political corruption, economic crisis, social instability, and hope

jephraim p. gundzik’s analysis of the philippine economy—published in asia times—is alarming:

by all accounts, the public sector debt burden of the philippines is unsustainable. the fiscal deficit, as measured by the all-inclusive public sector borrowing requirement (psbr), has averaged 5.7% of gross national product (gnp) over the last four years. during the same period, the average annual rate of real gnp growth has been a modest 4.6%. so economic growth has not been strong enough to offset the growth of psbr. as a result, the public sector debt stock has increased from 123% of gnp in 2001 to an estimated 143% of gnp at the end of 2004.

interest and principal payments on the public sector debt have increased from 39% of total national government expenditure in 2001 to 68% of total national government expenditure in 2004. the growing burden of public sector debt service has led to sharply lower public sector investment and severe cuts in social expenditure. contracting investment and social expenditure has weighed on economic growth, helping to push the debt stock higher.

the foreign debt of the public sector is equivalent to about 60% of the total public sector debt. about half this foreign debt is dollar-denominated, while the rest is primarily yen- and euro-denominated. the weakness of the peso against the dollar, yen and euro over the past several years has pushed both the foreign debt stock and foreign debt service payments higher. similarly, an increase in the annual average interest rate for 91-day philippine t-bills from 5.43% in 2002 to 7.34% in 2004 has increased the cost of domestic public sector debt service.

he presents a direct correlation between the philippines’ ailing economy and the allegedly-corrupt administration of gloria macapagal-arroyo:

this year, social instability has been attenuated by the arroyo government's fiscal policy and the continued rise of energy prices. at the same time, accusations of corruption leveled against arroyo's family members have become persistent. ironically, identical accusations of corruption, centered around jueteng (underground lottery) payoffs, brought down arroyo's predecessor joseph estrada.

finally, last year's charges of electoral fraud have come home to roost again. if president arroyo survives, which appears increasingly improbable, her ability to govern the philippines will be severely limited. the result will be further deterioration in public finances. if popular revolt drives the collapse of the arroyo government, as happened to ferdinand marcos in 1986 and joseph estrada in 2001, first aid for the philippines' public finances is by no means guaranteed. economic growth only accelerated modestly in 1987 and 2002.

gundzik mentioned about the possibility of default as an option:

more interestingly, arroyo's political opposition has toyed with the idea of default as a means to boost economic growth and social welfare. this idea has gained momentum in the philippines following argentina's successful debt restructuring that reduced that country's external debt burden by about 70% and boosted economic growth.

i wish i'm already back in mindanao with joji so we can contribute, even in our small ways, to the alleviation of poverty of my people. but this burden is beyond my human capabilities. i must go back to the ultimate reference point of my justice-advocacy and peace-activism.

god of all nations and of history, send us a spirit-anointed leader who would really serve you by seeking the salam of our people and our land in these times of crises. please give the filipino people wisdom to choose a leader whom you would use to really liberate us from our bondage to graft and corruption. i pray that you would liberate us from our addiction to deceive ourselves, to deceive others, and to destroy our land. i submit this longing of my heart to you in the name of isa al-masih, who entered our history, who suffered with us, and who overcame death—the ultimate corruption—to liberate us from our own corruption.

amen.