now that we know for sure, thanks to the world bank and senator miriam defensor santiago, that corruption is alive and doing very well under gloria macapagal arroyo, lalong nakakatakot at nakakailang all the talk about stimulus funds, a whopping php330 billion, to be spent on infrastructure in aid of generating jobs, raising consumption, and weathering the global recession. u.p. economics professor, once budget secretary, benjamin diokno is right:
“Big projects take time to implement and a big chunk of the funds are usually lost to corruption,” he told reporters at the sidelines of the Export Development Council forum on Thursday at the Hotel Sofitel.
What the country needs during these difficult times, he said, are easily implementable and quickly felt initiatives.
more than ever, professor diokno’s recommendation that the exchange rate be fixed at 55php to 1$ seems infinitely more sound, if the idea is truly to pump-prime the economy before things get worse. writes filomeno s. sta. ana of action for economic reforms:
Benjamin Diokno’s proposal to peg the exchange rate at PhP 55 to a US dollar is gaining a broader constituency.The exchange-rate debate is no longer an esoteric one, confined to finance executives, exporters, and academic economists.
Those engaged in the manufacture of import substitutes now recognize that a competitive exchange rate can be a better alternative to tariffs to protect domestic industry and jobs. The tourism industry also sees the importance of the exchange rate, aside from its freedom-to-fly advocacy, for the country to draw in bigger numbers of inbound tourists.The BPO (business processing and outsourcing) industry has seen how a rapidly appreciating peso (in 2007) can sharply cut profit margins. Note that some of the Philippine corporate giants—the Henry Sy family and the Ayalas, for example—have stakes in the tourism or BPO industry.
The largest constituency that has added its voice for a competitive exchange rate is made up of the overseas Filipino workers (OFWs).They are highly organized and politically articulate.… Specifically, undervaluing the peso by fixing the exchange rate at PhP 55.00 to US$ 1.00 from the current PhP 47.00 to US$ 1.00 is a pump-priming tool to boost consumption.Thus, for every US dollar that an overseas Pinoy sends home to her family, the latter obtains an additional PhP8.00.In a manner, that’s a windfall gain of 17 percent based on the present exchange rate.In the aggregate, assuming that the US$15 billion in OFW remittances in 2008 will hold, we can expect an additional PhP 120 billion in the pockets of OFW families in 2009.
meanwhile, instead of spending the 330 billion bucks on the usual infrastructure projects in urban areas most of that stimulus fund could be spent on farm-to-market roads and irrigation systems that would pump-prime the agricultural sector so we can produce our own rice, among other crops, instead of relying on imports.
but of course we’re going to hear objections from the globalists, not least of them the gma camp. says men sta. ana:
A criticism that the Diokno proposal cannot evade is that a currency undervaluation is improper at a time of a global economic crisis.The deep recession that has hit the advanced economies requires global collective action.Beggar-thy-neighbor practices such as devaluing the currency will undermine the recovery of hard-hit countries that suffer from current account deficits and overvalued currencies.
but really it’s about time we started thinking of ourselves first, what’s best for us, which is what other nations are doing, worrying about themselves first. sabi nga ni senador manny villar:
“We have to think on our own and come out with an economic model that is suited to the Philippines,” he said.
“It is no longer automatic that what is good for others is good for us. We have the intellectual capacity to decide on the model that we should follow and not depend on other countries,” Villar said.
He said the country has a large pool of economists, both in the government and the private sector, who could be tapped to formulate an economic model for the Philippines.
Villar explained the economic models used by western governments and international organizations have turned out to be ineffective in preventing the housing credit problem in the United States from developing into a global crisis.
“The global financial crisis has crunched or destroyed some conventional economic thinking, particularly the Washington consensus. When we finally get out of this crisis we will find that things will never be the same again,” the senator said.
“First, we have been led to believe that big is good, so we encourage consolidations, mergers, combinations, like in the banking system,” he said. “However, the collapse or near-collapse of the world’s biggest banks – UBS, Citigroup, Bank of America and, of course, Lehman – has shattered this once-held gospel truth,” he pointed out. “Big is not necessarily good because being too big also means being unwieldy,” Villar added.
He also said the crisis has shattered belief that less government intervention is better.
“In reality, we know now that the damage wrought on the global economy would have been far greater if governments did not intervene,” he noted.
a new economic model, one appropriate to our strengths and cognizant of our weaknesses, is exactly what we need to turn things around, and not a copy-cat model based on whatever obama manages to work out with europe, russia, and china.
finally, wise words from a presidentiable. of course he has yet to comment on diokno’s proposal of a 55-to-1 exchange rate. if he says yes, he just might get my vote.