We have our begging bowl out again.
The twin scourges of Ondoy and Pepeng will require, at the minimum, about P50 billion for reconstruction and repair. If we are talking about a major make-over that will ensure our communities are safer from natural calamities, we will need over a trillion in new infrastructure over several years.
To put it bluntly, we do not have the money to do all that is needed to do.
The slowdown in the economy has translated into a drop in government revenues. The stimulus spending we have undertaken to keep recession at bay already depleted public finances.
The Finance Secretary says our consolidated public sector deficit could run up to about P300 billion by the close of the year. That is bad news. At that deficit level, there will be upward pressure on the inflation rate and downward pressure on the peso. Borrowing will become a lot more expensive since we will be treated as a riskier borrower.
The only way we can mitigate such a high deficit level is to rush a number of privatization deals. Rushing these deals will probably mean we will accept less than what we might be able to raise if we timed privatization deals with better market conditions. Unfortunately, we do not have the luxury of time.
Even if we are able to rush the few privatization deals on the block — such as selling off the FTI property in Taguig — it does not seem likely we could raise more than P10 billion. That will only be a very small dent on the deficit figure the Finance Secretary is now quoting.
Shortly after Ondoy struck, the UN called for international assistance amounting to $70 million. Hardly has that call been issued when Pepeng caused even wider damage. We are looking to raise about $100 million from the international community for immediate relief and rehabilitation projects.
Even if we raise the full amount over the next few weeks, that will only translate into something in the vicinity of P5 billion — or way below the current estimates of what we need to spend just to restore the damaged infra. Among those we need to immediately restore are roads cut by landslides, bridges damaged by swollen rivers and dikes broken by floods.
Remember, the numbers we are looking at refer only to public spending. There is no accounting of what individuals, families and communities need to spend using private funds to rebuild homes, repair damaged vehicles and restore agriculture.
Over the longer term, we will need to spend for new spillways, better dikes and many more water containment and watershed projects. How we will raise the financing for all these is the question of the day.
The initial response to the UN call for relief contributions has not been encouraging. Many of the donor countries are still battling with a serious bout of recession. Many of the donor governments are dealing with ballooning budgetary deficits brought about by their own stimulus spending.
Under conditions of global economic weakness, we cannot count on overwhelming charity. There is no point in indulging in rhetoric about our country being the victim of global warming caused by the pollution of richer nations. That will only offend the potential donors.
Besides, the extent of devastation that hit us is as much the consequences of our own neglect, our incapacity to plan into the long term and apply appropriate environmental policies.
Too, previous experience tells us that the larger portion of international responses to such calls for emergency relief come in the form of soft loans over grants. Loans, no matter how soft, will have to be repaid at some point. They will add to our debt stock and enlarge our debt service requirements.
Still, beggars cannot be choosers. We need money, a lot of it, now. The best way we could get it is by accepting soft loans.
In addition to the rehabilitation of public infra damaged by the twin storms, a lot of strategic thinking needs to be done about how we should proceed from here. We need long term plans about land use, water containment and protected watershed areas. We need a lot of innovation in the way we used to do things and the deficient policies we have in place: building codes, protection of waterways and housing for the poor.
Last week, the President ordered the formation of a Reconstruction Commission. She named respected private sector executive Manuel V. Pangilinan to head it.
That is probably the best way to proceed. The bureaucracy is mired in turf protection and old thinking. It cannot provide the imagination to lead in the reconstruction.
The political class is deficient as well. It is mired in partisan maneuvering and animated by self-serving ambitions. We cannot rely on the politicians to provide clear thinking in the midst of calamity — especially as crucial elections loom on the horizon.
The calamity, we now hear more frequently, is the result as much of dysfunctional politics as it is of global warming. Global warming we can do little about. Dysfunctional politics we can try to contain by trusting the technocracy more and giving the efficient corporate sector a more decisive role.
The formation of the Reconstruction Commission is a concession to that realization. The private sector appears ready to cooperate with this novel experiment in entrusting strategic governance to proven private sector leaders. I am not sure the political class and the most dysfunctional sections of our bureaucracy might be as ready to cede too much to a Commission that, to be effective, must stand above politics.