intended) of the situation, I think the more appropriate move will be to proceed with the sale. The additional funds will be an immediate boost to the budget and help improve the government’s fiscal position.

It doesn’t require a great leap of the imagination to relate these pressing concerns on the national level to our own personal finances. The media and economists are already confirming what we’ve gleaned from our daily transactions. Times are uncertain. Apart from dealing with our own private budget deficits, these trying times also require the proper use and management of our assets.

Take into account the recent challenges a friend and her family faced. The family was split on whether to sell their ancestral house located down south. One side of the family wanted to sell while market prices where still favorable; the other wanted to wait and bet on further growth.

After much contention, the side in favor of an immediate sale, held sway, citing the pressing need for liquidity amidst market uncertainty. In theory, the family could have bided its time and opted to sell the house when the property market experiences a further upswing. But these shaky times are not the appropriate occasion to take such a gamble. The family is now secure in its liquidity, no matter which direction the market sways. To quote a popular proverb: a bird in the hand is worth two in the bush.

With all that said, the government should cash in on this opportunity to raise funds, lest the market tip in an unfavorable direction, as it is recently wont to do. While the local economy has been largely spared from the global economic meltdown (thanks to the administration’s sound fiscal policies, some of which account for President Arroyo’s low popularity rating), the current budget deficit is one indicator that we need to source additional funding. Taking into account the current scenario, staying liquid is today’s name of the game.

This planned sale of shares in Petron follows a decision by Saudi Arabia earlier this year to sell its own 40 percent stake in the company to the London-based Ashmore Group, which now holds a 50.57 percent stake in the oil company. Ashmore bought Saudi Aramco’s 40 percent holding in Petron for $550 million in May, and later acquired 10.57 percent of Petron from small investors between June 16 and July 14 at P6.531 per share.

The government’s proposal to sell the Petron stocks is ultimately a positive move. While the sale may come at a time when global markets are flip-flopping like fish out of water, the sale eases the burden of the budget deficit while enabling the government to undergo essential community and building projects, benefiting the common tao. In this light, the sale is definitely a long-term solution to what is hoped to be a short-term problem.

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Sen. Dick Gordon’s way of saying farewell two weeks ago to French Ambassador Gerard Chesnel and his wife Ning Chesnel, who are leaving the country after a three-year assignment here, was to treat the couple and some members of the diplomatic corps to a tour of the Intramuros and Rizal, Bagumbayan Light and Sound Museum. The tour was highly appreciated by the diplomats who were surprised that such a historical and social landmark has not been given wide publicity.

 The museum had been put up by the senator when he was Secretary of Tourism, i.e., before he was elected to the Senate. The centerpiece project of the “Visit Philippines 2003” campaign, it stands on a 3,638-sq.m. lot where once was the convent school of the “Beatas,” or religious women of the 12th century. It showcases periods of Philippine history focusing on Rizal’s heroism and martyrdom in a nutshell. Wax figures and settings represent the pre-colonial era, the resistance of Lapu-lapu, the church and the state, the young Rizal, Rizal in Europe, icons of the hero’s novels, Battle of Imus, Rizal imprisoned in Fort Santiago, and his execution.

Dick waxed romantic over this noteworthy project that cost hundreds of millions to build, with a lot of help from friends. He has plans to rehabilitate the neglected project, and lately, has received a huge donation from the Japanese Embassy to reconstruct promenades.

Dick was particularly effusive over the contributions made by the French Embassy — not so much to the Light and Sounds Museum, but to the Philippine National Red Cross’ rescue efforts in various calamities. As you know, Dick is president of PNRC. Ambassador Chesnel graciously accepted Dick’s words of thanks, and as the evening wore on, sang romantic songs, as did Ambassador Alistaire Macdonald of the European Commission, Ambassador Robert Brinks of the Netherlands, and Mrs. Cosette Fedele, wife of the Italian ambassador. Dick’s good friend, smart and pretty Pinky Marquez added more sounds to the delightful evening.

If you’ve been wondering where to take your foreign and local guests, take them to the Light and Sound Museum. Ten persons are ideal for a package tour, at P100 per head. The walking tour takes about 30 minutes. For reservations, contact 5242827, or 0919-6099599 or 0918-9590164 or fax no. 5240823.

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