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Thursday, July 31, 2008

Poverty and Economic Data Point To Severe Governance Problem

Press release of Social Watch Philippines

Social Watch Philippines, a civil society network that led citizens groups' engagement in the national budget process and campaign for financing for development, called on President Gloria Macapagal-Arroyo to stop blaming the global crisis for the severe hunger felt by millions of Filipinos and face the truth that poverty in the Philippines is caused by a grave governance problem.

"If all countries are affected by the global crises, how come other countries are not as hungry as Filipinos are? How come Vietnam has 7.4 percent growth rate, Malaysia 7.1 percent , Indonesia 6.3 percent, Thailand 6 percent, and the Philippines 5.2 percent? The crucial factor is governance," SWP lead convenor Leonor Magtolis Briones said.

Briones, who is also a former National Treasurer of the country, said that the slowing down of the economy is a manifestation of the inherent weakness in how GMA has managed the economy. She stressed that GMA has wrong development priorities, as manifested by the lack if funding for social development, particularly the Millennium Development Goals. These wrong economic priorities rendered more Filipinos vulnerable to rising cost of living and threaten to push more people into poverty.

The group reminded GMA that the growth of agriculture, fishery and forestry went down to 3 percent in the first quarter of 2008 as compared to 4% in the first quarter of 2007. The industry sector has gone down from 6.6 % during the first quarter of 2007 to 3.9 percent in 2008.

SWP also assailed GMA's high dependence on Value Added Tax--a regressive form of taxation--to fund government programs.

"The Philippine government should resolve revenue administration so that the government will not be dependent on VAT which puts heavy burden to the poor. It should resort to a progressive system of taxation with higher dependency on income and real property taxes," SWP convenor Filomeno Sta. Ana III said.

SWP called on PGMA to concentrate on collecting taxes from the rich instead of putting the tax burden to the poor through VAT. The group pointed to a study that companies availing themselves of incentives such as tax holidays are also among the country's largest and most profitable companies owned by the wealthiest people.

"The surging prices of rice and food items and oil exacerbated by the VAT will diminish the purchasing power of people's money, which will lead to lower consumption and may affect business profitability. This, in turn, could lead to closure of firms and greater unemployment," explained Sta. Ana.

Latest NSCB data reveal that the number of families whose income is not enough to cover basic food requirements increased in 2006 to 1.9 million from 1.7 million. As of 2006, there are already 12.2 million food poor million Filipinos as compared to 10.8 million in 2003.

SWP, which convened 48 NGOs to form the Alternative Budget Initiative that pioneered civil society-legislature partnership for better allocations to finance the MDGs, asserted that subsidies and direct transfers are palliative and addresses only present, day-to-day needs. The group believes that subsidies are by no means long-term solutions to alleviating hunger and poverty.

"The only sustainable and effective way to addressing poverty is to invest on human capital, such as education and health which, unfortunately, shows disturbing trends," said Mercy Fabros of Woman Health Philippines which is one of the most active members of the ABI health budget advocates.

Fabros called attention to the fact that the Philippines is second among the ASEAN 5 countries (Malaysia, Thailand, Vietnam, Philippines, Indonesia) in terms of highest number of deaths among infant and children under five years old.

Meanwhile, Rene Raya of Action for Economic Reforms and also a convenor of SWP, stressed that the national enrollment rate is on a decline for the past five years.

SWP also called on Congress to check on the legality of providing subsidies under Unprogrammed Funds. "The General Appropriations Act is very specific that there has to be a showing that there is excess income. It is also clear that subsidies should go to health and education and that a special law on appropriations should be passed before the government can use any excess funds," Briones said. "Moreover, it is another opportunity for corruption," she added.

"PGMA should start reversing the government public expenditure patterns. Declining economic growth, soaring cost of living and increasing unemployment does not bode well for the worsening poverty," Briones said.

Briones stressed that PGMA should not be proud of the state of employment in the country during her SONA. "Gains in employment are already erased by the fact that unemployment now stands at 8% and underemployment at double digit levels. This resulted to a net loss of 168,000 jobs since April last year, Briones said.

SWP warned that the present administration has been measured and found most wanting in the area of governance. The group reminded PGMA that The World Bank has pronounced the Philippine government under Arroyo as the most corrupt government in East Asia.

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