Tuesday, July 28, 2009

Opinion on President Gloria Macapagal Arroyo's 2009 SONA

President Gloria Macapagal Arroyo's ninth State of the Nation Address (SONA) in 2009 presents a problem for those who embark on analyzing it. So many economic figures are cited in attempt to present the Arroyo administration's view of how the country is faring that it becomes difficult to make sense of it all. For the most part, you are basically left to cope with mere impressions of the statistics cited and when asked for an opinion on it, I find myself merely reflecting back on my long held overall opinion of President Gloria Macapagal Arroyo.

So, I basically tend to reject President Macapagal Arroyo's SONA as a product of verbal smoke and mirrors or a cerebral horse and pony show.

Nevertheless, it basically boils down to two major points:

First, is that her administration had accomplished so much despite the challenges it faced.

Second, was an attempt to rub the figurative face of her detractors in her administration's supposed accomplishments.

If she were a basketball player, her SONA was supposed to be a slam dunk right in the face of her political opponents. I can imagine her flying through the air and jamming the ball into the basket, then grunting "Ya feel me brah? Ya feel me?!"

Then again she's a midget, basketball posts are set 10 feet in the air, and she didn't say it in a cool way.

On page one, paragraph five of her speech, she said, "A few days ago Moody's upgraded our credit rating, citing the resilience of our economy. the state of our nation is a strong economy. Good news for our people, bad news for our critics."

If I didn't have Google, I wouldn't have probably found that the Moody's credit rating for the Philippines "...stands at Ba3, three notches below investment grade. Previously, the rating stood at B1, four notches below investment grade."

What does a Moody rating of Ba3 mean? The lowest investment-grade rating is Baa3. The highest speculative-grade rating is Ba1. A rating of Ba3 is just above B1, which was the Philippines' previous rating.

Sure, it sounds good to have a credit upgrade, but what does it really mean good news? Well, I really don't know but lemme try to figure it out.

A rating of Ba3 is described as:
Obligations rated Ba are judged to have "questionable credit quality." -- wikipedia
Having speculative elements -- www.moodyskorea.com
Moreover, consider this analysis from the Inquirer:
Moody's, like most foreign credit rating firms, keeps the Philippines below investment grade because the proportion of the government's debts to the country's gross domestic product (GDP) remains relatively high. Government data showed that its debt-to-GDP ratio stood at over 50 percent, higher than most of the ratios of other developing countries with the same credit rating.

Tom Byrne, senior vice president at Moody's, said the Philippine government's fiscal position worsened, with its budget deficit rising. But he likewise said the higher deficit, prompted partly by falling tax collection resulting from the crisis, would be easily funded. Byrne said the Philippines seemed to have no difficulty funding its expenditure requirements.
In a succeeding paragraph from the same article on the Inquirer:

The government expects its budget deficit to hit as much as P250 billion in 2009, much higher than last year's P68.1 billion. Fiscal officials said the deficit would naturally be higher because the government needed to spend more on infrastructure and services to pump-prime a slowing economy.
Anyway, this bit of information from the Inquirer makes it rather difficult to understand why in page 4, paragraph 37, Gloria Macapagal Arroyo says:
The next generation will also benefit from our lower public debt to GDP ratio. It declined from 78% in 2000 to 55% in 2008. We cut in half the debt of government corporations from 15% to 7%. Likewise foreign debt from 73% to 32%.
What strikes me is this, the government is functioning under a deficit situation -- meaning it is spending money it hasn't earned from revenues -- and yet we have President Gloria saying, that as it stands, the government owes less in public debt.

What isn't mentioned is just how much the government owes.


roundstone said...

Deficit spending may not be that bad, under the current global circumstances. Do you think the alternative, which is to do nothing, is better? That alternative could severely affect Juan dela Cruz even more.

Admin said...

Doing nothing is bad.

Running a government on a deficit can be good or bad or even both.

The same can be said of the country's debt.

My point here is that the SONA is filled with fluff.

betterphilippines said...

nice effort. i don't have the patience to do what you did. figures especially unverifiable ones make my head spin.

PRF said...

What would really be crazy is if someone actually tried to verify the figures.

What would be the point? To say that they are false?

People can just assume that and they'd be right. No mess, no fuss.

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